EURGBP Rises Over Brexit Impasse
The euro was put back on track thanks to the 500 billion euro recovery fund recently agreed between France and Germany. The much-awaited stimulus package is likely to boost investor sentiment for the time being as the single currency recoups its losses.
In the meantime, Brexit negotiations are facing roadblocks as Britain struggles to keep its key to the EU single market.
The pound sterling would be shunned by the market as long as the bloc is reluctant to grant London a free pass. The euro has broken above April’s consolidation range. 0.9200 is the target in sight if bulls succeed in sustaining the momentum.
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USDCAD Supported by Commodity Price Falls
The Canadian dollar may struggle to check its neighbor’s advance as risk-on sentiment recedes. Oil prices have started to turn south after Beijing scrapped its growth target for 2020, a sign of heightened uncertainty for the world’s second-largest oil importer.
Should we see more buyers jumping off the rebound ship in the oil markets in the coming days, the loonie may likely stay depressed against the USD.
A breakout above the 1.4160 resistance could resume the uptrend from January. The lower band at 1.3850 is the immediate support to keep the rate afloat.
USDCHF Buoyed by Trade Tensions
The pair could be coming out of its eight-week-long consolidation after a new geopolitical twist. The US has taken a more aggressive stance against Chinese interests, from tightened restrictions on Huawei’s suppliers to blocking Chinese companies from listing on US exchanges. China’s new security law on Hong Kong could cast a chill over US-China relations.
With the blaming game over the pandemic still ongoing, there is enough powder for a trade war 2.0, in which the dollar would be sought after.
A bullish breakout above 0.9800 could send the greenback towards the parity. On the downside, 0.9600 is major support.
AUDJPY Rallies on Grimy Japanese Data
The global slowdown has taken a toll on the Japanese economy after the country’s exports plummeted 22% in April, the worst decline in a decade. The yen may continue to be the weakest link should this Thursday’s CPI and industry data point to a prolonged recession.
On the flip side, the Australian dollar is still mirroring the Chinese yuan’s recovery. However, souring Sino-Australian relations over a pandemic investigation could put a brake on the Aussie’s advance.
The pair has risen back to the March high of 71.40. A bullish breakout could trigger an extended rally. 68.70 is a key support in case of a pullback.
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