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Overall, the currency market traded flat in the Asian session, but saw the dollar and the yen strengthen shortly after the German GDP release. The market is heading towards the last U.S. session of the week in risk aversion mode, as some traders begin to have doubts about the recent green shoots theory. The currency market is expected to see strong action during the U.S. open, but slowly fade as the market heads towards the Friday’s close.
The Euro (Eur/Usd) saw little movement during the Asian session, as the pair was preparing for today’s important economic releases. During the London open, the pair plunged 50 pips after a report showed that Europe’s largest economy, Germany, contracted 3.8% in the first quarter. For now, the euro trades within the range of the last five days of trading.
The Pound (Gbp/Usd) moved sideways during the early part of the overnight session, but the pair was dragged lower during the London open. However, the move was retraced back very quick and the pound returned to the same side-ways movement as before. For now, the pound trades just below an important resistance trend-line, which connects the 04/28 and the 05/07 lows, and slightly below the 1.5250 resistance area.
The Aussie (Aud/Usd) moved slightly lower during the Asian session, but the move gathered speed during the London open. As such, the aussie dropped to the neutral pivot point (0.7560), but was not able to push any lower from there. On the 4-hour chart, the aussie has developed a downtrend channel.
The Cad (Usd/Cad) traded again in a close range, after moving in a 50 pip range on Thursday. On the daily chart, the cad trades slightly above the 23.6% retracement of the downwards trend that lasted from 04/21 to 05/11.
The Swissy (Usd/Chf) followed the euro during the overnight session, and rose some 40 pips. This appears to be a specific pattern of the swissy, which makes some traders use this pair as a hedge for euro positions. However, it should be also noted that the correlation between the two is not always perfect, thus caution should be used.
The Yen (Usd/Yen) traded relatively flat during the Asian session, but plunged more than 100 pips shortly after the German GDP numbers. The pair was able to find a bottom near the 100-day moving average, which appears to be the swing point of the last few days of trading.
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