EURUSD, Daily
EURUSD has a short term support level near the 1.0850’s and resistance levels around 1.0990’s – 1.1020’s. The short term trend is now negative, and trading in line with the ECB’s dovish position to increase the supply of EURs on the market. Short term EURUSD traders may look to re-sell into strength if prices extend past the 1.0990’s – 1.1020’s resistance levels, ideally between the 1.10’s – 1.1050’s for a 1.0750’s price target.
Further negativity on the EUR comes from the much weaker than expected Eurozone retail sales, which fell 0.6% m/m, keeping the euro under pressure, offsetting an upward revision in final Eurozone services and composite PMI survey data for July. The fact that both the U.S. and the U.K. are seeking to raise their rates is giving traders enough reasons to support both the US dollar and the British pound, adding to EUR selling pressures.
On Wednesday, the U.S. ADP employment report missed expectations; however, the July services ISM posted a 10-year high. The EURUSD rallied to session highs around 1.0930 after the employment data, and then fell to session lows near 1.0850 following the ISM outcome.
Currency Pairs, Grouped Performance (% change)
The new Currency Movers Charts show the percentage change from previous day’s close to the current moment against the other major currencies.
The AUD is trading lower against the majors as commodity prices have been weakening. CFTC data also reports that net speculative short positions have increased for the AUD. The USD, EUR, GBP and JPY are all trading mixed as traders await GBP data.
Significant daily support and resistance levels for these pairs are:
Main Macro Events Today
• GBP BoE Interest Rate Decision: The central bank is widely expected to leave the repo rate at 25 bp. Today is the inaugural BoE “Super Thursdays”‘, which will include the instant-release of the MPC minutes and the latest Quarterly Inflation Report. Governor Carney will also lead a one-hour press conference. The minutes will likely reveal a hawkish shift at the BoE, with MPC members Weale and McCafferty seen resuming their vote in favour of a 25 bp rate hike (having voted for this between August and December last year), though still be outvoted by 7 to 2. Carney will likely maintain that the next move will be a hike, but still present a relatively balanced view in line with market expectations for tightening to start in February next year. The BoE is also likely to trim near-term inflation forecasts given sterling’s trade-weighted strength, the recent decline in oil prices, and signs that productivity is improving, though at the same time is likely to flag upside risk further down the track.
Please note that times displayed based on local time zone and are from time of writing this report.