15-May-2020

1) EUR/USD: Bulls Managed To Defend 1.0775 Support, Only For The Time Being
2) Dollar Rises Against G4 Currencies on Modest Risk Sentiment
3) GBP/USD: Remains Vulnerable To Slide Further, 1.2165 to Act As a Pivotal Support

1) EUR/USD: Bulls Managed To Defend 1.0775 Support, Only For The Time Being

The EUR/USD pair remained depressed for the second straight session on Thursday and fell to one-week lows on the back of a modest pickup in the US dollar demand. In an interview with Fox Business Network, the US President Donald Trump advocated a stronger dollar and said that it will help the economy during the recovery post coronavirus crisis. This comes on the back of the fact that the Fed Chair Jerome Powell on Wednesday rejected the idea of using negative interest rates and led to a broad-based USD strength.

The greenback maintained its bid tone following the release of weaker-than-expected US Initial Weekly Jobless Claims. The US Labor Department reported that 2.9 million Americans filed for unemployment benefits in the week of May 9, higher than consensus estimates pointing to a 2.5 million increase and making a total of 36.6 million layoffs over the last eight weeks. Sustained USD buying dragged the pair further below the 1.0800 round-figure mark, albeit improving global risk sentiment helped limit any further losses.

The pair finally settled near the 1.0800 round-figure mark and remained confined in a narrow trading band through the Asian session on Friday. Market participants now look forward to the release of the flash version of the German and Eurozone GDP figures for the three months to March for a fresh impetus. Later during the early North-American session, the US monthly Retail Sales data will influence the USD price dynamics and further contributed to produce some meaningful trading opportunities on the last day of the week.

From a technical perspective, nothing seems to have changed much for the pair and the near-term bias still seems tilted in favour of bearish traders. However, it will be prudent to wait for some follow-through selling below the 1.0775 horizontal support before positioning for any further depreciating move. A convincing breakthrough the mentioned support now seems to accelerate the fall further towards the 1.0700 round-figure mark, which if broken will expose YTD lows, around the 1.0635 region.

On the flip side, immediate resistance is pegged near the 1.0840-50 region, above which the pair is likely to make a fresh attempt towards reclaiming the 1.0900 mark. A sustained strength above the mentioned hurdle might prompt some near-term short-covering move and lift the pair further towards the 1.0980 supply zone en-route the key 1.1000 psychological mark. This is closely followed by the very important 200-day SMA, around the 1.1015-20 region, which should act as a key pivotal point for short-term traders and help determine the pair’s next leg of a directional move.

2) Dollar Rises Against G4 Currencies on Modest Risk Sentiment

The dollar rose to a three-week high on Thursday as traders overlooked another week of roughly 3 million new jobless claims, evidence of a second wave of coronavirus-related lay-offs.

The Japanese yen and Swiss franc were both weaker against the dollar and flat versus the euro, and U.S. stocks ended the day up, suggesting the dollar’s bid was not part of a broader risk-off move.

The Labor Department’s weekly jobless claims report on Thursday, the most timely data on the economy, supports the contention that it would take a while for activity to rebound even as businesses in many states reopen after shuttering in mid-March as authorities tried to slow the spread of COVID-19, the respiratory illness caused by the virus.

The latest data lifted to 36.5 million the number of people who have filed claims for unemployment benefits since mid-March, with more than one in five workers losing their job. Claims will be closely watched in the coming weeks for signs of whether companies rehire workers as businesses reopen.    Against a basket of its rivals, the dollar was up 0.20% at 100.37, hitting a three-week high of 100.56 early in the session.

The euro was down 0.23% against the dollar at $1.0790.

Earlier in the session the pound tumbled below the $1.22 line for the first time in more than five weeks after Wednesday’s data showed Britain’s economy shrank by a record 5.8% in March as the coronavirus crisis escalated. It later recovered, last trading down only 0.06% at $1.222.

New Zealand manufacturing PMI, Japan corporate goods price, China industrial output, retail sales.

Germany GDP, France CPI, CPI (EU-norm), Italy industrial orders, industrial sales, CPI, CPI (EU-norm), EU employment change, GDP.

U.S. New York Fed manufacturing, retail sales, retail sales ex-autos, industrial production, capacity utilization, JOLTS job openings, University of Michigan sentiment on Friday.

3) GBP/USD: Remains Vulnerable To Slide Further, 1.2165 to Act As a Pivotal Support

The GBP/USD pair revisited April monthly swing lows near the 1.2165 region before staging a goodish intraday bounce of around 75 pips on Thursday. The two-way price action lacked any obvious fundamental catalyst and was sponsored by the US dollar price dynamics. Following a brief consolidation through the early North American session, the greenback gained some positive traction after the US President Donald Trump advocated a stronger dollar. In an interview with Fox Business Network, Trump said that it’s good to have a strong dollar and that it will help the economy during the recovery post coronavirus crisis. This comes on the back of the fact that the Fed Chair Jerome Powell on Wednesday rejected the idea of using negative interest rates and led to a broad-based USD strength.

Meanwhile, the USD bulls seemed rather unaffected following the release of weaker-than-expected US Initial Weekly Jobless Claims. The US Labor Department reported that 2.9 million Americans filed for unemployment benefits in the week of May 9, higher than consensus estimates pointing to a 2.5 million increase and making a total of 36.6 million layoffs over the last eight weeks. However, the upbeat market mood undermined the USD’s perceived safe-haven demand and turned out to be one of the key factors that extended some support to the major. However, the intraday short-covering move lacked any strong follow-through and the pair finally settled nearly unchanged for the day, forming a Doji candlestick on the daily chart.

Meanwhile, fears about the second wave of the coronavirus infections and fading hopes for a quick global economic recovery continued weighing on investors’ sentiment. This, in turn, remained supportive of the greenback’s relative safe-haven status against its British counterpart and prompted some fresh selling around the major during the Asian session on Friday. In the absence of any major market-moving economic releases from the UK, the pair remains at the mercy of the USD price dynamics. Later during the early North American session, the release of the US monthly Retail Sales figures will be looked upon for some meaningful trading opportunities on the last day of the week.

From a technical perspective, the pair already seems to have confirmed a bearish break through the double-top neckline support near the 1.2300 mark. Meanwhile, the overnight bounce from the previous swing lows support near the 1.2165 region warrants some caution for bearish traders. Hence, it will be prudent to wait for some follow-through selling below the mentioned level before positioning for any further near-term depreciating move, possibly towards challenging the 1.2100 round-figure mark.

On the flip side, any meaningful recovery beyond the overnight swing high, around the 1.2240 level, seems more likely to confront a stiff resistance and remain capped near the neckline support breakpoint. That said, a convincing breakthrough might trigger a short-covering move and pave the way for further near-term recovery, possibly back towards the 1.2400-1.2420 supply zone.