These significant drivers will continue to determine market directions.
Based on recent macroeconomic data of the Eurozone, it shows weak economic growth and is expected to decline further in the midterm. Political issues such as the EU parliamentary elections coming up in May will potentially weigh on the EUR/USD in the coming months. The currency pair is trading between the 1.13 – 1.15 range since January and with low volume. With the recent weak economic data, there is a high probability for the currency pair to break below 1.13 to 1.12 in the next 3 – 6 months. This is sure to happen unless strong economy data returns to regain lost market confidence or USD weakening due to a high possibility of a 2nd round of government shutdown and an unfavorable outcome from the upcoming US-China trade meeting.
Brexit is the dominating theme for UK assets and will continue to remain as such, with uncertainty likely to continue. The currency pair broke weekly trendline and closed below 1.295 for the week. It is now at the primary support zone between 1.27 – 1.295. Note that the volume is weak and will need more strength to fall further. On the other hand, the price may retest the resistance zone at 1.297 – 1.32 level. GBP is likely to stay vulnerable against its major currency rivals unless the numbers surprise on the upside.
The pair came under renewed selling pressure after a rebound and added to this week's losses after the RBA offered a more balanced approach to rate moves and this erased all of the gains posted since early January. Meanwhile, resurfacing US-China trade tensions, coupled with the prevailing risk-off mood further drove flows away from the China-proxy/perceived riskier AUD. As long as the long-term bullish equities market remains in place, the downside potential will be limited in spite of a correction. The strong support levels for the week is between 0.7000 – 0.7050, where the pair has multiple daily lows, and resistance levels at the 0.715 – 0.725 zone.
The RBNZ’s is likely to remain focused on the balance between two key risks: downside risk to growth and upside risk to inflation. It is expected to convey a neutral stance in the upcoming week. Near-term growth forecasts may be nudged a little lower, which would likely result in the RBNZ’s own projected increase in the interest rate being delayed into the future. The price fell and closed at 0.67432 for the week (∆-2.13%) after the dismal unemployment data release; a high rate of 4.3% vs. 4.0% rate recorded in the previous quarter. Support level at 0.67 can be retested if unfavorable economic data is released this coming Wednesday. Conversely, the price may rebind to the previous high at 0.695 to the next resistance target at 0.705 level.
In view of the US Dollar Index continuing its strong momentum upwards, the currency pair is anticipated to follow suit. However, a better than expected Canada's Jan housing and labor data may add to loonie's strength. Price is currently well supported by weekly trendline, and 1.305 is strong support level in the daily timeframe perspective.
USD/CHF remains on course for further strength advance to the 1.004 which is the last defense before the 1.0128 November high. The pair broke above 0.999 zones and closed at 1.00001 previous week. On the flipside, 0.989 and 0.980 are favorable support levels to further its moves.
As stated in the last overview report, the bull signal was formed and is waiting for a breakthrough of the 110 level. However, the JPY found demand and remained resilient against the dollar, despite the USD posting gains against most all of its primary rival currency last week. The prevalent risk-off mood also triggered a sharp decline in the US Treasury bond yields, which partly offset the advance of the USD and further contributed to the pair’s subdued/range-bound price action between 108 – 110. A clear direction is unlikely to unfold unless some breakthrough event act as a catalyst to stimulate momentum and price movement.
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