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Overall, the currency market traded split during the second part of the day. On one side, it was the cad, swissy and the euro, which posted relatively strong gains compared to the dollar, but on the other side it was the pound and the aussie which failed again to move, expanding range-bound trade from the last few days. In addition, the yen had its own way of trading during Wednesday’s session, depending on the regional news headlines. Moreover, the pound’s hesitation might continue in the coming period, as a number of market participants say that the U.K. economy might be facing a fiscal crisis if the government fails to take decisive actions.
The Euro (Eur/Usd) showed a lot of strength during the European and the U.S. sessions, a period in which the pair advanced as much as 150 pips. The strength the euro posted during the second part of the day may be linked to tomorrow’s ECB press conference, where a number of market participants expect the ECB to have an upbeat tone over the euro-area economy.
The Pound (Gbp/Usd) is currently forming an indecision pattern on the daily chart, a doji-star, after it formed a bearish pin-bar on Tuesday. Most of the time, a pin-bar is gauged as a reversal formation. During the European session, a release showed that the U.K. manufacturing PMI increased to 47.00 in June. This denotes very dynamic recovery in the U.K. manufacturing sector, since the index gained almost 13 points in just 5 months.
The Aussie (Aud/Usd) had a very weak overnight session on Wednesday. The pair continued with the same weak momentum during the remaining of day, failing to break, or at least to test, any important price points. During the Asian session, a release showed that retails sales rose twice as much as expected, while the number of building approvals declined by a whopping 12.5% in May, much worse than expected.
The Cad (Usd/Cad) had probably one of the strongest trading days out of its recent history on Wednesday. The pair declined as much as 180 pips during the day, but retraced some of these declines during the second part of the U.S. session. Moreover, the cad found the strength to move lower even though crude oil declined today.
The Swissy (Usd/Chf) moved lower in a stair-step pattern during the first part of the day, even though during the Asian and the early European session, the swissy looked as a lost cause. Since the Wednesday session begun, the swissy lost around 100 pips and broke below the 20-day moving average.
The Yen (Usd/Yen) rose up to the resistance area formed by the 20, 50 and the 100-day moving averages during the Asian session. However, the pair spent almost the entire European session around the same area, but shed most of the gains seen earlier during the U.S. trading hours. During the Asian session, a release showed that the manufacturing side of the Japanese economy is still in a deep contraction phase, something that puts downside pressure on the Japanese yen
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