EURUSD price, after breaking out of the six week downward sloping price channel, looks set to continue to bounce off of May’s low at 1.0820. Price action during Monday’s trading sessions was supported by the German Ifo report; the market viewed the results as strong enough to allow the pair to confirm a new short term resistance level at 1.1129. Technically, I now seek a return move towards the previous day’s low near the 1.0970’s, before we see a retest of the 1.1120’s.
The euro outperformed as more Grexit risk premium was unwound. Further, the July German Ifo survey beat expectations and boosted EUR longs. Market participants, as it seems, are adjusting expectations on the performance of the Chinese economy as the Chinese stock market closed down 8.5% on Monday. It is yet to remain seen, if the Chinese slowdown is a domestic issue or if it will spread into the global economy.
The dollar shrugged off the better durables report, which was beefed up by Boeing orders. The U.S. Dallas Fed’s manufacturing index improved to -4.6 in July versus -7.0 in June. It’s been in negative territory for 7 straight months given the region’s exposure to the oil recession.
Currency Pairs, Grouped Performance (% change)
The new Currency Movers Charts show the percentage change from previous day’s close to the current moment against the other major currencies.
The GBP is trading firmer against the EUR and the JPY ahead of the GBP GDP data.
The JPY trades lower against most pairs, as the USDJPY recovered most of the losses from yesterday’s decline.
Significant daily support and resistance levels for these pairs are:
Main Macro Events Today
• GBP Prelim GDP: Preliminary Q2 GDP data is expecting a 0.7% q/q rise, up from 0.6% in Q1, With robust growth the BoE can afford to lay the ground for rate hikes ahead and a recent Bloomberg poll suggests that most economists expect the first MPC members to start voting for a hike next month.
• USD CB Consumer Confidence: The July consumer confidence is out later today and should reveal a decline to 100.0 (median 100.0) from 101.4 in June. This would come along side a decline in Michigan Sentiment to 93.3 in the first July release from 96.1 in June. The IBD/TIPP poll for the month managed to hold steady at 48.1 for a second month.