Forex Market Analysis

Daily Market Update: Easing on Italy’s Politics, CAD Rate Statement, and Possible US Tariffs on EU


News Commentary



The Euro gained on Thursday as Italian parties renewed attempts to form a government, to calm down the concerns about the wider impact of a political crisis in Europe’s third-largest economy.

The two anti-establishment parties have made many efforts to form a coalition government, rather than force Italy into holding elections for the second time this year in September.

The CPI flash estimate enhanced the regains of the Euro after a reading of 1.9% more than the forecast, which was 1.6%, along with the core reading of 1.1% more than the forecast which was 1.0%.

Bank of Canada Governor Stephen Poloz left rates on hold for a third straight decision on Wednesday at 1.25%, but gave a hawkish statement for the economy and removed some cautious language.

The central bank also clarified that recent economic data bolsters its April outlook for a 2% growth in the first half of 2018.

All eyes will be on GDP at 12:30 GMT with the expectation of 0.2% after the last reading of 0.4%. Any higher than expected would reinforce the optimism bias.


Australia reported worse than expected Capex data. Private capital expenditures rose only 0.4% in the first quarter against 1.0% estimated and 0.2% from the fourth quarter of last year.


Negative data came from the US yesterday as ADP Non-Farm Employment Change released lower than expected figures with 178K. Along with prelim GDP which came in at 2.2%, lower than the forecast and the previous reading at 2.3%.


There’s some news that Washington will announce plans to put tariffs on Eurozone steel and aluminium imports, sources said.

They said the announcement was planned for Thursday morning in Washington but that the timing could still change. Commerce Secretary Wilbur Ross told the French daily newspaper, Le Figaro it would be announced either before markets opened or after they closed.

While not confirming for sure that the U.S. would decide to force tariffs, he said: “It’s up to the European Union to decide if it wants to take retaliatory measures. The next question would be: how will the U.S. President Donald Trump react? You saw his reaction when China decided to retaliate.”



Chart Analysis



On the daily chart, as we expected the price had made its way into the resistance zone of 1.289-1.298, almost reaching the key resistance at 1.309, with an approach from the descending trend line starting from the high of 2015, and the upper edge of the horn pattern.

The price has already bounced beneath the key resistance and the resistance zone, to take the price firstly to the support level at 1.274.



On the daily chart, the price had a false break beneath the support zone 0.75-0.7535 with a pin bar.

That enhances the AB=CD harmonic pattern, with breaking a descending channel.

The pair rose with an engulfing candle from the support zone.

Along with divergence in RSI, the price is ready for the next move up to 0.774 which is a level with a combination of the lower trend line from the high of 2018 and the broken uptrend.



On the daily chart, as we expected, the price reached the resistance zone at 84-84.35.

The price couldn’t break through this area to bounce back.

It reached the support levels at 81.25-80.5 (as we expected also) to pull back up again boosted by the ascending trend from the low of March.

As the pair is currently moving sideways. The price is expected to retest the resistance zone again.



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