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Thursday, June 28th
The EUR/USD pair struggles to find a clear direction in the second half of this week, trading around the level of 1.1550. It seems that the pair has stalled its downside rally after two consecutive days at a loss, which was driven mainly by renewed buying interest around the US dollar. However, any further sharp movements of the pair are unlikely, as markets remain cautious ahead of the EU Summit, where investors are expecting to meet fresh details on the key issues, such as Brexit and migration in the Eurozone. Besides the EU Summit, investors will also pay attention to the US data, which will be able to bring some trading opportunities during the NA session, while broad risk aversion, backed by fears of a global trade war, will continue influencing the pair.
The GBP/USD pair shows losses for the third consecutive session, having refreshed its 7-month lows on the level of 1.3067. It seems that the pound continues to suffer from dovish comments of MPC members, and especially from comments of John Haskel, who doesn’t deny the possibility of lowering the rate if the UK economy continues to show weak results. Moreover, yesterday the pound received additional bearish impetus, as Financial Stability Report indicated risks related to Brexit, while Mr. Carney during his speech highlighted additional risks to the UK economy from rising global trade tensions. Today investors will focus their attention on another speech by the MPC member A. Haldane, while the US will publish the GDP report, which both are scheduled for the NA session.
The NZD/USD pair remains ultra-heavy lately, having refreshed its 2-year lows on the level of 0.6769 on Thursday. The major remains under pressure of multiple bearish factors, which are pushing the pair into the negative territory. First, today the RBNZ left its interest rate unchanged, however, pointing out that the Bank has no clear vision on when and in what direction the rate is going to move. This outcome of the meeting has again brought the divergence between the Fed and RBNZ to the fore, thus accelerating its downside trend of the pair. Moreover, broad cautiousness, caused by the US-China conflict, remains one of the main drivers across the market, forcing the higher-yielding Kiwi to lose points. On the data front, the US has prepared GDP numbers, which will be published during the NA session.
The USD/JPY pair regained its bullish tone in Asia and reached the level of 110.30 by the European opening. Today the pair remains positive that can be mainly explained by stronger positions of the US dollar and the divergence between the US and Japan’s regulators. However, further upside of the pair looks limited on the back of ongoing increased tension between the US and China. In addition, recent comments by National Economic Council Director Larry Kudlow, who said the US had not softened its stance on China, have also improved demand for safety, which in turn is supporting the yen. Today the US will publish the GDP data, while risk-off sentiment and US dollar price dynamics will remain the main drivers for the pair this Thursday.
Major events of the day:
EU Leaders Summit – 13.00 (GMT +3)
US GDP – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1457 R. 1.1723
USDJPY S. 109.35 R. 110.95
GBPUSD S. 1.3017 R. 1.3291
USDCHF S. 0.9860 R. 1.0032
AUDUSD S. 0.7277 R. 0.7439
NZDUSD S. 0.6723 R. 0.6905
USDCAD S. 1.3223 R. 1.3445
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