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FxWirePro: Currency Market Weekly Outlook

Previous Week

 

US dollar was one of the worst performers previous week and lost more than 100 pips from high 99.10 especially EURUSD shown a massive recovery of more than 150 pips from bottom 1.09250 despite ECB monetary policy easing. The central bank cuts deposit rates by 10bps to -0.50% and introduced a bond purchase program by 20bn euros. But markets expect an aggressive move from ECB which has supported Euro at lower levels. US dollar index hits a low of 98.03 and is currently trading around 98.14.

 

US CPI came at 1.7% y/y compared to forecast of 1.8% y/y and retail sales rose 0.4% m/m compared to decline -0.8% previous month and the jump was mainly due to spike in auto sales.

The precious metal is consolidating in a narrow range between $1480 and $1528 for the past two weeks. The slight easing of US-China trade tension and jump in bond yield is putting pressure on yellow metal at higher levels. It is currently trading around $1506.

The Brent crude oil prices exploded nearly 20% for the first time since 28 years after an attack on Saudi Arabia's Aramco facility. It has halted more than 50% of Saudi oil exports and 5% of the world's daily production.  

 

US 10 year bond yield shown a good recovery of more than 30% after hitting a 3-year low of 1.44%. It is currently trading at 1.898%. The yield curve inversion between US 10 year and 2-year has gone and spread widened to 8 bps.

 

Weekly Technical:

 

EURUSD:

 

Major trend reversal level- 1.1125

 

Near term support- 1.1050/1.100

 

Near term resistance – 1.1125/1.11750

 

 

USDJPY:

 

Major trend reversal level- 108.35

 

Near term support- 107.20/106.60

 

Near term resistance – 108.35/109.30

 

USDCHF

 

Major trend reversal level- 0.9955

 

Near term support- 0.9850/0.9770

 

Near term resistance – 0.9955/1.000

 

USDCAD

 

Major trend reversal level- 1.3380

 

Near term support- 1.3300/1.3380

 

Near term resistance – 1.3180/1.3135

 

Gold

Major trend reversal level- $1480

 

Near term support- $1480/$1460

 

Near term resistance – $1525/$1555

 

WTI Crude

Major trend reversal level- $63.50

 

Near term support- $58.10/$56.08

 

Near term resistance – $60.50/$63.50

 

Major Economic events for the week

 

Fed policy meeting - Wednesday (6 PM GMT)

 

Canadian CPI - Wednesday (12:30 PM GMT)

 

Swiss National Bank Monetary policy assessment  -Thursday (11 AM GMT)

By Rangarajan Hariharan
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