The dollar rallied across the board amid heightened risk aversion on a combination of the fallout from the SEC's investigation into Goldman Sachs and fears that the Chinese government may implement additional measures to curtail its overheating economy. Asian stocks sold-off sharply to start the week with the Shanghai Composite index shedding 4.8% -- its largest one-day drop since August 2009. Crude oil also tumbled, shedding more than 2.5% amid fears that a slowdown in the global economic recovery will temper demand.
The US data released today saw the leading economic indicators rise by 1.4% in March, versus an upwardly revised 0.4% a month earlier. The calendar for the coming week will provide additional gauges on the housing market, including the February home price index, March existing home sales and new home sales. Also due out this week will be producer prices and durable goods orders.
Central banks will remain in focus this week. The Reserve Bank of Australia will release the minutes from its last monetary policy meeting in the coming session. Also, the Bank of Canada will announce the results of its policy deliberation on Tuesday at 9:00 AM. The BoC is expected to leave interest rates unchanged at 0.25% but may signal a more hawkish stance which could suggest policy tightening over the second half of the year.
The euro pulled back beneath the 1.35-handle on a combination of pressure stemming from the Goldman Sachs investigation and lingering uncertainty over the Greece bailout. In the coming session, traders will look ahead to German PPI and the February Eurozone current account balance. Later in the week will feature key reports, consisting of Germany's April ZEW sentiment survey, manufacturing PMI, Eurozone consumer confidence, April Germany Ifo sentiment survey and Eurozone industrial orders.
EURUSD holds steady below the 1.35-mark will continue to remain under pressure in the week ahead. Support starts at 1.3470, followed by 1.3440 and 1.34. Subsequent floors will emerge at 1.3365, backed by 1.3320 and 1.33. On the topside, resistance is eyed at 1.35, followed by 1.3540 and 1.3580. Additional ceilings will emerge at 1.36, backed by 1.3640 and 1.3660.