You are here: Home > articles > Forex > European Open Preview – Stocks rebound, greenback lags to end holiday-shortened week
European Open Preview – Stocks rebound, greenback lags to end holiday-shortened week
March 30, 2018 8:26 amVideo
Latest News
- The euro did not understand the Fed’s signals May 3, 2024
- Analysis of GBP/USD pair on May 2nd. The final chord for the dollar May 2, 2024
- Analysis of EUR/USD pair on May 2nd. The market calmly responded to the FOMC meeting May 2, 2024
- Technical Analysis – GBPJPY returns to pre-intervention levels May 2, 2024
- JPY terrifies traders May 2, 2024
- Fed makes tough decision May 2, 2024
- USD/JPY: Simple trading tips for novice traders on May 2nd (US session) May 2, 2024
- GBP/USD: Simple trading tips for novice traders on May 2nd (US session) May 2, 2024
- EUR/USD: Simple trading tips for novice traders on May 2nd (US session) May 2, 2024
- GBP/USD: trading plan for the US session on May 2nd (analysis of morning deals). The pound was pushed below 1.2521 May 2, 2024
- EUR/USD: trading plan for the US session on May 2nd (analysis of morning deals). Euro bought around 1.0700 May 2, 2024
- EUR/USD. May 2nd. US statistics disappoint once again May 2, 2024
- Technical Analysis – EURUSD capped by 20-day SMA as rebound falters May 2, 2024
- Forex forecast 05/02/2024: EUR/USD, USD/JPY and Gold from Sebastian Seliga May 2, 2024
- USD/JPY: trading tips for beginners for European session on May 2 May 2, 2024
- GBP/USD: trading tips for beginners for European session on May 2 May 2, 2024
- EUR/USD: trading tips for beginners for European session on May 2 May 2, 2024
- Market Comment – Dollar slides as Powell rules out rate hikes May 2, 2024
- RBA decision: will a rate hike be back on the table? – Preview May 2, 2024
- Video market update for May 02, 2024 May 2, 2024
Here are the latest developments in global markets:
Major movers: Dollar softens a little, but still on track for a decent week
While the dollar index was 0.2% lower today, it is worth noting that it is higher overall this week, currently hovering near a 10-day high of 89.95. There were very few triggers or positive economic data to lift the world’s reserve currency, so its recovery appears to be linked more to traders taking profit on their prior short-USD positions, or covering those same positions as the quarter was drawing to an end.
Dollar/yen was also down by 0.2%, while euro/yen fell 0.1% today, even despite a disappointing raft of data out of Japan overnight. The nation’s unemployment rate ticked up to 2.5%, but still remains extremely low, while the core CPI rate for Tokyo – widely seen as a precursor to the nationwide rate – declined to 0.8% y/y, from 0.9% previously. These suggest there is little pressure on the BoJ to start shifting to a more hawkish stance anytime soon. Note that the BoJ’s Tankan survey for Q1 will be released right after markets open on Monday, and will provide a fresh indication of how Japanese businesses are coping with the recent trade risks, and the broader appreciation of the yen.
Pound/dollar is nearly 0.2% higher today, recouping some of the significant losses it posted yesterday. There were no updates on Brexit or any major UK data, so quarter-end flows appear to have been the culprits behind sterling’s latest underperformance.
Elsewhere, the commodity-linked currencies maintained relatively narrow ranges, with news flow also being very light. Dollar/loonie is practically flat in the day, after declining a little yesterday on the back of higher oil prices, even despite disappointing GDP data out of Canada. Aussie/dollar climbed 0.2%, but is still trading not far above a 3-month low, while kiwi/dollar was only marginally higher.
Overall, with a holiday in the US and Europe today, FX trading will probably be characterized by thinner-than-usual liquidity. This suggests that sharp moves could occur without much at all in the way of fundamentals.
Day ahead: Investors take a break ahead of the second quarter
On Friday trading volumes are expected to be subdued as Western and European major centers will be shut for Easter Holidays and investors have already closed their positions before the start of the second quarter next week, which could bring fresh volatility to the markets.
The first three months of the year kept investors on edge given the ups and downs in the White House involving Trump’s massive tax cuts and his surprising decision to impose tariffs on aluminum and steel which raised speculation of a global trade war. On the monetary front, the Fed’s plans to continue to raise interest rates faster than other major central banks added further stress to the markets, whereas a deal between the EU and the US regarding the Brexit transition period was a relief.
The second quarter now brings new questions, with investors wondering whether risks around trade developments could ease further after China and the US showed the willingness to start negotiations. It would also be interesting to see how the North Korean story will wrap up following Kim Yong Un’s statement that he is willing to give up his nuclear weapons if the US and South Korea create an atmosphere of peace. Brexit and NAFTA are also important spots and any significant progress could increase confidence in pound and loonie respectively.
Technical Analysis: USDJPY neutral but risk tilted to the downside in short-term
USDJPY recorded an impressive run on Wednesday, bringing the market back into neutral mode. Moreover, it managed to close significantly above the 20-day simple moving average for the first time since early January, but the pair might not hold above it for long as Stochastics are on track to enter overbought levels. The RSI is currently around its neutral threshold of 50, though, the index seems to be gathering negative momentum. Therefore, the pair could consolidate for a while until we see Stochastics posting a bearish cross.
Should the pair move lower amid uncertainties around the US-China trading relationship, support could come at the 105 key-level. Conversely, sufficient progress on this front at the beginning of the second quarter could send prices up to the 107 handle.
Related Posts: