The selling bias prevails so far around the European currency, with EUR/USD now attempting to stabilize in the 1.1450/40 band after clinching new multi-month tops earlier in the session. The buying in EUR/USD appears to have met quite a moderate hurdle in the 1.1470 region – or 4-month peaks – during early trade, grinding lower soon afterwards as market participants keep digesting the EU deal on the recovery fund. The pair is slowly approaching the 2020 highs just below 1.15 the figure, always on the back of the persistent weakness surrounding the buck. As always, upbeat risk appetite trends continue to support the momentum around the euro in combination with the current recovery in the euro zone. In addition, the recently clinched deal on the European Recovery Fund help to put political fears in the region at rest.
The pair was seen hovering near six-week tops during the early North American session, with bulls making a fresh attempt to build on the momentum beyond the 1.2700 mark. The pair has now found acceptance above the 23.6% Fibonacci level of the 1.2076-1.2813 positive move. This comes on the back of the overnight sustained breakthrough a symmetrical triangle and supports prospects for additional gains. Technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory. This, in turn, adds credence to the positive outlook amid sustained selling around the USD. A subsequent move towards testing June daily closing highs resistance, around the 1.2745 region, now looks a distinct possibility. Some follow-through buying should assist the pair to aim back to reclaim the 1.2800 mark.
The USD/JPY pair came under renewed bearish pressure during the American session as another USD selling-wave hit the markets. As of writing, the pair was trading at its lowest level in five days at 106.86, losing 0.35% on a daily basis. In the early trading hours of the Asian session on Wednesday, the Jibun Bank Manufacturing PMI data from Japan will be looked upon for fresh impetus. Until then, the risk perception is likely to continue to impact the USD’s performance and USD/JPY’s movements.
The AUD/USD pair jumped to fresh YTD tops during the early North American session, with bulls looking to build on the momentum beyond the 0.7100 round-figure mark. The pair gained some strong traction on Tuesday after RBA Governor Phillip Lowe said that they don’t see the need to intervene in the foreign exchange market and push down the Australian dollar. Lowe further added that the valuation of the domestic currency was broadly in line with fundamentals. The comments prompted some aggressive short-covering move and assisted the AUD/USD pair to finally break out of a one-week-old trading range.
EUR/CHF is trading within a neutral/bearish bias near the 200-day SMA (1.0731) following the softer fashion around the single currency on turnaround Tuesday. Indeed, the euro met some selling pressure after the EU leaders reached a deal on the European Recovery Fund worth €750 billion. This fund is expected to mitigate the devastating economic effects of the coronavirus pandemic on some European economies. The fund will now need to be approved at the European Parliament and it consists of €390 billion in grants and €360 billion in loans. In the meantime, the Swiss franc is expected to shed some ground in coming sessions as political concerns following the deal are now alleviated, opening the door to a potential move to July peaks in the 1.0800 neighbourhood.