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Thursday, July 20th
The EUR/USD pair was trading back and forth so far this session in a range of 1.1500-30 as investors turn nervous ahead of key risky event of this Thursday – ECB monetary policy decision. However, the pair continues to keep negative bias for the second day in a row, as traders are taking profits of the table, focusing on ECB meeting. It is expected that the regulator will keep its policy stance unchanged, while any details regarding QE program, especially in light of recent hawkish talks of ECB members, will have significant influence on the pair. On the data front, today the EU calendar won’t bring any relevant reports during the European session, while bloc of macroeconomic releases from the US economy will be able to attract traders attention in the NA session.
The USD/JPY pair extends its recovery from its 3-week lows, posted yesterday at 111.55 spot, as BoJ offered no surprises during its meeting. As it was widely expected the regulator held status quo on its monetary policy, leaving interest rate unchanged. The BoJ also revised its inflation forecasts lower, underpinning market’s expectations that the Bank will continue to keep accommodative policy and extend its massive simulation program that in turn brought negative impact on the yen. However, growing cautiousness amid market participants ahead of European CB monetary policy decision is providing some support for the yen, limiting pair’s upside rally. On the data front, today the US economy will release slew of macroeconomic reports, which will be able to bring some fresh trading opportunities during New York trading hours, while markets will keep digesting recent dovish BoJ policy statement.
The AUD/USD pair was demonstrating pretty high volatility level in Asia, having once again refreshed its two-year tops at 0.7989 spot on the back of mixed data from Australian economy. However, the pair was unable to sustain bullish rally and reversed its upside spike, as bears took control over the pair on the back of weaker-than-expected Australian jobs data. Adding to this, ongoing broad recovery of the US dollar and increased nervousness across the market ahead of ECB meeting is also negatively influencing the pair this Thursday. However, mildly positive sentiments around commodity assets are lending some support to the Aussie, thereby limiting further downside of the pair. In the day ahead, traders will look forward for the bloc of the US economic data, featuring Philadelphia Fed Manufacturing Index and several second tier releases, while strong market sentiments will continue to navigate the pair during European trading hours.
The GBP/USD pair extends its sideline consolidation pattern in the 1.3020 area, as markets are waiting for the release of UK retail sales data. The pair continues to hover in a narrow range so far this session, as traders refrain of placing any directional bets ahead of another important data from the UK, especially taking into account recent streak of disappointing British fundamentals, and another round of Brexit negotiations, as the UK Brexit Secretary D.Davis will meet today EU Chief Negotiator M.Barnier in Brussels. Adding to this, subdued recovery of the greenback also fails to cheer up US bulls across the market that is also helping the pair to stall its downside traction. Besides UK data, today traders will pay attention to the US bloc of data, while sharp moves of the EUR/GBP cross, triggered by ECB policy decision, will also have some impact on the pair.
The main events of the day:
UK Retail Sales – 11.30 (GMT +3)
ECB Interest Rate Decision – 14.45 (GMT +3)
Philadelphia Fed Manufacturing Index – 15.30 (GMT +3)
ECB Press Conference – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1480 R. 1.1572
USDJPY S. 111.22 R. 112.58
GBPUSD S. 1.2986 R. 1.3070
USDCHF S. 0.9516 R. 0.9580
AUDUSD S. 0.7890 R. 0.7990
NZDUSD S. 0.7314 R. 0.7408
USDCAD S. 1.2537 R. 1.2685
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