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The euro, which has been under pressure by weaker-than-expected economic data and growing doubts about when the European Central Bank will normalize its monetary policy. EURUSD decline with no retracements and closed the day at 1.1991, near the support at 1.1950. More downside is likely, but I expect the price to pause at 1.1950
The Aussie was under pressure ever since the day started, as data coming from the country at the beginning of the day posted outcomes below their previous figures. March HIA New Home Sales fell 2.0% monthly basis, well below the previous -0.7%. Also, the TD Securities inflation monthly reading resulted at 0.5%, better than the previous 0.1%, although the yearly number decreased to 2.0% from the previous 2.1%. The pair is approaching a major low/support at 0.7500. It will prove to be an important level to watch
DXY went through 91.00 resistance and closed the session at 91.37. The break indicates there is more upside possible. Now the resistance at 91.00 becomes the support and the price is expected to touch it before it will print another leg up. 91.00 is now a great spot to buy DXY. Targets are not clear from the technical perspective. The only significant level for targets I can see lies at 92.60
EURUSD kept trading lower and closed the session at 1.2158. This is almost 3 months low for this market. The most important event is tomorrow’s Draghi speech, which is expected to be a significant market mover. ECB has no reason to be bullish given the recent poor data from he Eurozone. Over the past 6 weeks there’s been widespread deterioration in business activity prompting investors to position for a dovish outlook. My guess is; Draghi will be cautious and may defer cutting stimulus, which is bearish for EURUSD.
EURUSD had an up day and recovered some of the losses in today’s trading. ECB is likely to keep neutral monetary policy stance on Thursday and the single currency could see further weakness if President Draghi suggests that the central bank many not consider tightening rates until well into 2019. At this stage, the market is waiting for ECB on Thursday. History teaches us that Draghi is capable of a surprise.
U.S. dollar rallied to a seven-week high on Monday as investors bought the greenback on the rise in the 10-year U.S. Treasury yield toward the psychologically important 3 percent level. DXY finished the day at 90.68, the highest level since 28th February. The next resistance level sits at 91.00. This is a major point and the price can find some fierce resistance there. But If we break through it, it will open the door for more upside and a larger rally in USD. I don’t think this will be the case though.
EURUSD keeps trading in this deadly range. Although German bund yields also rose today, more so than Treasury yields, the currency didn’t rally much. The Eurozone reported a slightly weaker current account balance and while tomorrow’s German PPI report is expected to show higher price pressures, the risk is to the downside given slightly weaker German consumer price growth in March. There is no end in sight of the sideways price action. Keep out
Cable got hit badly today with the 1st tier data printed red across the board. CPI slowed to 0.1% in March from 0.4% and average weekly earnings growth holding steady at 2.8% instead of rising, a contraction in retail sales in excess of 0.6% could encourage the Bank of England to postpone a rate hike. Inflation is now at its lowest level in a year. The market is currently pricing in 83% chance of tightening on May 10th, down from 87.5% on Friday. Let’s see if this have impact on the long planned hikes next month. My bias remains to the upside and the current down move is an opportunity to buy rather than sell.
Similarly, to EURUSD, there was no material change in DXY price action since yesterday. I will stay away from this range, but if your strategy allows you to trade, bearishness is preferable. As long as the price trades below 90.15, the market is bearish with targets below 88.30
Sterling remains firm and is within striking distance of the best level since the 2016 referendum against the dollar that was seen in January near $1.4345. Prime Minister May is expected to be criticized by the opposition for not seeking parliamentary approval before the weekend strike, but as a whole, it will support her actions. It seems more like political theatre than a substantive attack. More upside is likely in the long term, but this resistance might hold in the short term
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