Euro, EUR/USD, US Dollar, Treasuries, USD/JPY, AUD/USD, Fed, RBA, BoE – Talking Points
- The Euro weakened today as US Dollar strengthens across the board.
- Markets are focussed on central banks this week, the Fed is front and centre
- Until the Fed moves, EUR/USD appears hostage, can it bounce off recent lows?
The Euro continues to trade near 5-year lows in Asia today as US Dollar strength is all pervasive ahead of the Federal Reserve meeting this Wednesday.
A 50 basis-point (bp) hike has been well telegraphed, and the market is now scoping a potential 75 bp lift at the June meeting
USD/JPY and EUR/USD continues to trade near multi year highs for the US Dollar. USD/JPY continues to hold above 130 after a reprieve on Friday while EUR/USD is near 1.0500.
Asian markets on Monday are digesting a torrid month end for April on Friday, after both equity and bond markets tanked in the US session.
The Nasdaq had its worst month since 2008, finishing down 13.56%. The entire US Treasury curve lifted by 10-12 basis points on Friday, pushing the prices of bonds lower.
The bond rout continued in Asia today with the Australian government 10-year note now yielding over 3.25%, a long way from 1.77% at the start of the year.
It did little to help the Australian Dollar, it’s now trading below 0.7050, after last month’s high of 0.7661. This is ahead of the RBA monetary policy meeting tomorrow where rates lift-off appears likely.
Crude oil was relatively steady in the Asian session, with WTI near US$ 104 bbl. Gold is a touch softer, trading under US$ 1985 an ounce.
Later today, the US will see ISM numbers but the focus for this week will be the Fed’s Federal Open Market Committee (FOMC) meeting, alongside Bank of England and RBA meetings.
The full economic calendar can be viewed here.
EUR/USD Technical Analysis
EUR/USD made 5-year low last week and is now eyeing the January 2020 low of 1.0340, which might provide support.
The consistent move lower has seen the price move below all short, medium and long-term simple moving average (SMA), as represented by the 10-, 21-, 34-, 55-, 100- and 200-day SMAs.
All of these SMAs have negative gradients, which may suggest bearish momentum is intact for now. A move back above the 10-day SMA could reverse this momentum in the near term.
Resistance might be at the pivot points of 1.0638, 1.0727 and 1.0758.
Chart created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter