On Wednesday the 23rd of May, trading on the euro closed down. US President Donald Trump was the main newsmaker for financial exchanges yesterday. He said that he wasn’t satisfied with how trade negotiations were going between the US and China and warned that his planned summit with North Korean leader Kim Jong Un may be delayed.
The yen crosses declined in response to this development (i.e. the yen got stronger). Aside from the US dollar’s rise across the board, pressure on the euro also came from the political uncertainty in Italy as well as weak Eurozone data.
Our main pair rebounded from 1.1678 after the publication of the FOMC minutes from their latest meeting. Most of the committee members believe that there is a case to be made for a rate hike in the near future. There were, however, differences of opinion with regards to how many rate hikes should be expected this year; 3 or 4. They said that this would depend on inflation.
Day’s news (GMT 3):
- 09:00 Germany: GDP (Q1), Gfk consumer confidence survey.
- 11:00 UK: BoE Governor Carney’s speech.
- 11:15 USA: Fed’s Dudley speech.
- 11:30 UK: retail sales (Apr).
- 11:30 Eurozone: ECB’s Praet speech.
- 15:30 USA: initial jobless claims (18 May).
- 16:00 USA: housing price index (Mar).
- 17:00 USA: existing home sales (Apr).
- 17:35 USA: FOMC member Bostic’s speech.
- 21:00 USA: FOMC member Harker’s speech.
Fig 1. EURUSD hourly chart. Source: TradingView
The euro’s slide came to an end at the 135th degree (1.1667). After the publication of the FOMC minutes, prices recovered to 1.1714. Buyers were halted by the resistance provided by the trend line.
In today’s Asian session, the euro crosses have been showing some mixed dynamics. US bond yields are declining. The yen, franc, and gold; as safe haven assets, are on the rise. Today’s situation is similar to yesterday’s. I think that we’re going to see a false breakout of the trend line and then, as the price breaks the support of 1.17, I expect it to drop to 1.1665.
US10Y bond yields have dropped to 2.97%. Now they’re trying to climb back up.
I’m expecting a surge in market volatility during BoE Governor Mark Carney’s speech, as well as when the US housing market data is released. I’m not paying attention to Germany’s GDP as this is not the first reading and we’re already 2 months into the second quarter.