The US dollar was little changed against the Euro as investors were slow to take large positions before the Fed meeting and the G20 summit later in June when the US and China leaders are expected to discuss trade. The dollar rose to after earlier weakness but retreated and gave up gains subsequently.
The US Dollar Index, which gauges the greenback versus a bundle of its main competitors, is trading on a better mood around the key 97.00 the figure. The index has managed to leave behind the initial pessimism and recovered around the key 97.00 mark in spite of another poor result from the US docket. Today, the Import Prices contracted at a monthly 0.3% during last month, while Export Prices also dropped 0.2% inter-month. In the same line, weekly Jobless Claims rose by 222,000, taking the 4-Week Average to 217,750 from 215,250.
Worries about the US-China trade war remain. The US President Trump said recently that if Chinese President Xi Jinping doesn’t meet with him at the Group of 20 summit, tariffs may be slapped on a further 300 billion USD in Chinese exports.
At the moment, the US Dollar Index is advancing by 0.07% at 97.02 and now faces the next hurdle at 97.05 (high June 13) seconded by 97.42 (55-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the flip side, a breakdown of 96.46 (low June 7) would open the door for 96.04 (50% Fibo of the 2017-2018 drop) and then 95.82 (low February 28).
The euro was down by 0.12% to 1.1273 USD, while the Japanese yen strengthened 0.11% to 108.40 JPY and the British pound was last trading at 1.2675 USD, down by 0.09% on the day.
The EUR/USD pair bottomed earlier today at 1.1267, the lowest level in six days and then slowly recovered until it found resistance at the 1.1285 area. As of writing, trades at 1.1273, marginally lower for the day and 65 pips below the weekly highs.
The Euro is up in June against the US Dollar on its way to the first monthly gain of the year. The bullish bias on the daily chart remains in place, even as the positive momentum eased.
The pair continues to retreat after being unable to break above 1.1345-1.1350. On Friday, geopolitical developments will likely continue to be a key driver while traders will also look at US data (retail sales and industrial production).
The Fed has blinked and rate cuts are coming from July. At the same time, the ECB lacks answers on what to do about the risk of a de-anchoring of inflation expectations. The Fed-ECB monetary policy divergence should pave the way for a higher EUR/USD over the coming 6 months. The analysts forecast EUR/USD at 1.1400 in one month and 1.1500 (revised up from 1.1300) in 3 months.
The USD/JPY pair is having a tough time determining its next short-term direction on Thursday amid a lack of significant market drivers. As of writing, the pair was posting small daily gains on the day at 108.40.
Although the 10-year US Treasury bond yield is erasing more than 1% today, the fact that Wall Street is posting gains in the first half of the session hints at a mixed market sentiment, which makes it difficult for the pair to move in accordance with the risk perception.
Yesterday, the USD/JPY currency pair tried to surpass the resistance level formed by the 55– and 100-hour SMAs, as well the Fibonacci 38.20% retracement at 108.44. Note, that the pair is supported by the 200-hour SMA, currently located at 108.33, thus, some upside potential could prevail in the market. A possible upside target is the weekly R1 at 108.61.
If the given resistance holds, it is expected, that the exchange rate could re-test the lower boundary of the short-term ascending channel. It is unlikely, that a breakout south could occur, as the rate is supported by the weekly PP at 108.22.