News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Gold: -0.93% Silver: -1.67% Oil - US Crude: -2.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/zljwnQwRbk
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/GgrFV6rChg
  • Prior to the oil blockade in January, Libya had been producing circa 1.1mbpd https://t.co/ZS6LPcKbyF
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.42% 🇨🇦CAD: -0.23% 🇦🇺AUD: -0.39% 🇪🇺EUR: -0.50% 🇬🇧GBP: -0.58% 🇳🇿NZD: -0.65% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0EqnRHMZJ3
  • Libya has restarted oil production by 90kbpd and will resume an extra 220kbpd on September 24th, according to sources #OOTT
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: US 500: -1.50% Wall Street: -1.78% France 40: -3.30% Germany 30: -3.41% FTSE 100: -3.62% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2G6XT0J6v5
  • Tune in to @nickcawley1 's #webinar at 6:30 AM ET/10:30 AM GMT to prepare for key UK events and markets in the week ahead. Register here: https://t.co/xewSeUoDaT https://t.co/I8N4F5SmRK
  • Germany 30 IG Client Sentiment: Our data shows traders are now net-long Germany 30 for the first time since Sep 08, 2020 when Germany 30 traded near 12,883.80. A contrarian view of crowd sentiment points to Germany 30 weakness. https://www.dailyfx.com/sentiment https://t.co/PrXKfwUQbT
  • UK's Hancock says final decisions have not been taken in response to surge in COVID cases $GBP
  • #SP500 futures tumbling through Bear Flag support at the 3300 mark. Implied measured move suggests a push to 3000 could be on the cards if price breaks below the June high (3231.25) $ES $SPX https://t.co/o26aOMmin8 https://t.co/pS7A9CVmt6
A EUR/USD Question to Be Answered Thursday

A EUR/USD Question to Be Answered Thursday

2013-06-27 04:31:00
Kathy Lien, Technical Strategist
Share:

Thursday’s speeches from a pair of FOMC voters are likely to determine whether the EUR/USD will continue falling below the key 1.30 level or reverse higher en route to 1.31.

For the first time in three weeks, EURUSD tested and closed below the 1.30 level. The break of 1.3060 was technically significant, and the pair barely looked back as it dropped to its next support level of 1.30. After failing to break below this level in a meaningful way, however, many traders are now wondering whether 1.30 will hold.

With a number of Federal Open Market Committee (FOMC) voters speaking on Thursday and the economic calendar full of Eurozone and US data, the next 24 hours will be critical for the euro (EUR).

A large part of the selloff in the EURUSD from its high of 1.34 on June 19 to its low of 1.2985 on Wednesday was driven by investors pricing in new expectations for Fed policy, which makes Thursday’s speeches by FOMC voters William Dudley and Jerome Powell extremely important. Both members lean towards a more dovish monetary policy stance, and if they support Fed Chairman Ben Bernanke's view that asset purchases should be tapered this year, EURUSD could drop to its next support level at 1.2935 and possibly to 1.28 (although we feel that losses should be contained to that level).

However, if either FOMC voter expresses skepticism or reservations about Bernanke's timing on reducing asset purchases, EURUSD could rally and make its way back up to 1.31.

German unemployment and Eurozone confidence numbers are scheduled for release on Thursday, and the outcome of these reports will impact the market's expectations for European Central Bank (ECB) policy, and in turn, the euro.

If the confidence data is good, then the central bank's latest threat to increase stimulus will fall on deaf ears. These numbers will likely take a backseat to the German unemployment data, however.

See also: Concerning Words from ECB President Draghi

Dollar Survives US GDP Flop

Wednesday’s shockingly large downward revision to US first-quarter GDP growth had only a temporary impact on the US dollar (USD). Nonetheless, previously resilient European currencies including the euro, British pound (GBP), and Swiss franc (CHF) extended their slides, while commodity currencies enjoyed a relief rally.

While the focus on Thursday will be on Fed speeches, US personal income, personal spending, and jobless claims data are also scheduled for release along with pending home sales. Personal spending is expected to increase with retail sales rising last month, but not much is expected from personal income because average hourly earnings stagnated in the month of May.

UK Releases Financial Stability Report

The British pound sold off sharply against major currencies after the Bank of England (BoE) released its bi-annual Financial Stability Report (FSR). The BoE warned lenders about the potential for a sudden increase in long-term interest rates and asked banks to raise additional capital. The BoE also cautioned that some borrowers are highly in debt, which could result in losses for lenders.

In an attempt to reduce the soaring current account deficit and boost growth, the UK government announced a new round of spending cuts and plans to raise 11.5 billion pounds in savings from government bonds. Chancellor of the Exchequer George Osborne said during the spending review that by boosting the austerity program, the government plans to lift its status from "rescue to recovery." Osbourne warned that although the government reduced its debt by a third, the deficit remains high and the UK will "need to take tough decisions to deal with our debts."

Aussie Politics Dominate the Headlines

The Australian (AUD), New Zealand (NZD), and Canadian (CAD) dollars all ended Wednesday slightly higher against the greenback. The 20-basis-point (bp) decline in the overnight SHIBOR rate eased tensions and uncertainty in Asia, helping to lift commodity currencies in the process, but demand was further supported by the surprise leadership change in Australia.

See also: 3 Surprise FX Market Drivers

Australian politics will continue to dominate the headlines on Thursday, but our focus will be on Chinese money markets. New Zealand trade numbers are scheduled for release as well, and given the sharp improvement in business PMI, the country's surplus is expected to improve.

2 USD/JPY Catalysts to Watch

With no Japanese data on the economic calendar Wednesday, the performance of the Japanese yen (JPY) was mixed. USDJPY consolidated for the fourth consecutive trading day, while other yen crosses moved in different directions, though none of the moves were significant enough to drive a break of recent ranges.

There's not much on the Japanese calendar for Thursday, either, although the Ministry of Finance's weekly portfolio flow report is scheduled for release. The Japanese have been net sellers of foreign bonds for the past five weeks, and even though US ten-year Treasury yields breached 2.5%, the trend is not expected to change. When it does, however, it could provide sufficient catalyst to renew the rally in USDJPY and drive the pair back above 100.

The recent decline in the Nikkei also prevented USDJPY from rallying, and traders also should watch this index carefully, as a recovery could help lift the pair.

By Kathy Lien of BK Asset Management

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES