On Tuesday, the eyes will be on the U.S. Commerce Department, which will release March wholesale inventories (-0.5% on month expected) and advance goods trade balance (55.0 billion dollars deficit expected). The Conference Board will publish April Consumer Confidence Index (87.9 expected)S.P.SP/Case-Shiller will report 20-City Composite Home Price Index for February (+0.4% on month expected). Let’s look at today’s trade setups.
Economic Events to Watch Today
EUR/USD – Daily Analysis
Today in the early Asian session, the EUR/USD currency pair is flashing red, and, having faced rejection at 1.0860, it pulled back mainly because the European leaders failed to reach on the agreement and left the ECB alone for the fight against coronavirus recession. That keeps the shared currency under pressure.
The broad-baseU.S.S. dollar latest recovery sentiment also pushes the currency pair lower. However, the pair’s sentiment will remain neutral while the pair is confined within the trading range of 1.0727-1.0860. A breakout could pave the way for at least a 100-pip rally, while a range breakdown would show the 2020 low of 1.0636. As of writing, the EUR/USD currency pair is currently trading at 1.0820 and consolidates in the range between the 1.0817 – 1.0837.
The direction in the currency pair would depend on Fed & ECB actions. It remains to see what the Federal Reserve and the European Central Banks Deliver during this week. Although, there is an option of increased bond purchases for both Central Banks but having eased aggressively between meetings.
The United States is struggling over the past two months in the fight against the coronavirus and having used multiple ways to tame this outbreak. So, as in result, the Federal Reserve can be quiet and measure the situation about the virus front, and the impact of the multiple easing measures announced over the past two months.
In the meantime, the European leaders did not succeed in reaching an agreement on spending last week, left the European Central Bank alone during its tough time in a fight against the coronavirus-induced recession. Most of the observers think the ECB could hint that it will be ready to provide additional easing during the month of June. As a result, EUR/USD is more likely to suffer a range breakdown.
Daily Support and Resistance
- S1 1.0748
- S2 1.0792
- S3 1.0811
Pivot Point 1.0836
- R1 1.0855
- R2 1.0879
- R3 1.0923
EUR/USD– Trading Tips
On Tuesday, the EUR/USD is trading sideways around 1.0828, despite the stronger Spanish Spanish Unemployment Rate from the Eurozone. The overall trading bias continues to be bearish as the EUR/USD prices are holding below 50 EMA, which is extending resistance around 1.0837 level. On the 4-hour chart, the EUR/USD may find resistance around 1.0837 level, and bullish breakout of this level can continue buying until 1.0889 level. Conversely, the bearish breakout of 1.0765 level can drive selling until 1.0649 level today, let’s look for selling trades below 1.0770 level today.
GBP/USD – Daily Analysis
During Tuesday’s early Asian session, the GBP/USD currency pair failed to extend its four-day winning streak and dropped from the weekly high to 1.2415 while representing 0.13% losses on the day, as the broad-baseU.S.S. dollar regains the bids on optimism about reopening thU.S.S. economy. In the meantime, the intensifying fears and uncertainty abouU.K.K. lockdowns extension in the wake of coronavirus (COVID-19) also keeps the currency pair under pressure. The GBP/USD pair is trading at 1.2442 and consolidates in the range between the 1.2407 – 1.2450.
News oU.K.K. Prime Minister Boris Johnson returning back to the office helped the currency pair to register a 3-day winning streak on Monday after the Tory leader gave a cautious statement regarding the pandemic fears and showed some willingness to ease the lockdown despite coming coronavirus cases.
As per the latest report, the virus figures from thU.K.K. registered further 360 people died due to the virus in hospitals, reaching the total number of deaths to 21,092. Whereas, the death toll fell to the lowest in a month as compared to previous months.
Apart from this, the on-going criticism on Tory government’s about the handling of coronavirus crisis, and shortage of medical supplies also keeps the UK PM worried about lifting the lockdowns restrictions.
On the other hand, the Tory government’s struggles for further tests in order to achieve 100,000 a day target as well as calling for public questions to be discussed in the daily briefings also showing the UK PM Johnson and Tory party’s interest for the country while the chancellor’s struggles to keep small companies comfortable are also favorable for Tory’s despite recent criticism about the cracks in the mechanism.
Daily Support and Resistance
- S1 1.2315
- S2 1.2371
- S3 1.24
Pivot Point 1.2427
- R1 1.2456
- R2 1.2483
- R3 1.2539
GBP/USD– Trading Tip
The GBP/USD is exhibiting bullish bias as it’s trading at 1.2459 area, having violated the sideways trading range of 1.2450 – 1.2396. Closing of candles outside this range will determine further trends in the market. The Cable has closed candles above 50 EMA, which are extending support to the GBP/USD pair.
On the upper side, the GBP/USD may find resistance around 1.2523, and violation of this can lead Sterling further higher until 1.2626 area. While immediate support holds around 1.2396 level, let’s look for buying trades above 1.2399 and bearish trades below 1.2520 level today.
USD/JPY – Daily Analysis
The USD/JPY lost 0.2% to 107.28. The Bank of Japan announced that it would purchase the required amount of Japanese government bonds with no border, compared with a previous target of Y80 trillion, while keeping its benchmark rate at -0.1% unchanged. This morning, official data showed that Japan’s jobless rate edged up to 2.5% in March (as expected) from 2.4% in February.
ThU.S.S. Dollar Index, which dropped below the 100 marks earlier in the day, is up 0.12% on the day at 100.47 and stays on track to close the 4th-straight day in the positive area. The latest pullback of the U.S. dollar kept a lid on bullish moves in the pair. Currently, the USD/JPY is trading at 107.27 and consolidates in the range between the 106.98 – 107.86. However, investors are cautious and waiting for a fresh catalyst before placing any position.
Looking forward, the virus headlines will be the key catalyst, while thU.S.S. data about the Consumer Confidence and Richmond Fed Manufacturing could offer intermediate moves. ThU.S.S. Commerce Department will release March wholesale inventories (-0.5% on month expected) and advance goods trade balance (55.0 billion dollars deficit expected).
The Conference Board will publish April Consumer Confidence Index (87.9 expected). S.P./Case-Shiller will report the 20-City Composite Home Price Index for February (+0.4% on month expected).
Daily Support and Resistance
- R3 108.25
- R2 107.94
- R1 107.59
Pivot Point 107.29
- S1 106.94
- S2 106.64
- S3 106.29
USD/JPY – Trading Tips
The USD/JPY is trading with a bearish bias on Tuesday, as its prices are holding above the triple bottom support level of 107. Since Japanese yen is gaining bullish momentum, driving USD/JPY down, the violation of the 107 level can lead the pair towards the next support area of 106.550. The resistance today stays around 107.400, and above this, the next resistance may be found around 107.640.
The 50 EMA is left around 107.570, which is far away around from current market prices of 107.045. While the MACD is suggesting selling bias among USD/JPY traders, so let’s keep an eye on the 107 level as we may see selling below this, and buying above this level today.
All the best for today!