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Monday, July 10th
The EUR/USD pair was showing minor volatility during Asian session, keeping position within 10 pips narrow range near the level of 1.14. However, demand for the euro continues to cheer up bulls, as the ECB is showing surprisingly hawkish tone over the last few weeks, narrowing divergence of monetary policies between the ECB and Fed. However, lack of momentum could be explained by Friday’s positive results from the US labor market, which underpins investors’ hopes of another Federal Reserve’s rate hike in December, thus keeping US bulls in shape at the start of this week. In absence of any important market moving data on Monday, the US dollar’s price dynamics will stay as a key driver for the pair during this trading session.
The GBP/USD pair is trading on a firm note this Monday, extending recovery from its 1-1/2 week lows, posted at 1.2869 after disappointing results from the UK economy. On Friday, the pound once again came under strong bearish pressure, following poor Manufacturing Production data, which forced the pair to lose more than a cent and break below resistance level, located at 1.29 spot. Moreover, seems that dust around mixed data from the US labor market has started to settle down, allowing the pair to correct higher this Monday. Adding to this, slightly better tone on the commodity market has reignited risk-appetite among investors, providing some support to higher-yielding currencies, such as the pound. It is expected that the pair will continue to show low activity during this trading session, as both US and UK calendars will remain silent at the start of this week.
The AUD/USD pair is trading with bullish bias at the start of this week, keeping its positions just a few pips above the level of 0.7600. The Aussie barely reacted on mixed Chinese inflation data, seen this morning, and positive tone of the greenback, backed by Friday’s better-then-expected NFP numbers, lending support to the pair this Monday. On the other hand, further upside appears fragile, as markets continue to digest recent data from the US labor market, which positively affects chances of another Fed rate hike this year. Looking ahead, today we have absolutely empty data session, so market’s attention will remain focused on the USD dynamics and broad risk trends throughout this Monday.
The yen remains one of the worst performers of this trading session, allowing the USD/JPY pair to step above the level of 114. Currently the pair is trading within striking distance of its 2-month tops, marked at 114.24, as BOJ Governor H.Kuroda once again showed intentions to adjust monetary policy, by expanding QE program, if it is necessary. Adding to this, bloc of weak Japanese data, featuring machinery orders, also collaborates with pair’s upside at the start of this week. Today the market will continue to digest Friday’s jobs report, which signaled that the Fed might stay on its tightening path, as both dockets won’t bring anything important during this Monday.
The main events of the day:
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1345 R. 1.1465
USDJPY S. 112.65 R. 114.81
GBPUSD S. 1.2797 R. 1.3013
USDCHF S. 0.9564 R. 0.9690
AUDUSD S. 0.7547 R. 0.7649
NZDUSD S. 0.7233 R. 0.7333
USDCAD S. 1.2775 R. 1.3043
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