By Orbex

Market Waits For FOMC

Over the European morning on Tuesday, the US dollar continued its slide lower with the Index printing 97.35 last. The move is likely just profit taking ahead of the FOMC meeting due tomorrow. Recent US data has been surprising to the upside and traders will be keen to hear the Fed’s latest assessment. However, for now, it seems the market prefers to be cautious.

EUR Rallies on GDP Beat

The recovery in EURUSD continues today with price moving back above the 1.1175 level to trade 1.1209 last. Despite ongoing concerns over the health of the eurozone economy, USD weakness has allowed higher levels in EURUSD today, bolstered by better than expected domestic data. This data saweurozone’s Q1 GDP printing better than expected.

US Data in Focus

GBPUSD has also been a clear beneficiary of the USD weakness today. Price is rallying back up to challenge the broken 1.30 level which, for now, is holding as resistance.  An absence of UK data today leaves the focus on US data which is due over the European afternoon today. The US Consumer Confidence is the headline print to watch.

Risk Assets Muted

Risk sentiment has had a muted start to the week with the SPX500 clinging to the 2939.67 level. Ongoing optimism around the prospect of a US/China trade deal continues to keep the market supported. However, traders are waiting on fresh headlines to act as a catalyst for higher prices. Given the high level of anticipation in the market, any negative surprises could fuel sharp downside volatility.

Safe Havens Rally On Soft Risk Appetite

Given the more muted tone to risk appetite today, the safe havens have enjoyed a better start to the day with both gold and the Japanese yen higher against the dollar. Gold prices remain supported by the 1280.58 level which continues to be a key pivot for price action. USDJPY continues its decline away from the key 112.16 resistance level with price now breaking down below last week’s lows trading 111.32 last.

Crude Recovering

Oil prices have been taking advantage of the USD weakness today. Crude is fighting its way back up toward a retest of the broken 64.38 level. Price collapsed back below the level last week in response to news that Trump had contacted OPEC asking the group to increase its oil production to reduce oil prices. Looking ahead, the market is waiting on the release of the API oil report to give an indication on inventory levels ahead of the main EIA report due tomorrow.

Mixed Trading in The Commodity Currencies

A weaker US dollar alongside a recovery in oil prices has been good news for USDCAD so far today. Price is trading back below the 1.3467 level once again. Looking ahead to today’s US session, tier one Canadian data in the form of GDP could provide a catalyst for further bearish action in the pair which would be welcomed by CAD bulls.

Once again we are seeing mixed trading among the commodity currencies as, despite the rally in oil and the weakness in USD, AUDUSD is trading in the red. Weaker than expected private credit data overnight has weighed on price which, due to the subdued tone to risk today, has failed to recover. For now, though, price remains above the .7021 level which is the key downside market to watch.

By Orbex