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Overall, the dollar strengthened across the board during the first part of the European session. However, the market turned around, helped by the spot European markets and by the U.S. futures, and retraced back most of the declines seen earlier in the day. The European release calendar failed to decisively move the market, even though the major currencies had a small reaction to the news reports. Ahead, the U.S. calendar is light, having only two reports coming from Canada, which are likely to influence the cad. As such, the currency market will probably remain susceptible to moves stemming from the U.S. futures and crude oil market, since both are trading near important price levels.
The Euro (Eur/Usd) fell as much as 80 pips during the European session, near TheLFB S1 (1.3900), but the pair reversed in the second part and retraced back every pip lost earlier. Currently, the euro trades near the high of the session, and at the same time slightly below the 20-day moving average, at 1.4000. During the European session, a release showed that German factory orders surged by 4.4% in May, the most in almost two years.
The Pound (Gbp/Usd) declined over 100 pips after the London open, even though the pair traded side-ways throughout the first part of the overnight session. The pound came within 15 pips of the TheLFB S1 (1.1615) area, but then started to reverse parts of the downside move, as the European cash equity market was heading higher.
During the European session, an economic report showed that manufacturing and industrial production contracted in May, even though the market expected the two sides of the economy to expand. Manufacturing production contracted 0.5%, while industrial production shirked by 0.6% in May from one month earlier.
The Aussie (Aud/Usd) saw a smaller trading volume than usual on Tuesday morning, as investors prepared for the RBA’s interest rate decision. As expected, the bank kept the key interest rate at 3.00%, and since then, the aussie has appeared reluctant to break free from the range it set earlier in the day. This might have been triggered by the bank’s statement, which said that further easing might still be possible. As such, the RBA is the only major central bank that still has that view, something that may weigh on future valuations.
The Cad (Usd/Cad) moved in a 30-pip range during the overnight session, delimited by the neutral pivot point (1.1620) and the lows reached on Monday. In order to move higher, the cad would have to break above the 1.1630 resistance area, but the pair’s hesitation to do so suggests that some large institutional block orders are protecting this level. Later in the day, the cad will have two important news reports, which might help the pair develop a trend.
The Swissy (Usd/Chf) is trading at an area packed with important support and resistance levels. As such, the pair needs a very strong momentum increase to move decisively either way. In the short-term, the swissy needs to break-free from the 20-day moving average at 1.0850.
The Yen (Usd/Yen) traded flat, close to the neutral pivot point (95.30) during the Asian session, but moved a few pips lower throughout the European session. However, since then, the pair has failed to move decisively either way. On the daily chart, the yen is trading slightly above the 95.00 support area.
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