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Overall, the currency market moved very little during the European session, but to some extent, this was widely expected as investors prepare for the U.S. open. This is a crucial point ahead, which might send the market back into a risk-averse mode, thus sending the dollar higher, or it will allow the major pairs extend their gains compared to the dollar as investors become risk-tolerant. Either way, the NFP and the ECB press conference could allow the currency market trend again, something that has not really happened lately.
The Euro (Eur/Usd) had two effective side-ways channels throughout the European session, both around 20-pips, as investors await the ECB pres conference and interest rate decision. The two might influence substantially the euro’s value, and thus the forex market over the upcoming period. The euro’s next leg on the upside would be the 1.4200 area, while on the downside the 1.3950 area.
During the European session, the euro-area unemployment rate was released at 9.5%, the highest rate since 1999. Moreover, the unemployment rate has been moving higher for more than a year, in which the economy shed a huge number of jobs. The Producer Price Index report from the euro-area showed that inflation in raw goods prices decreased for the tenth consecutive month in May.
The Pound (Gbp/Usd) lost nearly 180 pips during the overnight session, mostly direct from the London open as a number of investors argue that the U.K. economy is heading towards a currency crisis, due to the country’s huge deficit. It is expected that the pound will under-perform the other major currencies over the following period.
During the European session, the BoE released the Credit Conditions Survey, but as expected, this release had little implications in the currency market. The Construction PMI was releases at 44.5, being the first decline over the last three months, but still it failed to move the market.
The Aussie (Aud/Usd) fell as much as 100 pips during the European session, but the pair retraced some part of the declines during the second part of the European session. Over the last few days of trading, the aussie has appeared very reluctant to sustain a trend, something that made the pair move in a range-bound mode. However, the aussie is expected to have a strong momentum throughout the U.S. session.
The Cad (Usd/Cad) spent most of its time in a 20-pip channel throughout the overnight session, which might suggest that cad is once again returning to its old pattern: trading on a very light volume during the first part of the day. For now, the cad is trading near the support area of a 4-hour upside channel, and at the same time slightly above the 50-day moving average.
The Swissy (Usd/Chf) moved higher most of the time during the Asian session, with the upside moves becoming stronger throughout the European session. For now, the swissy trades near the 1.0800 area, which represents an important swing point. During the early part of the European session, a member of the SNB voting committee had a public speech, but this had little impact on the pair.
The Yen (Usd/Yen) had a very weak overnight session after it opened slightly below the resistance area formed by the 20 and the 50-day moving averages. The pair topped around the same resistance area in the previous session, but today’s U.S. calendar might provide a strong push on the upside, or to the downside, to this pair.
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