Euro rally accelerates ahead of Trump speech on Hong Kong

The euro rose today as investors remained optimistic about the recovery of the European Union. The rally accelerated after the eurozone’s statistics office released the preliminary inflation data from the bloc. The numbers showed that the headline CPI data rose by 0.1 per cent, which was the lowest level in four years. The CPI declined by 0.1% mostly because of a significant decline in energy prices. The closely watched core CPI rose by 0.9%. These numbers will put pressure on the ECB when the monetary committee meets next week. Earlier on, data showed that German retail sales declined by 5.3% in May, which was slightly better than the expected decline of 12%.

Global stocks declined as investors waited for a statement by Donald Trump on China. In Europe, the DAX index, FTSE 100, and Stoxx 40 declined by 0.95%, 0.90%, and 0.60% respectively. In the United States, futures tied to the Dow Jones and S&P500 dropped by 90 and 30 and 8 points respectively. In the statement, Trump is expected to introduce tariffs to Hong Kong because the administration does not consider the city autonomous anymore. In a statement earlier on, the Hong Kong government warned the US against any tariffs, citing the many American companies in the city. It also cited the significant trade surplus the US has with the city.

The Canadian dollar rose slightly against the USD after the country released the second reading of Q1 GDP. Data from the statistics office showed that the country’s economy declined by 2.1% from the fourth quarter and declined by 0.91% on a year on year basis. The data showed that the economy contracted by 7.2% in March alone. Also, the RMPI declined by 13.2% in April while the IPPI declined by 2.3%. The country’s economy has been affected significantly by the current crisis, coupled with low oil prices. But the recent rally in oil prices has lifted the Canadian dollar.

 

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1131, which was the highest level since March. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages while the RSI has climbed to above 70. The dots of the Parabolic SAR have also supported the price. The price will likely continue rallying as bulls attempt to test the 61.8% retracement level at 1.1165.

 

GER30

The DAX index declined to an intraday low of €11,650, as all companies in the index remained in the red. The biggest laggard was Lufthansa and E.ON, the energy company. The index is at the 61.8% Fibonacci retracement level on the four-hour chart. It is also above the 50-day and 100-day exponential moving averages. A decline below the current support will be a sign that there are more sellers in the market, who will attempt to test the 50% retracement of €10,985.

 

EUR/GBP

The EUR/GBP rallied to an intraday high of 0.9056 as investors remained optimistic about the eurozone economy. Today’s high was the pair’s highest point since March 27. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages while the RSI has moved to the overbought level. The pair is likely to continue rising as bulls attempt to test the next resistance at 0.9100.