Euro rises ahead of key speeches by Lagarde and Leyen
Global stocks rallied yesterday as investors remained optimistic about the economy. In the United States, the Dow Jones rose by more than 529 points while the S&P500 and Nasdaq rose by 36 and 15 points respectively. Yesterday, new home sales and consumer confidence data showed that the US economy was recovering. New home sales rose by 0.3% in May while confidence rose to 88.0. Still, investors are worried about the souring relations between the United States and China. In a report yesterday, Bloomberg said that the Trump administration was considering sanctions to Chinese officials because of the Chinese bill that will be passed tomorrow. Such action could provoke retaliation from China, which may risk the first phase of the trade agreement signed in January.
The Euro rose slightly during the Asian session as investors waited for a speech by Christine Lagarde and Ursula von der Leyen. With Lagarde, they will want to hear about the actions the bank is taking to combat the coronavirus pandemic. They also want to see clues about what will happen in the next meeting. Leyen will talk about the fiscal responsibility for the crisis. Her speech will be watched because of the divisions that have arisen between the northern and southern states. Northern states like Denmark, Netherlands, and Austria have opposed a grant-based approach which is being favoured by Germany and France.
The Canadian dollar rose yesterday, boosted by higher crude oil prices and the overall US dollar weakness. Investors also reacted to a statement by Stephen Poloz, the outgoing BOC governor. In a statement, he said that the Canadian economy will need more fiscal stimulus in its rebuilding phase. He also said that the deflationary risks associated with the pandemic were of great concern. These actions will be in addition to what the central bank has already done, including lowering rates to zero and injecting more than $210 billion into the financial market.
The EUR/USD pair rally eased slightly during the Asian session. It is now trading at 1.0970, which is slightly below yesterday’s high of 1.1000. On the four-hour chart, the price is along the 38.2% Fibonacci retracement level while the RSI is slightly below the overbought level. It is also slightly above the 100-day and 50-day exponential moving average. The pair may resume the upward trend as bulls attempt to retest the 50.0% retracement at 1.1066.
The USD/CAD moved below the important resistance level of 1.3857, boosted by higher oil prices. It is now trading at 1.3788, which is close to the lowest it has been since March 13. The price is also below the short and long-term moving averages and is close to the 61.8% Fibonacci retracement level. Therefore, there is a likelihood that the bearish trend will continue as long as the price is below the 50% retracement at 1.3900.
The USD/CHF pair declined to an intraday low of 0.9646. On the four-hour chart, the price is slightly above the 38.2% Fibonacci retracement level. It is also slightly above the 100-day and 50-day exponential moving average while the RSI is slightly above the oversold level of 30. The pair will likely move lower as bears attempt to move below 0.9600.