Dutch central bank Governor Klaas Knot expects the euro zone economy to perform better in the second quarter after an upsetting start in 2019. He referred to ECB’s plan to provide extra liquidity to banks through TLTROs, adding they will be brought forward on stricter conditions. He also confirmed the slowdown displayed in the first months of 2019 do not point to a recession or crisis. Meanwhile, in Italy Treasury Minister Giovanni Tria stated that due to significant economic slowdown in his country, they will not be able to expand fiscal policy. Italy is already burdened by a budget deficit which could increase even further this year if economic growth does not rebound. The EUR could be under strong volatility in the following days due to important financial releases. EURUSD remained at the lower levels that the pair closed near on Friday. Even though the pair has been under a selling interest in previous sessions the pair could rebound today as it has shown signs of stabilization. If the major currency moves in an upward trend we may see it breach the (R1) 1.1260 resistance level and aim higher for the (R2) 1.1300 resistance barrier. Even higher we could see the (R3) 1.1340 resistance level. In the opposite direction we could see the pair breaking below the (S1) 1.1220 support level and aim for the (S2) 1.1175 support barrier. If the selling is to continue we could see the pair aiming for the (S3) 1.1130 support line.
US: Mexican border could close, China remains in goodwill
US president Trump sent threats through twitter and his spokesman that he will shut down U.S.-Mexico border. The threats came amid an excess supply of migrant building up on the boarder and after he cut access to Central American countries previously. The issue brings students and workers that cross the border in a state of worry as this could affect their lives significantly. On another front China in an act of good faith said it will avoid extra tariffs on U.S. vehicles and auto parts after April. This came after the US announced it will not be adding extra tariffs on the Mainland. This provides the opportunity for both countries to benefit from each other under a more optimistic environment. USDCAD dropped on Friday after the positive news from Canada indicated the GDP (MoM) increased to 0.3% from previous negative figure of -0.1%. The positive news provided a boost to the Canadian Dollar which forced USDCAD below the (R1) 1.3360 support level now turned to resistance. If the downward trend is to continue we may see the pair aiming lower for the (S1) 1.3290 support level. Below that we could see the (S2) 1.3235 support line and the (S3) 1.3175 support level. If the pair comes under buying interest we could see it break above the (R1) 1.3360 resistance level and aim higher for the (R2) 1.3425 support line. Even higher we could see the (R3) 1.3510 resistance line being next.
Other economic highlights, today and early tomorrow
In today’s European session, we get Germanys Manufacturing PMI along with the Eurozone’s Core CPI preliminary reading, both for March, while form the UK we get the Manufacturing PMI for March. In the American session we get the US ISM Manufacturing PMI for March and the US Retail Sales for February.
USDCAD Daily Chart
Support: (S1) 1.3290, (S2) 1.3235, (S3) 1.3175
Resistance: (R1) 1.3360, (R2) 1.3425, (R3) 1.3510
EURUSD Daily Chart
Support: (S1) 1.1220, (S2) 1.1175, (S3) 1.1130
Resistance: (R1) 1.1260, (R2) 1.1300, (R3) 1.1340
