EUR/USD has juuust broken above a channel resistance!
Can the pair extend its upswing after the Fed has announced its May policy decision?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/AUD finding support at an inflection point after RBA’s rate hike and ahead of ECB’s policy announcement. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. layoffs grew to the highest levels since 2000; the quits rate fell to 2.5% (lowest in 2 years); job openings fell to 9.59M from 10M
U.S. Factory Orders for March: +0.9% m/m (+1.2% m/m forecast) vs. -1.1% m/m previous
Shares of major U.S. regional banks fell as FRC failure shakes faith in banking sector recovery
Japan and China’s markets out on bank holiday
The latest milk auction saw New Zealand’s international milk prices and volumes rise in May. Global Dairy Prices rose by +2.5% to $3.506 in Tuesday’s auction (below the +3.2% rise in the Apr. 18 auction)
New Zealand’s quarterly employment change up by 0.8% in Q1 vs. 0.5% expected and previous, unemployment rate steady at 3.4% vs. 3.5% expected
RBNZ: “New Zealand financial system is well placed to handle the increasing interest rate environment”
Australia’s retail sales rose 0.4% m/m in March, the third consecutive month of growth, driven by rising food prices.
Judo Bank Australia Services PMI Business Activity Index shot up from 48.6 to 53.7 – its fastest pace in a year – in April, supporting RBA’s rate hike
Price Action News
Overlay of NZD Pairs 15-min Charts by TV
Kiwi bulls found more reasons to buy NZD earlier today after the Reserve Bank of New Zealand (RBNZ)’s Financial Stability Report noted that the “New Zealand financial system is well placed to handle the increasing interest rate environment and international financial market disruptions.”
Then, a quarterly labor market report came in stronger than expected, fueling speculations that RBNZ will take cues from RBA and raise its interest rats some more.
The good vibes didn’t last, however, as the bearish force was stronger amidst concerns over banking sector contagion and slowing global growth.
NZD has retraced some of its intraday gains and is even in the red against the safe haven JPY.
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s unemployment rate at 9:00 am GMT
U.S. ADP report at 12:15 pm GMT
U.S. ISM services PMI at 2:00 pm GMT
FOMC statement at 6:00 pm GMT
FOMC presser at 6:30 pm GMT
NZ building consents at 10:45 pm GMT
AU trade balance at 1:30 am GMT (May 4)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
EUR/USD 15-Minute Forex Charts by TV
U.S. recession concerns and hawkish ECB expectations got traders buying EUR/USD!
The pair hit a high of 1.1045 earlier today and is now trading near the 1.1030 area.
Can EUR/USD reach even higher intraweek highs?
The markets are in for a busy trading day as the U.S. prints two jobs-related reports (ADP and ISM services PMI) followed by the anticipated FOMC decision.
Word around is that the Fed will raise its rates by another 25 basis points and then signal a pause. Meanwhile, the European Central Bank (ECB) will also likely to bump up its rates this week.
Unless Fed members convince the markets that their rate hikes won’t cause a hard landing, or today’s labor market data print to the upside, then USD selling could extend to today’s U.S. session trading.
EUR/USD could visit areas of interest like 1.1050 or 1.1060.
But if all the risk aversion turns into a USD-friendly trading environment, then EUR/USD – which has already risen by half of its average daily volatility to the R2 of the Standard Pivot Points – could pull back to inflection points like 1.1000 handle near the 38.2% Fibonacci retracement and broken channel resistance.
What do you think?
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