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Monday, February 26th
The EUR/USD pair caught fresh pips in Asia, following broad market trend, caused by retreat of the US dollar against its main rivals. However, the pair still remains weighed down, following meeting minutes of both CBs, which triggered fresh speculations regarding divergence between monetary policies of the Fed and ECB. Talks about widening divergence have negatively affected the pair, as Fed’s protocols showed the need of tightening monetary policy, which was especially relevant in light of recent positive US inflation data, while the ECB didn’t provide markets with any surprise. Now all investors’ attention shifts toward speeches of the heads of the CBs – Mr.Draghi and Mr.Powell, which both will take place in the first half of this week and will be able to heat up or cool off recent market’s talks regarding widening divergence between two monetary policies.
The GBP/USD pair remains bullish for the third consecutive session, having leaped above its psychological mark of 1.4000, while refreshing its weekly highs. Recent bullish rally of the pair could be explained by several factors, which are pushing the pair in northward direction. First, renewed sell-off of the US dollar remains the key driving factor on the market today, thus exerting support to the pair. Adding to this, recent hawkish comments of the BoE Deputy Governor D.Ramsden, who said that expects to see rate hike sooner than it was planned previously, provided extra support to the pound. And finally, easing fears around Brexit also positively affected positions of the pair. Looking ahead, today the macro calendar will bring us only US data from housing market, so widespread trend will remain the key determinant for the pair on Monday.
The USD/JPY pair remains broadly offered at the first working day of the week on the back weaker sentiment around the dollar. Today the key driving theme across the market remains downside trend of the US currency, which started at the end of the last week. Taking into account recent trend, the yen ignored several bearish factors during this Asia, such as increased demand for risky assets and speech of the BoJ Governor H.Kuroda, who once again stressed that the regulator would continue powerful monetary easing to achieve inflation target level. However, further interest for risky instruments may appear capped, as markets are awaiting for Fed Charman Jerome Powell's congressional testimony, where he could provide fresh comments regarding further Fed monetary policy. Today we have pretty light macro calendar, with only the US new home sales report, so broad market sentiments will continue to navigate the pair on Monday.
The NZD/USD pair entered the top most profitable assets of this Asian session, following several bullish factors, which support the Kiwi this Monday. First, new wave of greenback weakness dominates the market today, allowing the pair to grow for more than 60 pips since its daily lows, marked at 0.7277 spot. Moreover, increased risk appetite and upbeat sentiments on the commodity market are two more bullish factors that support the NZ currency on Monday. On the data front, today the US calendar will bring us data from the housing market, while demand for higher-yielding instruments and US dollar price dynamics will continue to determine pair’s further trajectory during this trading session.
Major events of the day:
ECB President M.Draghi’s Speech – 16.00 (GMT +2)
US New Home Sales – 17.00 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.2245 R. 1.2361
USDJPY S. 106.21 R. 107.45
GBPUSD S. 1.3856 R. 1.4060
USDCHF S. 0.9295 R. 0.9403
AUDUSD S. 0.7787 R. 0.7871
NZDUSD S. 0.7229 R. 0.7375
USDCAD S. 1.2537 R. 1.2771
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