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Wednesday, July 19th
The EUR/USD pair is correcting lower today from its 14-month highs, marked at 1.1583 level in the previous trading session. Seems that the dust around yesterday’s rejection of Trump’s Healthcare bill by the Senate has settled down, allowing the US dollar to correct higher against its major peers that in turn is weighing on the pair this Wednesday. However, further decline of the pair seems fragile, as the market turns cautious ahead of tomorrow’s ECB meeting. It is expected that the regulator will leave its interest rate at the same level, while any announcements regarding QE program will have significant influence on the pair. In the day ahead, the US will release fundamental reports from the housing market in the NA session, which will be able to bring some impetus to the pair, while the EU docket will remain silent today, allowing the US dollar to navigate the pair during European trading hours.
The USD/JPY pair is extending its previous session’s recovery, as the US dollar corrects higher amid profit-taking actions after its yesterday’s sharp decline across the market. The US dollar has finally stalled its broad sell-off, triggered by failure of the D.Trump’s Healthcare bill to pass through Senate vote, and now is correcting higher against its main competitors, that remains one of the main drivers for the pair this Wednesday. Adding to this, slightly improved risk appetite is also weighing on the Japanese yen’s safe-haven status so far this session. On the other hand, lack of any fresh directional impetus is forcing the pair to keep its positions near the level of 112, as traders are turning cautious ahead of the next risky event – BoJ interest rate decision, which is scheduled on the next Asian session. Besides BoJ monetary policy decision, traders will also look forward for data from the US housing market, which will be able to bring fresh trading opportunities during the NA session.
The AUD/USD pair extends its bullish rally above the level of 0.7900, refreshing its 26-month highs, barely reacting on the US dollar’s correction. Pair’s upside could be mainly attributed to yesterday’s hawkish RBA meeting minutes, which continue to provide support to the Australian dollar. Moreover, positive risk-on environment, which was prevailing on the market throughout the Asian trading session, also collaborates with pair’s bullish tone in the middle of this week. Next of note for the pair remains the US housing market data, which will provide some short-term trading impetus in the NA session, while Australian jobs data will take center stage during the next Asian session on Thursday.
The GBP/USD pair has stalled its overnights retreat, meeting support in the region of 1.3025-30, as traders have passed over yesterday’s weak results of the UK economy and now are awaiting for a fresh directional impetus from the upcoming US macro data. On Tuesday, the pair came under strong selling pressure, having lost nearly a cent since yesterday’s highs, after UK CPI numbers missed market’s expectations. Adding to this, following uninformative speech of the BoE Governor Mark Carny, during which head of the regulator stated that the picture on the UK inflation remains the same, also didn’t provide any relief to the pound. On the other hand, broad weakness of the US dollar, backed by Trump’s Healthcare bill failure, allowed the pair to step away from its last session lows. Looking ahead, today investors will focus their attention on data from the US housing market, while the UK will continue to keep silence on Tuesday, so the USD dynamics will remain as a key determinant for the pair during the European trading session.
The main events of the day:
US Building Permits – 15.30 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1424 R. 1.1648
USDJPY S. 111.14 R. 113.12
GBPUSD S. 1.2935 R. 1.3177
USDCHF S. 0.9458 R. 0.9680
AUDUSD S. 0.7725 R. 0.8037
NZDUSD S. 0.7216 R. 0.7438
USDCAD S. 1.2515 R. 1.2757
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