Article by ForexTime
Downside pressure resumed in the EURUSD yesterday, highlighting that Friday’s bullish momentum was likely in response to Mario Draghi appearing slightly more relaxed than usual during Thursday’s press conference. The EURUSD declined by just over 30 pips, before finishing trading at 1.3385.
Early this afternoon, the latest German ZEW survey is announced and this poses a major event risk to the EURUSD today. Recent disappointing German economic releases have shown that Europe’s largest economy has been hit by the geo-political conflict in Eastern Europe and strong rumors are circulating that the German economy is going to be announced as having contracted in Q2. If today’s German ZEW survey fails to meet expectations, it will likely only create further anxiety for Thursday’s GDP release. As a result, I would expect the EURUSD to further decline with support levels located at 1.3361, 1.3345 and 1.3332 (current yearly low).
After the GBPUSD fell through the stubborn looking 1.6815 support level on Friday morning, selling pressure has accelerated. Since then, the GBPUSD has declined by nearly 50 pips and concluded Monday’s trading at 1.6785. There is no scheduled economic news from the United Kingdom today, where the United States Small Business Optimism release this afternoon is expected to show that Small Business Optimism continued to rise last month (an increase to 96 vs 95 is expected).
As a result, the GBPUSD appears set to further decline today. Upcoming support levels can be found at 1.6760 and 1.6734.
The USDJPY moved marginally yesterday (around 20 pips), before concluding trading at 102.182.
Free Reports:
This evening, Reuters are reporting that Japan’s GDP release will show the biggest economic contraction since the global financial crisis. CNBC are reporting a similar story, with it being expected that April sales consumption tax is going to hit tonight’s GDP hard. The Japanese economy is expected to have contracted by an annualised 7.1% from April to June, down sharply from the 6.7% advance in the previous quarter.
Confirmation of this huge contraction (and especially if the contraction is higher than anticipated) will almost surely weaken the JPY. USDJPY resistance can be found at 102.539, 102.798 and 103.093. It is essential to note that the 103 area remains a psychological resistance level for the pair and until a candle closes above 103, the pair will probably just pull back.
If the Japanese GDP data is not as negative as perceived, do not rule out the JPY strengthening tonight. A lower economic contraction will calm fears that the Bank of Japan (BoJ) will possibly need to introduce further stimulus measures in a few months, with USDJPY support located at 102.106, 101.958 and 101.720.
Last week’s dismal Australian employment report, where the Australian unemployment rate unexpectedly rose to its highest in a decade (6.4%) has continued to weigh on investor’s mind. The AUDUSD declined by just over 30 pips yesterday, before concluding trading at 0.9261.
Early on Wednesday morning, the latest Westpac Consumer Confidence index is announced. The Reserve Bank of Australia (RBA) did mention in a recent monetary statement that domestic consumer confidence levels are declining. If this is confirmed in tonight, expect further pressure on the Aussie as a result. AUDUSD support can be found at 0.9245 and 0.9229.
Written by Jameel Ahmad, Chief Market Analyst at FXTM.
Follow Jameel on Twitter @Jameel_FXTM
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