Euro's Bull Trend Hits Pause; Dollar Waits on Fed Speakers
- Sliding economic data momentum weighing against the Euro and the US Dollar equally right now.
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We're into the second half of the trading week and it's certainly been a calmer one than in weeks past. A lackluster economic calendar from across the developed world is to blame, with only three data points - the RBNZ and Banxico rate decisions, as well as the Canadian CPI report - garnering a 'high' rating on the DailyFX Economic Calendar.
For many traders, this week has been simply about 'waiting': waiting for legislative progress from the Trump adminstration; waiting for Fed speakers to explain their hawkish stance despite weak US data (four Fed speakers due up the next two days); waiting for progress in the Brexit negotiations; etc.
A currency that hasn't gotten much attention this week has been the Euro. The Euro, which had been on a tear for much of April and May, has seemingly hit a roadblock the past few weeks. Now, EUR/USD technical uptrend has been broken: price traded above the daily 21-EMA between April 18 and June 15. Since June 15, the bulls have scattered, and we've been left with a flat market oscillating above 1.1135 (an area of support//resistance since August 2016).
While much attention has been paid to the underlying weakness in US economic data - the US Citi Economic Surprise Index is at six-year lows - not much has been said about the stalled momentum of Euro-Zone economic data. The Euro-Zone Citi Economic Surprise Index currently resides at its lowest levels of the year, while inflation swaps - the 5-year, 5-year forwards, which are ECB President Mario Draghi's favorite market measure of inflation expectations - are also at yearly lows.
The Euro has a chance to see some life breathed into its data momentum tomrrow with the final Q1’17 French GDP reading (which shouldn’t move markets) and a smattering of preliminary June PMI releases for France, Germany, and the broader Euro-Zone (which have the best chance of any data released all week to spark volatility).
--- Written by Christopher Vecchio, Senior Currency Strategist
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