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Wednesday, July 5th
The EUR/USD pair regained its positive tone in Asia, as traders remain cautious ahead the key risky event of this Wednesday. Today markets remain in anticipation of the release of FOMC June meeting minutes, which will be able to shed some light on further Fed monetary policy moves. Markets are broadly expecting that FOMC protocols will hint on another rate increase by the end of this year. Adding to this, the euro also benefits from geopolitical tensions, triggered by North Korea’s missile launch, which are driving flows away from risky assets this Wednesday. Besides FOMC minutes, today traders will also see bloc of PMIs from the euro area, which will be able to bring some impetus to the pair during the European trading session.
The USD/JPY pair managed to recover part of its overnight losses, however, remaining under pressure amid increased demand for safety, backed by rising geopolitical tensions. The pair recover its positions above the level of 113 in early Europe on the back of minor attempts of the US dollar to extend its recent recovery mode. However, ongoing risk-aversions, underpinned by North Korea’s ICBM launch and aggressive talks of Kim Jong-un, are limiting pair’s further increase. Recently leader of North Korea stated that he intends to complete tests of ballistic missiles, which can reach the continental US. Taking into account recent events, the UN Security Council called an emergency meeting on Wednesday, to discuss the launch of North Korean missiles. Looking ahead, today the pair will continue to follow broad risk trend and USD price-dynamics, while key risky event for the pair remains release of FOMC Meeting Minutes, which is scheduled on NY afternoon.
The GBP/USD pair was unable to hold its overnight recovery mode and fell to the region of its weekly lows, located near 1.2900 level. Broad risk-aversion, triggered by tensions over North Korea missile launch, remains one of the key driving factors across the market, restraining demand for higher-yielding instruments, such as GBP. Adding to pound’s losses, streak of disappointing PMIs, seen lately, is also limiting pair’s chances to recover its positions, so the market remains cautious, as today we will see another UK PMI report, which is scheduled on European trading hours. Besides UK fundamentals, today traders will also closely look for FOMC Meeting Minutes, which are scheduled on NA session, as they could hint on further Fed steps.
The AUD/USD pair is trading with mild bullish tone, correcting higher after yesterday’s slump, backed by neutral stance of the RBA. However, further recovery of the pair seems unlikely, as weaker-than-expected Chinese Caixin Services PMI, coupled with strong broad risk-off trend, are weighing the Aussie in the middle of this week. Adding to this, the market is still digesting recent outcome of the RBA meeting, during which the regulator decided to keep its neutral stance, leaving the AUD at the mercy of bears. Today investors will focus their attention on FOMC minutes, which are due for release in the American afternoon, while US dollar’s price actions will continue to navigate the pair during the European trading session.
The main events of the day:
UK Services PMI – 11.30 (GMT +3)
FOMC Meeting Minutes – 21.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1311 R. 1.1393
USDJPY S. 112.42 R. 113.86
GBPUSD S. 1.2883 R. 1.2975
USDCHF S. 0.9606 R. 0.9682
AUDUSD S. 0.7535 R. 0.7717
NZDUSD S. 0.7245 R. 0.7319
USDCAD S. 1.2851 R. 1.3055
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