Trading on global markets developed in a rather calm, orderly fashion yesterday and this bias was also visible in the currency markets. The euro spiked temporarily lower early in the session on the confirmation that the EU finance ministers failed to reach an agreement on a fiscal response to corona on an EU level. However, there was no follow-through price action. Intra-EMU spreads gradually eased from an initial widening and EUR/USD settled in a sideways trading pattern in the mid 1.08 area (close 1.0858). The trade-weighted dollar stabilized in the lower half of the 100 big figure. An ongoing positive sentiment, in particular in US equity markets, prevented a new USD rebound. Smaller currencies mostly also maintained Thursday’s gains. At least for now, it looks that the level of stress in global FX markets is easing.

This morning, Asian equity markets mostly show modest gains with Japan underperforming. Sentiment remains constructive even as news on the development of the coronavirus is mixed at best (e.g. Singapore). The trade-weighted dollar (DXY) is holding just north of the 100 level. USD/JPY (108.95) is trading with a mildly positive bias, but holding with its short-term consolidation pattern. The Aussie dollar maintains recent constructive bias and regained the 0.62 level.

Today, the US jobless claims and consumer confidence deserve some attention. However, of late, poor US data seldomly were a negative for the USD. Fed’s Powell giving an economic update is a wild card. The discussion on the EU fiscal response remains a (modest) euro negative, but we maintain the view that global risk sentiment and the overall risk-on/off dynamics in global USD trading remains a main driver for EUR/USD trading. Last week, EUR/USD falling below 1.09 deteriorated the technical picture. The pair tested 1.0775/70 support, but no clear break occurred. The March low comes in at 1.0636. We continue to watch the TW USD. The USD might stay well bid, but we don’t expect a rebreak beyond 103. EUR/USD rebounding above the 1.0950 area would be a first sign of improvement. In a day-to-day perspective, investor caution going into the long weekend might be slightly USD positive.

Yesterday, EUR/GBP returned to 0.8750 area, but recent lows/support survived. GBP (cable) trading is also USD driven. Even so, sterling recently often outperformed against the euro when the dollar declined. We don’t see strong (economic) reasons for a further EUR/GBP decline, but a break below 0.8740 would be technically relevant.

 

Download The Full Sunrise Market Commentary Currencies

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex Analysis

Editors’ Picks

EUR/USD chops around amid end-of-month flows, ahead of Trump

EUR/USD is battling 1.11, close to the two-month highs amid choppy trading. Hopes for a fiscal boost in Europe and mixed satisfactory data have supported the currency pair. , Sino-American tensions are rising and investors await President Trump's China announcement.

EUR/USD News

GBP/USD advances amid US dollar weakness, shrugging off concerns

GBP/USD is trading above 1.23, edging higher amid US dollar weakness and Britain's gradual reopening. Intensifying Sino-American tensions and the Brexit impasse are ignored. 

GBP/USD News

Cryptocurrencies: $348M in matured derivatives boost the market

Futures and options contracts' expiration brings a wave of volatility to the crypto market. Ethereum takes advantage and attacks resistances in the market dominance chart, Bitcoin goes back. Ripple disappoints despite regaining the third place in market capitalization.

Read more

Canada's economy falls by 8.2% annualized in Q1, better than expected, USD/CAD shakes

The Canadian economy squeezed by an annualized rate of 8.2% in the first quarter of 2020, better than -10% expected. Quarterly, Gross Domestic Product (GDP) squeezed by 2.1%. Most of the downfall occurred in March, with a drop of 7.2%, better than 8.5% projected. 

Read more

WTI drops 4% and eyes $32 mark amid risk-off, weakening demand

The selling pressure around WTI (July futures on Nymex) accelerates following the break below the 33 level, as bears now target the 32 support zone heading into the key US macro data and US President Donald Trump’s response to the Hong Kong issue.

Oil News

Forex Majors

Cryptocurrencies

Signatures