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Wednesday, May 24th
Today the EUR/USD is consolidating its positions in 20-pips range in the area of 1.1180, after sharp reversal, seen in the last trading session. Yesterday the pair came under strong selling pressure, as the US dollar performed sharp correction against its main competitors on the back of rise in odds of a June Fed rate hike, which recently increased to 83.1% from 78%. However, further downside remains capped, as yesterday’s positive data from German economy and growing cautiousness ahead of big events are limiting pair’s chances on any sharp moves. Now immediate focus shifts on ECB President M.Draghi’s speech, which will be closely watched for any details on tapering of the QE program, while FOMC Meeting Minutes, due to be released later ahead, will be able to bring some hints regarding Fed’s monetary policy tightening measures on its upcoming meeting in June.
The AUD/USD pair continues to extend its retreat from 3-week highs, marked yesterday at 0.7521 spot, and now is eyeing the level of 0.74. The Aussie came under pressure of a number of bearish factors today, including news that international financial research agency Moody’s downgraded China’s credit ratings and outlook. As a result, strong wave of risk-aversion sentiments hit the market, providing additional pressure on higher-yielding assets, such as the Australian currency. Moreover, softness on the commodity market, with bearish rallies of copper and gold prices, is also collaborating with pair’s retreat. And finally, negative data from Australian housing market, released this morning, are restricting chances of the pair on immediate recovery. Now all eyes remain on FOMC Meeting Minutes, which are scheduled on NY afternoon, but for now the pair will remain under influence of global market’s sentiments.
The GBP/USD pair is remaining within striking distance of its daily highs, posted in the region of 1.2980, trying to recover after negative start of the week and news about the downgrade of China's credit rating, which has hit high-risk assets. Moreover, seems that the dust around Manchester explosions and “divorce bill” of a EUR 100 billion, which was issued by the EU to UK is settling down, thereby easing bearish pressure on the pair. Meanwhile, the greenback has stalled its broad recovery, consolidating its positions, gained in the last NA trading session, as investors are gearing up for another risky event of this week – FOMC minutes, that will be released today ahead. Besides FOMC Meeting Minutes, the US economy will also provide the market with portion of macro data from the housing market, while UK docket will remain absolutely data dry, leaving the pair at the mercy of broad market’s trend in European trading hours.
The USD/CAD pair is trading on a firm note today, extending its recovery from monthly lows, marked yesterday at 1.3456 spot, as oil prices have stalled its bullish rally, lending some relief to the pair. Moreover, recovery of the pair can be also attributed to short-term correction ahead of FOMC meeting minutes and BoC decision, as traders prefer to lock in some profits ahead of risky events. It is widely expected that the BoC will maintain status quo on its monetary policy stance, but the accompanying statement could trigger some volatile moves around the CAD. Looking ahead, today traders will also focus their attention on US Existing Home Sales data and US Crude Oil Inventories, which will be able to bring some short-term trading opportunities later today.
The main events of the day:
ECB President M.Draghi’s speech – 15.45 (GMT +3)
US Existing Home Sales – 17.00 (GMT +3)
BoC Interest Rate Decision – 17.00 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
FOMC Meeting Minutes – 21.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1115 R. 1.1301
USDJPY S. 110.50 R. 112.48
GBPUSD S. 1.2901 R. 1.3063
USDCHF S. 0.9680 R. 0.9802
AUDUSD S. 0.7435 R. 0.7537
NZDUSD S. 0.6954 R. 0.7074
USDCAD S. 1.3428 R. 1.3566
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