The DXY index fell to 93.68, while the single currency reached an intraday high of 1.1640. The dollar stopped weakening due to a tech-driven sell-off in equities. As a result, the Nasdaq 100 plunged 2.16% to 14,472. By the close, price action in the key pair dropped to 1.1616.
Today’s macro agenda (GMT 3)
- From 10:50 to 11:30 Markit services PMIs (September) will be released in France, Germany, the Eurozone, and the UK
- 11:00 Eurozone: PMI (August)
- 15:30 US and Canada: trade balance (August)
- 16:45 US: services PMI (September), 17:00 ISM non-manufacturing business activity (September)
- 18:00 EU: ECB President Christine Lagarde speech, Eurozone Economic and Financial Affairs Council
By the time of writing, major currencies were trading in negative territory, with the euro hovering around 1.1595. Risk-sensitive currencies remain under pressure after the RBA meeting and the downtick in stock index futures.
The Royal Bank of Australia kept its Cash Rate Target at 0.10%, and left its bond purchase plan unchanged at $4 bln. The press release said that the conditions for a rate hike will not be met until 2024.
The focus now turns to Wednesday’s RBNZ meeting, at which the regulator is expected to raise the OCR is by 25 bps to 0.50%. A rate hike would lend support to the New Zealand dollar, and help shore up sentiment in other pairs.
In addition to central bank meetings, traders are now looking ahead to Friday's NFP report. The data in the report could provide clues about the Fed’s next move. Meanwhile, the US debt ceiling issue remains unresolved.
In Asian trading, sellers pared yesterday's gains. In view of upcoming events, one may assume that EURUSD will continue to trade sideways until Friday. Resistance is currently at two levels: 1.1622 and 1.1642. The faster the price recovers to 1.1640, the higher the odds that the rally continues to 1.1685 in line with the correction.
Support (45-degree angle) is located 1.1585. If sellers breach this level, they will drive buyers down to 1.1560.