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Thursday, April 6th
The EUR/USD pair came under strong selling pressure in early Europe, as the market aggressively reacted on dovish stance of ECB President M.Draghi, forcing the euro to lose all its yesterday’s gains. The euro received strong bearish impact across the market, as Draghi once again noted that EU inflation growth pace is still slow and reassessment of current monetary policy stance is not warranted at this stage, thereby sending the pair to refresh it 3-week lows at 1.0629 mark. Now all investors’ attention turns toward another key risky event of this Thursday - Chinese President Xi Jinping’s and US President Donald Trump’s meeting, where the main issues concerning future relationships of the countries will be discussed. Looking ahead, only secondary data reports will be released later this day, so traders will continue to digest recent ECB President M.Draghi’s speech.
The GBP/USD pair is consolidating its yesterday’s heavy gains, however, failing to sustain above the level of 1.2500. Yesterday the pair met fresh bids after UK released solid services PMI print, that allowed the pound to recover part of this week losses, witnessed after streak of disappointing macro data. Moreover, the pair received additional support, after FOMC meeting minutes reviled that the Committee is planning to reduce the balance sheet size this year, however, failing to provide any details on how it will be done. On the other hand, risk-off moods are still full of steam this Thursday, limiting the pair from its further gains somewhat, as all eyes now remain on US and Chinese presidents’ summit, which will begin later today. In the meantime, both dockets today will remain data-quiet, with only secondary tier releases from the US economy scheduled in NA session, so global market’s sentiments will stay as a key driver for the pair during this trading session.
The yen continues to stay bullish against its US competitor, emerging to biggest gainer in Asia, amid broadly based US dollar’s softness and ongoing risk aversion. Yesterday the pair came under strong selling pressure after FOMC failed to provide any clarity on its plans to reduce the balance sheet size this year, that drops a shadow on Fed’s hawkishness regarding its monetary policy tightening, thereby strongly weighing the dollar across the market. Moreover, the USD/JPY pair remains additionally pressured lately by strong risk-off sentiments, that are still gripping the market, providing the yen with extra support. Today amid data quiet session the Trump-XI Summit is expected to grab all the attention later this Thursday.
The AUD/USD pair fell sharply to its monthly lows, which are located at 0.7532 level, this morning, following disappointing Chinese fundamentals. Seems that AUD bears are totally ignoring broad USD softness, led yesterday’s FOMC minutes, that showed Committee members’ intention of trimming Fed balance sheet later this year. Moreover, the pair continues to stay pressured this morning, wobbling within striking distance of its recent lows, as increasing cautiousness ahead of Trump-Xi summit and ongoing softness in commodity market are limiting any pair’s chances to recover. On the data front, nothing important is scheduled in calendars from both sides, so traders will closely watch for any headlines regarding official meeting between leaders of the two largest economies in the world to set up further course of pair’s movement.
The main events of the day:
None
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0607 R. 1.0717
USDJPY S. 109.97 R. 111.81
GBPUSD S. 1.2392 R. 1.2544
USDCHF S. 0.9974 R. 1.0114
AUDUSD S. 0.7540 R. 0.7600
NZDUSD S. 0.6912 R. 0.7008
USDCAD S. 1.3356 R. 1.3480
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