Today’s macro agenda (GMT 3)
- 11:00 Eurozone: trade balance (March)
- 13:00 UK: CBI industrial trend orders (May)
- 15:30 Canada: new housing price index (April); US: Philly manufacturing index, initial weekly jobless claims
- 17:00 US: CB leading index (April)
At the time of writing, the euro fetched 1.2196. Amid rising euro crosses, buyers are attempting to win back yesterday's losses. At this stage, it’s hard to say whether they will succeed or not, since yesterday the trendline (3) failed to hold and the price action slipped below the balance line (55-day SMA). Today these lines have turned into resistance levels.
Major currencies have been trading in positive territory. Today’s top-performing currencies are the aussie dollar ( 0.35%) and kiwi dollar ( 0.33%). The euro is up 0.16% compared to Wednesday's close.
The news flow for the euro and the dollar is subdued today, so all eyes will be on 10Y treasuries. The yield currently stands at 1.668%, widening after the FOMC minutes were released.
The price pattern on the hourly TF looks ambiguous. If, within 3-5 hours, 10Y yield does not rise above 1.68%, it will sink to 1.62%, putting pressure on the greenback. This would be the time for the bulls to buy into the euro.
The resistance level is 1.2205 for EURUSD. If, by some stretch of the imagination, the bulls manage to gain a foothold above that level, a false breakout of the trendline will be seen and in all likelihood, the gains will pick up to 1.2241 (1). Conversely, a sharp pullback from 1.22 would heighten the risk of retracing to the 1.2160 low.
Bottom line: after the FOMC minutes came out, sellers broke through the trendline and consolidated below the 55-day SMA. The aussie and the kiwi topped the leader board in terms of profitability. The rally in antipodeans points to increased risk appetite. Most euro crosses show a bullish bias. Since today’s economic calendar is a blank slate for the single currency, the odds are strong that the pair will continue to recover. Against the backdrop of declining UST yields, we expect the price action to head back to 1.2240.