EUR/USD rebound off 1.1270 support area
|The recent euro decline/USD rally fell prey to profit taking yesterday. EUR/USDeuro decline/USD rally fell prey to profit taking rebounded as global sentiment improved on a tentative US budget deal and investor hopes that the US-China trade talks are heading in the right direction. ECB speakers including Weidmann, Lane, Nowotny and Knot didn't sound overly dovish. EUR/USD briefly filled bids below the 1.1270 support, but the test was rejected and EUR/USD staged a protracted intraday rebound to close at 1.1326. USD/JPY confirmed its 110+ break, but given the rise in US yields and the positive sentiment, gains were modest (close at 110.48).
Overnight, Asian equities also rally on the positive headlines on the US-China trade talks. The yuan strengthens (USD/CNY 6.7550 area). USD/JPY (111.65) continues drifting higher. EUR/USD (1.1335 area) is gaining a few ticks. The kiwi dollar rebounded sharply as the RBNZ failed to meet dovish market expectations (rates are expected stable through 2019 & 2020, a tentative rise is pencilled from 2021). The kiwi dollar gained more than a full big figure (NZD/USD 0.6845 area). The Aussie dollar (AUD/USD 0.7130 area) also regained modest ground on decent confidence data and constructive RBA talk.
US CPI inflation is expected to ease to 1.5% (headline) and 2.1% (core) today. If anything, the report might justify the Fed's wait-and-see stance. This might be neutral to tentatively soft for the USD. Headlines on the Spanish budget are a wildcard. Yesterday, the euro profited from a better risk sentiment. However, EMU political event risk is still in play and the fragile eco picture questions the room for the ECB policy normalisation. EUR/USD tested the 1.1270 area, but the test is rejected. However a sustained euro rebound probably needs some of the global (trade) and EMU political event risks to be solved and more comforting EMU eco data. This condition isn't met yet. We look out for more convincing signs of a bottoming process. EUR/USD 1.1216 (Nov low) low remains next high profile support.
EUR/GBP gained a few more ticks yesterday. The move was mainly caused by the overall EUR/USD rebound. UK PM May as expected tried to convince Parliament to give her more time to reach a better deal/agreement on the Irish backstop arrangement. Today UK inflation data will be published a modest easing is expected. However, markets will mainly look forward to the developing Brexit story, starting with tomorrow's vote in the UK Parliament. As we don't see signs of a break-through yet, more technical driven EUR/GBP trade might be expected.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.