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7 May Forex daily review

Sergiy Zlyvko
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On Wednesday, the dollar index fell back to a moving average line. EURUSD fell from 1.3950 mark to 1.3910. GBPUSD including trading in Asia fell to the level of 1.6945. Key pairs prepared for announcement of the Bank of England and ECB meeting results and ready to sharp fluctuations.

Yesterday’s market expectations justified – USD corrected. What do we expect from it today? Investors do not expect changes in monetary policy from Bank of England. Accompanying release of the Bank of England will be interesting. Investors also do not expect surprises from ECB. They believe that the ECB today refrain from non-standard measures to fight deflation. But it is worth noting that the behavior of the market at 12.30 GMT during a press conference of Mario Draghi will be unpredictable.

EURUSD is trading by 75 points from 1.4000 mark. Mario Draghi repeatedly made market signals that strong euro is a negative factor for the economy of Eurozone. If he wants to send the euro down, then he will send. We are considering in the main scenario for today to a drop of dollar index to 78.85, EURUSD – rising to the level of 1.3975, GBPUSD – rising to 1.7030, USDCHF – fall to 0.8700 mark, AUDUSD – rise to 0.9395.

EURUSD returned to moving average line. The market is ready for further growth to the level of 1.3975. For today’s highlights BoE and ECB acts. EURUSD was not fell to 1.3890 and that’s good. Pair is trading at 1.3915 mark. With the opening of Europe, the pair must move slowly upwards. This would indicate that the market is set to increase to 1.3975.

If the ECB’s monetary policy will remain unchanged, EURUSD will start to increase to 12.30 GMT. Then movement dynamics of the euro will be determined by Draghi’s speech. If he wants to push on the euro, he will do this nicely. If the euro slips down after 12.30 GMT, we propose to consider a target level of 1.3835. Euro trading is risky today.

GBPUSD fell back to moving average line and it traded at 1.6955 mark. Bulls will attempt to fend off the moving average. From a technical point of view, we do not see a problem in reaching the levels of 1.7000 and 1.7040. We should following the dynamics of cross-rates. Because of them, the movement between EURUSD and GBPUSD at 12.30 GMT can be multidirectional today.

Yesterday AUDUSD skillfully rolled to moving average line os today on statistics from China and Australia the pair rose to 0.9375 mark. Once AUDUSD is at 0.9365 highest point, there are conditions for rolling back to the level of 0.9350. This does not mean that after the upgrade, rollback from the maximum will begin immediately. There are important events in the evening today. If the dollar collapses on them, AUDUSD exchange rate moves to 0.9430.

USDCHF rate from low at 0.8720 mark returned back to moving average line. We believe that the pair is ready to fall to 0.8700. We expect a sharp decline at 12.30 GMT during Draghi’s speech. But we should be vigilant, as Draghi may derail the euro and then instead of falling, USDCHF rate will strengthen to the level of 0.8820. It all depends on Draghi. We does not see any problem in reaching the level of 0.8700 from the technical side.

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