An Important Day of the Week for the Global Markets

This article was written by Ashwin Peswani, Regional Director of . 

Following its pullback moves on Monday, the US Dollar Index (I.USDX) managed to rejuvenate upside momentum on Tuesday when Existing Home Sales unexpectedly rallied to its highest since 2007.

The same optimism helped the greenback to maintain its strength against the majority of its counterparts, except the AUD which gained after commodity prices advanced on expectations of increasing future demand.

The EUR got another dent with ECB officials favoring a loose monetary policy while the GBP couldn’t sustain its gains from the previous day ahead of today’s budget release.

Further, the JPY and gold kept bearing the burden of more risky demand while crude dipped following sn OPEC statement that Iraq and Iran are still not confirming their ‘IN’ status for the November 30 production-cut deal, which in turn dragged the CAD down again.

As we come to Wednesday, the busiest day for global markets, traders are tying their belts tightly to observe a slew of releases from the EU and the US. Amongst them, headline PMI figures from the EU and Germany could help forecast near-term EUR moves while US Durable Goods Orders, New Home Sales and FOMC meeting minutes may continue providing busy trading schedules to investors. Additionally, the weekly announcement of US crude stockpiles might also help the crude traders to have some statistical direction. It should also be noted that Japanese markets are close for the day and an increase in the Chinese yuan reference rate again increases the importance of the AUD.

To briefly analyze the details, EU and German PMIs are less likely to offer any relief to the EUR and weaker prints could confirm ECB officials’ favor for loose monetary policy. On the other hand, US Durable Goods Orders are expected to increase USD traders’ happiness with housing figures likely to join in with the recent optimism and Jobless Claims indicating a bit of a pullback. Further, FOMC minutes aren’t likely to convey anything new except from supporting a near-term rate-hike.

Hence, the fundamental desk confirms additional upside by the US dollar with sustained weakness in EUR and crude prices, that in turn could affect AUD and CAD prices. However, disappointing US outcomes might have higher repercussions which require trader caution before taking any USD related trades.

Technical speak

At the technical front, EUR/USD continues signaling a 1.0580 re-test unless breaking 1.0665-70 TL while GBP/USD may test 1.2350. Additionally, a descending trend-channel can keep compressing AUD/USD. Hence, all three majors are more likely to move south but economics could play an important role and shouldn’t be ignored.

Pair Trend Support 1 Support 2 Resistance 1 Resistance 2
EURUSD DOWN 1.0580 1.0530 1.0670 1.0720
GBPUSD Down 1.2350 1.2300 1.2445 1.2520
AUDUSD DOWN 0.7385 0.7340 0.7460 0.7525


Cheers and Safe Trading,
Ashwin Peswani

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