USD: The Dollar is finding moderate strength this morning, but still has a long way to go in order to fully recover from yesterday’s sharp downdraft. Risk appetites may be having a near-term setback this morning but have clearly improved from Monday’s global washout, which will likely keep Dollar gains limited in nature. Mixed results from recent US economic data have not helped the Dollar to regain upside momentum, so the market may focus on this afternoon’s Beige Book release for further clarity on the US economic outlook. While the Dollar looks to have resumed its position as the safe-haven destination of choice after the Yen’s brief revival ran out of steam, fresh risk concerns will need to become a front-and-center issue again for the Dollar to receive any meaningful benefit. The Dollar may be able to extend today’s rebound to the 82.20 level later in the session, and will need more of a flight-to-safety mood in global markets to lift fully clear of these recent lows.
EURO: The June Euro has held onto a large portion of yesterday’s huge upside breakout, and still remains in relatively close proximity to 7-week highs this morning. The Euro was a major beneficiary of this week’s recovery in global risk attitudes, and has clearly been assisted by a lack of fresh negative news headlines from EU troublespots, while the market has focused on other regions of the globe. This has helped to keep peripheral EU debt yields fairly subdued, particularly with a capital flight out of Japan likely to resume with the Yen’s turnaround this week. The Euro is likely to remain under moderate pressure this morning, but will remain fairly well supported just as long as the region stays out of the market’s spotlight and the latest sovereign debt downgrade talk isn’t given a full front burner status. The June Euro should find decent support around the 131.45 area, but will need to see a turnaround in global risk sentiment in order to climb up into new high ground once again.
GBP: The June Pound has come under severe pressure this morning, and has now slumped to a new weekly low. Today’s Bank of England meeting minutes release showed little change in their attitude towards fresh easing measures. However, a 0.2% uptick in the UK Unemployment rate this morning will likely renew calls from both inside and outside the market for the BOE to take decisive easing action in the near future. The June Pound may slide further down to the 152.32 level later today, and will need plenty of help from outside markets in order to recover any significant amount of this morning’s early losses.
JPY: The June Yen remains on the defensive this morning, but today’s minor setback in global risk appetites may keep the market from reaching a new weekly low. There are indications now that the G20 meeting this weekend will not result in any significant criticism of Japan’s recent monetary actions, which will add further pressure to the Yen during today’s session. With a large share of safe-haven support shifting back into Dollars, it will be very difficult for the Yen to regain the sharp upside momentum seen on Friday and Monday. However, there may be an opportunity to approach the short side of the market if global risk concerns start to flare up once again. The June Yen may bounce back to the 102.26 area this morning, but traders should wait for a further rally back towards unchanged levels before putting on long put option strategies.
CHF: The June Swiss was able to post a new high for the move early in today’s session, but lost upside momentum and has fallen back into negative territory this morning. A surprisingly strong reading on Swiss investor sentiment was unable to provide lasting strength to the Swiss Franc, which is finding carryover pressure from the Euro zone this morning. The June Swiss may fall back towards the 108.14 area later today, but recent strength in Swiss economic data should help to keep prices relatively well supported during the next few sessions.
CAD: The June Canadian could not sustain yesterday’s recovery into today’s session, and is now within striking distance of last Friday’s low for the move this morning. While sluggish energy and metals prices are applying some pressure, today’s Bank of Canada meeting may be encouraging additional long liquidation. If the BOC does come out with a more dovish tone this morning, the Canadian Dollar is likely to reach a new monthly low very quickly. The June Canadian will find early support around the 97.39 area, and will be hoping that the BOC avoids a shift towards a more dovish posture.
EasyForexNews Research Team