The common currency dropped on Tuesday, extending the downward correction after the rally fuelled by Emmanuel Macron victory in the French elections. The pair arrived at a short-term support level of 1.09 during the Asian trades but remains reluctant to break out hinting towards a bullish play with the EUR/USD. Today, the representatives of the Federal Reserve including the FOMC voting members Neil Kashkari and Robert Kaplan and non-voting Eric Rosengren, are expected to speak at various events. And while the FED’s policy contains fewer surprises amid the receded recession risks, strong labour market and sustained inflation, their cautiousness poses primary uncertainty factor for the markets. The odds of the June rate hike rose to 87.7% according to the CME, fuelling the demand for the USD and the US equities. On Tuesday, the weighted average Dollar rate rose by 0.14% to 99.17 at the time of writing, the US stock markets withstood a bearish pressure, S&P 500 + 0.00%, Dow 30 + 0.03%.
Rising the appeal of the US assets which apparently corresponds with the rut in the safe heavens. The USD/JPY posted biggest gains from the major currency pairs, rising 0.42% to 113.72, the Swiss franc declined 0.28% against the Dollar, Gold lost about $10 for yesterday’s and today’s trading sessions, sticking to 1.225.70. It should be noted that the strengthening of the Dollar is limited, as the main catalysts have already been put into the market and the Dollar bulls will have to rely on additional speculative capital inflow, which sources are still unclear.
Retail sales in Australia for March seem to really show that the purchasing focus is on the real estate market. The headline reading excluding inflation fell by 0.1% in quarterly terms with a forecast of 0.5%. The Australian Dollar was unable to keep the defence at 0.7400, moving to the level of 0.7350, as weak data on consumption moved the RBA rate increase forecast to a later period.
Germany’s trade surplus in March added optimism to the euro zone economy recovery, rising to 25.4 billion Euros, with a forecast of 21.5 billion Euros. The volume of exports and imports also exceeded expectations, indirectly indicating the consumption growth, as well as the strengthening of the industrial sector. In general, the macroeconomic data in the European economy is strengthening the market’s hopes for the ECB’s transition to making stricter policies, so the bullish scenario for the Euro remains very relevant.