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Wednesday, June 28th
The EUR/USD pair remains highly positive in the middle of this week, having refreshed its multimonth highs at 1.1380 level in early Europe. Yesterday the pair received a huge boost from upbeat comments of the ECB President M.Draghi, delivered at the ECB Symposium. During his speech, Mr.Draghi stressed that softer inflation is temporary and growth of the EU economy is seen above trend. The market took these comments as a hint on a possible QE program tapering, thereby increasing demand for the common currency. Moreover, the US dollar mostly ignored yesterday Fed Chair J.Yellen’s neutral talks and continued to retreat against its main competitors amid reports of a delay in the Senate vote on the US Healthcare plan. Looking ahead, today developments surrounding the last day of the ECB Forum in Portugal, featuring speech of the ECB President M.Draghi, will hog the limelight during this trading session.
After reaching its 3-week highs at the level of 1.2861, the GBP/USD pair entered consolidation phase, staying near the level of 1.2815 in Asia, as bulls have taken a breather after sharp increase of the pair. Meanwhile, in the Bank of England’s Financial Stability Report, which was released yesterday, the regulator noted risks associated with Brexit negotiations. However, the market mostly ignored slightly dovish stance of the BoE report and following M.Carney’s speech, as prevailing bearish sentiments around the greenback were the main motivator for traders to push the pair higher. Today we will have another speech of the BoE Governor Carney, which will be held at the ECB Symposium later today, and data from the US housing, while ongoing weakness of the US dollar will continue to determine pair’s next steps during this session.
The USD/CAD pair extends its massive decline, refreshing its 4-month lows at 1.3129, as CAD bulls are still full of steam. The pair came under renewed selling pressure in the Asian trading session on hawkish remarks of the BoC Governor S.Poloz, who once again stated that previous rate cuts are not still necessary, thereby lending support to the Loonie. Adding to this, renewed sell-off of the US dollar, backed by a delay in the US Senate vote on the health-care bill, and recovery in oil prices are also providing some pressure to the pair this Wednesday. Now all focus shifts towards the BoC Governor S.Poloz’s speech, scheduled later today, while the US Pending Home Sales report and Crude Oil Inventories will also have a significant impact on the pair during the NA session.
The USD/JPY pair met a support near the level of 112.00 during Asian trades and refreshed its daily tops at 112.40 on the European opening on the back of minor attempts of the US dollar to recover its positions across the board. However, further upside remains capped, as prevailing risk-off moods, backed by the second session of the ECB Forum in Portugal, are underpinning demand for the safe-haven assets. Moreover, it is expected that the US dollar will continue to trade on a softer note during this day, as the market is still digesting recent delay in the vote on the Healthcare bill by the US Senate, which in turn raised concerns over US President D.Trump administration's ability to fulfill its promises. Today all eyes will be glued to the summit of Central Bank governors, where H.Kuroda will also take part, while RO-RO trend and US dollar’s dynamics will remain as key drivers for the pair throughout this Wednesday.
The main events of the day:
BoE Governor M.Carney’s speech – 16.30 (GMT +3)
BoC Governor S.Poloz’s speech – 16.30 (GMT +3)
ECB President M.Draghi’s speech – 16.30 (GMT +3)
US Pending Home Sales – 17.00 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1117 R. 1.1459
USDJPY S. 111.09 R. 113.09
GBPUSD S. 1.2651 R. 1.2941
USDCHF S. 0.9502 R. 0.9784
AUDUSD S. 0.7547 R. 0.7641
NZDUSD S. 0.7213 R. 0.7371
USDCAD S. 1.3089 R. 1.3315
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