The USD weakened against a number of its counterparts yesterday as the American session opening delivered a substantial hit to the greenback. Analysts point out that the USD is weighed by dropping US yields as well as attempts to price in the release of FOMC ‘s meeting minutes today. The document is expected to be scrutinized, for any further clues regarding the bank’s discussion for the replacement of the “gradual increases” wording, with “patience”, which was considered as dovish. We would place more weight on any insight regarding what conditions the bank requires in order to decide its next rate movement. Also any comments regarding inflation and the balance sheet normalization would be of interest. The USD could remain under some pressure for the short term as it is considered a rather slow week and US-Sino fundamentals could also weaken its role as a safe haven. EUR/USD rallied yesterday, breaking back and forth the 1.1345 (R1) resistance line, thus stabilising at that level. Should the USD weaken even further today ahead of the release of FOMC’s meeting minutes, we could see the pair trading in bullish market. If the pair finds fresh buying orders along its path, we could see the pair breaking the 1.1345 (R1) and aim if not break the 1.1385 (R2) resistance level. Should on the other hand, the pair come under the market’s selling interest, we could see the pair aiming if not breaking the 1.1300 (S1) support level.
GBP strengthens yet Brexit uncertainty remains.
The pound strengthened yesterday as strong UK employment data were released and hopes grew for further developments on Brexit. Analysts point out that the UK government seems to be more realistic in renegotiating Brexit and that the markets may place more hopes on further progress. UK’s Theresa May is to meet with EU Commission president Juncker today, enhancing efforts to get the Brexit deal through UK parliament. EU officials seem to be willing to work towards a solution, yet remain reluctant for reopening the agreement and setting a time limit to the Irish backstop. We expect the pound to remain Brexit driven, especially as no further major UK financial releases are expected. Cable rose yesterday breaking the 1.2960 (S1) resistance line (now turned to support) and tested the 1.3070 (R1) resistance line. Should hopes for an agreed Brexit grow further, say for example due to any positive headlines about the issue reeling in from Brussels, we could see the pair rising further. If the bulls maintain control of the cable’s direction, we could see the pair breaking the 1.3070 (R1) resistance line and aim for the 1.3170 (R2) resistance level. Should on the other hand the bears take over, we could see the pair aiming if not breaking the 1.2960 (S1) support level.
Today’s other economic highlights
During the European session today, we get Germany’s PPI growth rate for January, while in the American session, we get Eurozone’s preliminary consumer confidence indicator for February and from the US the API weekly crude oil inventories figure. As for speakers, please note that ECB’s chief strategist Peter Praet speech today, as well as Dallas Fed president Robert Kaplan’s ahead of the release of FOMC’s meeting minutes.
GBP/USD H4
Support: 1.2960 (S1), 1.2830 (S2), 1.2710 (S3)
Resistance: 1.3070 (R1), 1.3170 (R2), 1.3270 (R3)
EUR/USD H4
Support: 1.1300 (S1), 1.1260 (S2), 1.1215 (S3)
Resistance: 1.1345 (R1), 1.1385 (R2), 1.1420 (R3)
