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Wednesday, March 28th
The EUR/USD pair continues to move in the south direction, mainly driven by the US dollar dynamics. Yesterday the greenback caught a fresh bid-wave on the back of speculations regarding possible avoidance of a trade war between the US and China, as sides agreed to discuss further trading terms. However, the pair was able to recover some of its losses during yesterday's trades, but failed to hold its positions, as US bulls regained control of the pair after short breather. In the day ahead, the US will release the GDP report, however, it is expected that the market won’t show any sharp reaction on a positive results of the US macroeconomic data, as investors have already managed to price in some economic growth of the US after hawkish talks of the Fed members on the last FOMC meeting. In addition to US data, today the pair will also be determined by widespread market trend, backed by recent US-China conflict and the US dollar price dynamics.
The GBP/USD pair lost its upside momentum and is again trading southward on the back of recovery of the US dollar. Yesterday the pair received strong bearish impetus in the region of its 8-week highs, having lost nearly 180 pips, on the back of resurgence of the US dollar, triggered by talks of possible avoidance of a trade war between the US and China. However, the pair managed to recover part of its losses and climbed to the level of 1.4200, where again met resistance and slipped to its intraday lows, located at 1.4134 spot, as US bulls are still not ready to give up. Adding to this, still persisting risk aversion, backed by uncertainty in trade relationship between the US and China, is another negative factor for the higher-yielding pound. Today the UK calendar will again not release anything noteworthy, while the US will offer investors GDP numbers, which will be able to help the pair to form its short-term trajectory.
The USD/JPY pair attempts to restore its bullish trend, however, still being weighed by broad demand for safety. Swings of the risk sentiment remain the key navigator for the pair this week. Recall, the pair received strong bullish impetus on Monday on the back of talks that the US and China would come to agreeable trade terms that would divert the looming trade war. However, the pair lost its upside momentum and slipped lower, as yesterday the Japanese government resumed hearing testimony on the government’s land sale scandal, where PM Shinzo Abe was involved. And now the pair is again trading northward, trying to recover yesterday’s losses, in wake of the latest news, saying that the N.Korea’s leader Kim Jong Un is committed to denuclearization. This news has sparked the recovery of investors’ interest to risky assets, thus providing support to the pair. However, it is expected that the pair won’t show any strong upside move, as uncertainty around trade conflict between the US and China is still navigating the market. Looking ahead, today the US will publish the GDP report, which will be able to bring some fresh trading opportunities, while risk sentiment will remain the key determinant for the pair on Wednesday.
The AUD/USD pair corrected higher from its weekly lows, marked on the level of 0.7675, after notable drawdown, witnessed a day before. The latest weakness of the pair is mainly attributed to strong risk aversion across the market, triggered by conflict between the US and China. However, further recovery lacked momentum and the pair again came under bearish pressure after facing resistance on the level of 0.7700, as risk-off sentiment still navigates the market this Wednesday. On the other hand, some positive developments around trade conflict also did happen. The US and China agreed to discuss the situation to avoid further trade war. Adding to this, bearish correction of metals, such as gold and copper, is also pushing the pair in the negative direction. On the data front, today the US will release GDP numbers which will bring investors fresh trading opportunities during the NA trading session, while risk sentiment will continue to navigate the pair during this trading session.
Major events of the day:
US GDP – 15.30 (GMT +3)
US Pending Home Sales – 17.00 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.2311 R. 1.2521
USDJPY S. 104.92 R. 106.10
GBPUSD S. 1.3978 R. 1.4334
USDCHF S. 0.9396 R. 0.9544
AUDUSD S. 0.7621 R. 0.7785
NZDUSD S. 0.7228 R. 0.7320
USDCAD S. 1.2779 R. 1.2957
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