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Monday, September 25th
The EUR/USD pair failed its attempt to fill in its today’s bearish gap and returned back in the area of 1.1900 level. Recent weakness of the common currency is mainly attributed to the disappointing victory of A.Merkel’s Conservative Party, which failed to gain the majority of seats in the Bundestag. So now, Mrs. Merkel’s CDU/CSU bloc will have to form a coalition that is viewed by the markets as a probable source of political uncertainty, thereby weighing the euro. Moreover, the greenback continues to keep its positive tone across the market on the back of easing US-N.Korea conflict that is also adding some pressure on the major currency pair at the start of this working week. Today the main event for the pair will remain ECB President M.Draghi’s testimony before the ECON Committee in Brussels, which will be able to shed some light on further ECB monetary policy developments, while the US calendar will remain broadly silent today, leaving the pair at the mercy of global market sentiments.
The NZD/USD pair remains under pressure at the start of this week amid uncertainty, backed by New Zealand’s election. Today the Kiwi came under bearish control, breaking the resistance of 0.7300, as markets are digesting the outcome of New Zealand’s election, which showed that the ruling National Party won the majority of votes, however, it was not enough to form a government. Therefore, the NZ PM B.English will have to form a coalition, which in turn is weighing on the NZ dollar. Moreover, positive sentiments around the greenback on the back of increased expectations of another Fed rate hike this year also are weighing the pair. Today we have relatively empty data calendar, so broad market sentiments will continue to play the main role in determining pair’s trajectory throughout this session, while next important event for the pair remains RBNZ meeting, which will denote further divergence between monetary policies of the regulators.
The dollar/yen pair caught fresh bids during the Asian session and reached the level of 112.50, but could not hold its positions and fell back to the region of 112. Ongoing positive tone of the US dollar and increased risk appetite amid lack of any news about Korean peninsula remain supportive for the pair on Monday. Moreover, the pair received additional bullish impetus today after dovish talks of Japan’s PM S.Abe, who suggested to expand existing QE program. However, the pair managed to correct lower after BoJ Governor H.Kuroda during his speech noted, that the Japanese economy continues to demonstrate moderate recovery pace. Looking ahead, today nothing noteworthy is scheduled in macroeconomic data calendar, so further pair’s actions will mostly depend on broad market trend and the US dollar price dynamics.
The GBP/USD pair trades with a positive bias at the start of this week, keeping positions near its today’s tops, marked in the vicinity of 1.3550 level. The latest upmove of the major is mainly driven by the recovery of the pound after its Friday’s drawdown, backed by uninformative speech of UK PM T.May, which failed to provide any details regarding the Brexit process. However, further upside looks unlikely, as the greenback continues to trade in a positive mood against its major peers, exerting some pressure on the pair on Monday. Today nothing much is scheduled economic data calendar, so widespread market moods will remain as a key driving factor for the pair throughout this trading session.
The main events of the day:
ECB President M.Draghi’s Speech – 16.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1890 R. 1.2032
USDJPY S. 111.16 R. 112.96
GBPUSD S. 1.3363 R. 1.3657
USDCHF S. 0.9648 R. 0.9730
AUDUSD S. 0.7873 R. 0.8029
NZDUSD S. 0.7254 R. 0.7380
USDCAD S. 1.2213 R. 1.2413
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