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Tuesday, May 15th
The EUR/USD pair follows broad market trend this Tuesday, retreating from its yesterday’s highs, marked in the vicinity of 1.2000. Renewed downside trend of the pair can be mostly explained by upside correction of the US dollar against its major rivals. It seems that markets have already digested recent disappointing US inflation figures, allowing the greenback to regain control over the market, thereby forming downside trend for the pair. As for the economic releases, today we have data-heavy session, as the economic calendar will bring us German ZEW surveys, preliminary EZ GDP figures and US retail sales, which will help the pair to form its further trajectory. However, broad market trend, partially determined by the US dollar price dynamics, will also be able to influence pair’s further actions.
The GBP/USD pair again is navigating southwards, having faced resistance in the vicinity of 1.3600. The pair failed to extend its recovery after BoE meeting, as markets are still digesting dovish outcome of the UK regulator’s meeting. Recall, last Thursday the BoE left its interest rate unchanged at 0.5%, which was caused by a series of weak British economic data. This decision triggered the increase of divergence between the US and UK CBs, which remains one of the key navigators for the pair lately. Moreover, renewed buying interest around the US dollar also is putting some pressure on the pair lately. In the day ahead, we will have pretty busy trading session, as both economies have prepared important releases for this Tuesday.
The AUD/USD pair failed to extend its recent recovery and dropped to area of 0.7500. Recent downside move of the pair is mostly attributed to renewed buying interest around the greenback. In addition to this, the pair accelerated its retreat after the RBA published minutes from the last policy meeting. As it was widely expected, the minutes didn’t offer any surprise, while again reiterating that high household debt, inflation and pick-up in wages are still bringing some uncertainty to the economy. Also the Bank pointed out that it would be appropriate to hold the cash rate steady, as the RBA sees current monetary policy as the source of stability and confidence. Re-stressing weak points of the Australian economy has intensified the divergence between the Fed and RBA, which additionally weighed the pair this Tuesday. Looking ahead, the US will publish retail sales numbers, but greenback price actions will continue to navigate the pair during this trading session.
The NZD/USD pair remains highly offered this Tuesday, having again refreshed its 5-month lows on the level of 0.6892. It seems that US bulls have regained the control over the market after short breather, triggered by recent weak US economic data, which in turn pushes the pair to the red territory. Another bearish factor for the pair remain intensions of the Fed to implement monetary policy tightening measures, which increases divergence between the Fed and RBNZ. Moreover, slight retreat of oil prices also added some pressure on the commodity-linked NZ dollar, and even positive Chinese industrial production report failed to offer any support to the pair. Next to see is the US retail sales report, while the US dollar dynamics will remain as the key driver for the pair this Tuesday.
Major events of the day:
UK Average Earnings Index +Bonus – 11.30 (GMT +3)
UK Claimant Count Change – 11.30 (GMT +3)
German ZEW Economic Sentiment – 12.00 (GMT +3)
US Core Retail Sales – 15.30 (GMT +3)
US Retail Sales – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1878 R. 1.2022
USDJPY S. 109.01 R. 109.99
GBPUSD S. 1.3491 R. 1.3641
USDCHF S. 0.9939 R. 1.0041
AUDUSD S. 0.7496 R. 0.7580
NZDUSD S. 0.6869 R. 0.6997
USDCAD S. 1.2712 R. 1.2874
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