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. See our updated Privacy Policy here.

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
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bullish
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Find out about the recent history of ISM data, how to track it, and how to trade its release here: https://t.co/MZtBh88nOv https://t.co/hTUNcuig70
  • US equities endured turbulent price action last week and could be positioned for further volatility as fundamental forces butt heads and investors look to negotiate the shifting landscape. Get your market update from @PeterHanksFX here: https://t.co/DcI8LXFLtY https://t.co/U1MEE8OmZg
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10la3j https://t.co/POsnWwTmER
  • Speculative stubbornness continues to hold back emergent fears like inflation and central bank moderation, but no certain of progress on that battle this week. While $NDX, $BTCUSD and Pound are on my radar, #Dollar tops my watch list: https://www.dailyfx.com/forex/video/daily_news_report/2021/05/15/Dollar-Outlook-Throttled-by-Both-Risk-Rebound-and-Curbed-Inflation-Concerns.html https://t.co/aYjyvQzhIA
  • AUD/USD remains range-bound but trend potential exists elsewhere in pairs such as AUD/JPY or AUD/CAD. Get your market update from @JStanleyFX here: https://t.co/bppORO1NEg https://t.co/6mXqAOrl9H
  • What are some technical and fundamental factors affecting the equities market? Get your free forecast here: https://t.co/YQG1aaIT8C #DailyFXGuides https://t.co/oOyN7fUaC6
  • The Federal Open Market Committee (FOMC) Minutes may drag on the price of gold as the central bank appears to be in no rush to switch gears. Get your market update from @DavidJSong here: https://t.co/2EvNplObIk https://t.co/hhEAnqhAEu
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/gNiVpWrd1p
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/4zEwS7mFJE
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/nB2f5m56nq
Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

Christopher Vecchio, CFA, Senior Strategist

High beta currencies and risk-correlated assets were well-supported in the overnight, with the Australian Dollar and the Euro failing to break yesterday’s lows against the US Dollar, as market participants largely overlooked the disappointing Chinese second quarter GDP print. But despite this, which has sent the Australian and New Zealand Dollars significantly higher across the board, the Euro has failed to rally. In part, this is due to a sovereign downgrade for Italy, which saw its credit rating cut by two notches to ‘Baa2’ by Moody’s Investors Services.

While the downgrade has had little material impact on the Euro to the downside, it certainly has held it back relative to other risk-correlated assets. As noted in this column earlier, a strong way to gauge the intraday strength of the Euro is to examine the performance of Italian and Spanish bonds, to which the EURJPY and the EURUSD have been highly correlated to the past several weeks and months. The Italian 2-year note yield has dropped to 3.572% (-14.9-bps) while the Spanish 2-year note yield has sunk to 4.284% (-9.5-bps). Conversely, the Italian 10-year note yield has risen to 5.965% (+8.2-bps) while the Spanish 10-year note yield has inched higher to 6.583% (+3.0-bps); higher yields imply lower prices.

RELATIVE PERFORMANCE (versus USD): 10:46 GMT

NZD: +0.39%

AUD: +0.38%

CAD: +0.31%

GBP: +0.12%

JPY:+0.10%

EUR: +0.02%

CHF: +0.01%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.19%(+0.15% past 5-days)

ECONOMIC CALENDAR

Euros_Setbacks_Pile_On_as_Moodys_Downgrades_Italy_to_Baa2_body_Picture_5.png, Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

The last session of the week brings about little in terms of key data out of Canada; but there are two data releases for the US that we will watch. At 08:30 EDT / 12:30 GMT, the US Producer Price Index for June will be released, which is expected to show slowing price pressures and in fact some deflation on a monthly-basis. At 09:55 EDT / 13:55 GMT, the July preliminary US U. of Michigan Confidence report will be released, and we expect confidence to remain lower.

TECHNICAL OUTLOOK

Euros_Setbacks_Pile_On_as_Moodys_Downgrades_Italy_to_Baa2_body_Picture_1.png, Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

EURUSD: Fundamentally, the EURUSD could tumble precipitously as the US Dollar’s outlook improves. Short-term technicals have relieved oversold conditions, suggesting that the rebound seen off of yesterday’s lows may be it its final stages barring a new catalyst. Near-term resistance comes in at 1.2230/35 and 1.2285/90. Above that, interest lies at 1.2360/65, 1.2400, and the crucial 1.2440/80 zone (Symmetrical Triangle support). Support comes in the 1.2140/60 zone then 1.2075 (Bollinger Band). Given the measured move and Fibonacci extensions, we are looking for a move towards 1.1695-1.1875 over the next eight-weeks.

Euros_Setbacks_Pile_On_as_Moodys_Downgrades_Italy_to_Baa2_body_Picture_2.png, Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

USDJPY: The USDJPY is working on an Inverted Head & Shoulders pattern off of the June 1 low, with the neckline coming in at 80.60/70. Only a daily close above this level will signal the commencement of this pattern. With the Head at 77.60/70, this suggests a measured move towards 83.60/70 once initiated. Near-term support comes in at 78.95/79.00 (200-DMA). Price action to remain range bound as long as advances are capped by 80.60/70.

Euros_Setbacks_Pile_On_as_Moodys_Downgrades_Italy_to_Baa2_body_Picture_4.png, Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

GBPUSD: Advances have been capped by the 10-DMA, most recently at 1.5571 on Wednesday (also the mid-point for the Bollinger Bands). New monthly lows were set today at 1.5440, suggesting that the seasonal trend in place will remain into next week. A daily close above 1.5580 reverses this trend and suggests a test of the monthly high at 1.5720/25. Near-term support comes in at 1.5390/95 (weekly low) and 1.5365/70 (Bollinger Band).

Euros_Setbacks_Pile_On_as_Moodys_Downgrades_Italy_to_Baa2_body_Picture_3.png, Euro's Setbacks Pile On as Moody's Downgrades Italy to 'Baa2'

AUDUSD: After a test of 1.01 yesterday, the pair has rebounded after the Chinese second quarter GDP reading, which was largely priced in it appears (or rather, the disappointing print means that the People’s Bank of China will need to ease further, which is bullish for risk-appetite). Near-term resistance comes in at 1.0210 and 1.0250/60. Support now comes in at 1.0155/60, 1.0120/25, 1.0080 (former intraday swing highs), and 1.0000/05 (50-DMA).

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com

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

DISCLOSURES