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Friday, October 20th
The EUR/USD pair met strong selling pressure on Friday after two consecutive session with gains, falling below the level of 1.1800. The downside rally of the pair could be mainly explained by renewed demand for the US dollar, as the US Senate has passed 2018 budget blueprint, which brings US President D.Trump’s tax reforms one-step closer to its implementation. Adding to this, ongoing uncertainty on the political field of Spain also collaborates with pair’s retreat, as the Spanish government could suspend Catalonia’s autonomy on Saturday in response to recent threats of C.Puigdemont to declare the independency of Catalonia, which remains one of the negative scenario of events. Today we will have pretty quiet data session, as EU data calendar lacks any important data releases, while the US will publish only existing home sales data, so broad market trend and the US dollar price dynamics will remain as key navigators for the pair during this trading session.
The NZD/USD pair remains highly pressured at the end of this trading week, having broken through its important psychological resistance of 0.7000 to its 5-month lows, located at 0.6971 level, on the back of recent developments from the NZ political field. The key driver of pair’s recent fall were headlines from New Zealand, stating that NZ First will form the next government with Labourites, supplanting the National Party from the political arena. These news spooked NZ bulls, as the policy of the new government may negatively influence the economy. Adding to this, Labour expressed their intention to reform the Central Bank that also exerted negative pressure on the pair. Moreover, sharp comeback of the US dollar across the market on the back of recent tax reform developments was another driving factor, which contributed to pair’s recent fall. Looking ahead, today we will have another pack of data from the US housing market, however, further developments from the NZ political field will be the main driving factor for NZD/USD on Friday.
The GBP/USD pair continues to stay under bearish control as several factors are exerting pressure on it. Yesterday the pair attempted to correct its positions, but the recovery was short-lived and the pair slumped to its nearly 2-week lows, marked at 1.3088 level. One of the reasons of pair’s weakness remains recovery of the US dollar, triggered by news that the US Senate approved 2018 budget blueprint, which were considered by markets as important step towards much awaited tax reforms. Moreover, the pound is showing negative dynamics lately, as EU Summit leaders expressed concerns regarding lack of progress in Brexit negotiations. On the data front, today we have only existing home sales report, scheduled in economic calendar, so any news about Brexit will hog the limelight on Friday.
The USD/JPY pair staged a solid comeback during Asia, breaking through the level of 113.00, as positive tone of the greenback remains key theme across the market at the last trading day of this week. During the Asian session, the US Senate approved a budget plan for the 2018 fiscal year, paving the way for the implementation of the long-waited tax reforms, promised by President Trump. This news triggered strong buying wave around the US dollar, thus allowing the pair to recover its positions. Moreover, slight cautiousness among market participants ahead of Sunday's Japanese elections also adds some negative pressure on the yen on Friday. Today the only important event will be the release the US existing home sales data, so broad market trend and the US dollar dynamics will continue to navigate the pair during this trading session.
The main events of the day:
Canada Core CP – 15.30 (GMT +3)
Canada Core Retail Sales – 15.30 (GMT +3)
US Existing Home Sales – 17.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1734 R. 1.1916
USDJPY S. 111.81 R. 113.51
GBPUSD S. 1.3061 R. 1.3277
USDCHF S. 0.9692 R. 0.9848
AUDUSD S. 0.7824 R. 0.7910
NZDUSD S. 0.6908 R. 0.7230
USDCAD S. 1.2432 R. 1.2520
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