The EURUSD pair was held up by the yen, which rose by 1.04% to reach 108.43 against the dollar. The yen is considered a safe haven asset, so investors were reluctant to buy risky assets. We reckon that this rise was due to comments made by Trump that he plans to sign the Uyghur Human Rights Policy Act. This would compel the US to impose financial sanctions on China, as well as deny visas to Chinese officials responsible for the repression of Muslims. This move could increase tensions with China.
Day’s news (GMT 3):
- 12:00 Eurozone: GDP (Q1).
- 17:30 UK: BoE’s Cunliffe speech.
- 23:30 US: EIA weekly crude oil stocks (5 Jun).
The bears missed the 135th degree by 43 pips. Because of the fact that Friday’s low was revisited, there’s now an increased risk of growth to 1.1335. This target doesn’t take into account the dynamics of the euro crosses amid the drop on the US dollar index.
In today’s Asian session, the majors are trading down except for the yen and Swiss franc. We wrote above that the yen is a safe haven asset. While stock markets are on the rise, some traders are investing in the yen. This raises a question: amid a retreat to safe havens, is the euro really going to appreciate? The answer is no, it won't. As such, we’re predicting a rise only as far as 1.1325. If the crosses reverse upwards, then it’ll quickly rise further to 1.1348/50. Cycles indicate that we won’t see any pressure on the euro until the end of the week.