After some consolidation on Monday and Tuesday US dollar index resumed decline falling below 93.50. American currency is under pressure as the expectations that the Federal Reserve will raise interest rates in the coming months declined. Brent oil rose above $52 a barrel for the first time since October 2015.
The main bullish factor for oil are supply disruption in Nigeria, decline in the US inventories (API version) and expected record-high summer gasoline demand. The current situation is also bullish for gold: XAU/USD rose to $1264.25 and may extend gains to $1280.
EUR/USD rose above 1.1400 even as the ECB started buying corporate bonds (a form of stimulus) as traders were broadly selling the US dollar. Above the top of the daily Ichimoku Cloud at 1.1405 the next target will lie at 1.1465 ahead of 1.1500. Support is at 1.1355 and 1.1315. The ECB President Mario Draghi will speak at 07:00 GMT, and we’ll see whether he tries to discourage the euro bulls.
GBP/USD was trading on the upside. British manufacturing and industrial production showed impressive gains in April of more than 2%. However, the pair currently finds itself in the middle of the sideways range between 1.4700 and 1.4350. We expect this range to hold in the coming days as the uncertainty created by the upcoming Brexit referendum, which will take place on June 23, will continue capping the pound.
USD/JPY returned down to support at 106.80/55. These support levels will determine the short-term picture for the pair: If they give way, the target will lie at 106.00; if they hold, we will see a recovery, though limited by resistance at 108.90.
AUD/USD met resistance at 0.7480 (50-day MA). Further resistance is at 0.7510. and 0.7570. China's imports were higher-than-expected in May, and that’s good because China is Australia’s main trading partner. Note that the pair looks overbought in the short-term. Support is located at 0.7437 and 0.7375.
NZD/USD is awaiting results of the Reserve bank of New Zealand’s meeting later on Wednesday. The RBNZ is expected to keep official cash rate at 2.25%, though earlier analysts were looking for a cut to 2%. Even if there is no cut, the central bank may do dovish comments. We expect high volatility. Note that NZD/USD is close to a strong resistance at 0.7050 (April, May highs). A break of this level will open the way up to 0.7200. Support is in the 0.6900 area ahead of 0.6850.