General market theme
More of the same yesterday as price action in the currency markets has been limited for the past couple of days with the major instruments holding their ground and waiting for fresh stimulus to pick up pace again. The week hasn’t offer many opportunities in terms of fresh news or report to affect price action yet and the broader sentiment and bias remains the same as we discussed yesterday: the dollar remains weak but the rest of the major lack the appetite to capitalize on it. Until we get fresh fundamental drivers to inject some momentum in the major currency pairs we should keep patient and not dive into mindless trading just for the sake of it.
Price action highlights
The euro managed to overcome the 1.1400 resistance level but the momentum just isn’t there for the currency to extend its move to the upside and we need to wait and see whether the single currency will manage to get a foothold above this figure. The ECB started buying corporate bonds yesterday as part of their stimulus operations and traders are hopeful that they might see some progress in terms of improving the economic climate in the Euro area finally. As long as the dollar stays bearish the broader bias is in favor of the euro that just needs a proper catalyst to benefit from it.
The cable was once again volatile and unstable yesterday, the currency tested the 1.4500 support early in the morning, rebounded higher to rally as far as the 1.4600 level and then proceeded to give up all of its gains again and ended the day where it started it – around the 1.4500 support area. Better than expected Production reports mixed with the uncertainty of the EU referendum are creating an interesting fundamental mix for the pound, the key resistance for now is around the 1.4600 highs and if the pound is to move higher then a break above it is necessary.
Focus of the day
The economic calendar doesn’t hold any heavy-duty reports today either, the UK Trade Balance figures and the US Initial Jobless Claims report are the only tier-2 reports scheduled for release that could attract our attention. However Mario Draghi’s speech early this morning could be the event of the day as his comments could just be what the euro needs in terms of stimulus to start trading more actively again.
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