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Wednesday, July 4th
The EUR/USD pair is trading in the north direction in the middle of this week, getting closer to the level of 1.1700. Today the main driver across the FX-space remains ongoing downside correction of the US currency after its notable gains, witnessed last month. Moreover, it seems that investors positively reacted on news that EU diplomats are considering a start of negotiations with big car producers on lowering tariffs on vehicles to avoid a full-blown trade war. In the day ahead, we expect a quiet trading session, as the economic calendar won’t offer us anything important, while the US market will remain closed due to Independency Day celebration.
The GBP/USD pair follows broad market trend and extends its recovery, having stepped over the level of 1.3200. It seems that speculations about the uncertainty surrounding Brexit have faded away somewhat, allowing the pair to recover some pips after revisiting its 7-month lows in the region of 1.3050 last week. Moreover, ongoing weakness of the US dollar remains the main driving factor across the board so far this week, which also offers support to the pair this Wednesday. As for the data, today investors will focus their attention on the UK services PMI, which is the only important data release for today, so broad market trend will remain the key determinant for the pair during NY trades.
The AUD/USD pair extends its correction from its 1.5-year lows, marked on the level of 0.7311 earlier this week, as several factors are offering support to the pair. First, today persisting weakness of the US dollar remains the underlying theme across the market, allowing the pair to regain its positions above the level of 0.7400. Moreover, in Asia the pair received additional support from higher-than-expected Australia’s retail sales figures and Chinese service PMI. However, further upside of the pair looks limited as we are heading towards the FOMC minutes, NFP report, and the implementation of Chinese tariffs on US agricultural products that forces markets to stay cautious, thus putting some pressure on the higher-yielding Aussie. Looking ahead, today the economic calendar won’t offer us anything relevant, as the US market remains closed in observance of national holiday, leaving the pair at the mercy of broad market trend this Wednesday.
The USD/JPY pair lost its positive tone after 5 consecutive session at a profit and refreshed its intraday lows in the region of 110.30. The main reason of pair’s recent decline can be called ongoing sell-off of the US dollar, which is dominating the market so far this week. Moreover, widespread cautiousness ahead of much-awaited NFP data also offers some support to the safe-haven yen in the middle of the week. But today nothing much is scheduled in the data calendar, as the US celebrates Independence Day, so widespread market sentiment will help the pair to form its near-term trajectory this Wednesday.
Major events of the day:
UK Service PMI – 11.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1598 R. 1.1704
USDJPY S. 110.11 R. 111.37
GBPUSD S. 1.3080 R. 1.3264
USDCHF S. 0.9891 R. 0.9969
AUDUSD S. 0.7279 R. 0.7459
NZDUSD S. 0.6662 R. 0.6806
USDCAD S. 1.3073 R. 1.3243
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