Politicians and investors cheered the historic agreement among European Union leaders to throw southern members a EUR750 billion ($862 billion) lifeline to offset economic damage from the coronavirus pandemic.
For the first time, the EU will borrow hundreds of billions of euros on debt markets to hand governments grants with few strings attached. The funding, part of a EUR1.8 trillion spending package settled in Brussels early Tuesday, aims to let Italy, Spain and others resuscitate their economies without piling on unsustainably large debts.
The EUR750 billion recovery fund established by EU leaders is part of a three-pronged approach to tackling that problem. The other steps are large purchases of southern European government bonds under a new program launched by the European Central Bank and a new crisis funding program offered by the eurozone’s bailout mechanism.
👉 The Kiwi dollar rose through key resistance at 66 U.S. cents overnight alongside gains in EUR/USD and AUD/USD after European leaders agreed on a gigantic recovery fund for the European Union, boosting risk appetite. NZD/USD, which is up 1.0% at 0.6640, was also lifted by a supportive global dairy auction result, says ASB. “Refreshed risk appetite and the stronger EUR/USD saw the NZD/USD easily blast through the key resistance level of 0.6600 overnight,” the bank says. “This likely paves the way for further gains over coming sessions.” AUD/USD has jumped about 1.5% to 0.7123.
👉 President Donald Trump appears to be getting a Federal Reserve Board governor who would also be endorsed by McKinley as the Senate Banking Committee on Tuesday. The candidacy of Judy Shelton, an economic adviser to Mr. Trump’s 2016 presidential campaign, for the Fed’s Board of Governors was approved by the Senate banking committee in a party-line vote despite objections from Democrats. Her next and final stop will be a confirmation vote on the Senate floor.
👉 A leading indicator of Australian economic growth remains in deep negative territory, consistent with a recession, the country’s first in 29 years.
Here are the High Impact Economic events expected today:
As we have observed earlier in the Currency Monitoring Chart, we discovered that AUD/USD lines are separated with the farthest distance.
As we have observed earlier in the Currency Monitoring Chart, we discovered that GBP/NZD lines are separated with the farthest distance. Screenshot taken as of 7:00 pm.
GBP/NZD in a strong downtrend looking at 30 minute chart:
INTRADAY MARKET INSIGHTS
USD/JPY Intraday:
Key resistance at 107.05. The pair is off a low of 106.65 seen overnight, but remains capped by the key resistance at 107.05. The relative strength index has not yet recovered the neutrality level of 50 suggesting a lack of upward momentum for the pair. A return to the immediate support at 106.65 (the low seen overnight) would trigger a further decline toward 106.50 on the downside. Alternatively, a break above 107.05 would open a path toward 107.20 on the upside.
EUR/USD Intraday:
Upside prevails. The pair stays on the upside following an up-surge overnight. It keeps trading at levels above both 20-period and 50-period moving averages, and the relative strength index stands at elevated levels in the 60s, indicating a lack of downward momentum for the pair. Unless the key support at 1.1510 is breached, the pair should target 1.1555 and 1.1575 on the upside.
AUD/USD Intraday:
Watch 0.7180. The pair is holding on the upside after yesterday’s upward acceleration. Currently, the prices remain riding the rising 20-period moving average. To sum up, as long as 0.7105 acts as a support level, expect a further advance with targets at 0.7150 and 0.7180 in extension. Alternatively, a break below 0.7105 would bring a return with 0.7080 and 0.7060 as targets.
NZD/USD intraday:
Further upside. The pair accelerated on the upside along the upper Bollinger band. The upward momentum is further reinforced by both rising 20-period and 50-period moving averages. Therefore, unless the support level at 0.6619 is violated, the pair should reach 0.6675 and 0.6690 in extension. On the other hand, a break below 0.6619 would trigger a pullback with a target at 0.6593.
GBP/USD Intraday:
Bullish bias above 1.2700. Despite the pair posting a pullback from 1.2765, it is still supported by a rising 50-period moving average. The relative strength index has landed on its neutrality level at 50 and is turning upward. To conclude, as long as 1.2700 holds on the downside, intraday bullish bias remains with up targets at 1.2765 and 1.2800 in extension. Alternatively, a break below 1.2700 would bring a return 1.2670 and 1.2645 as targets.
USD/CHF Intraday:
Target 0.9290. The pair remains on the downside and is under pressure below the resistance level at 0.9350, which should limit the upside potential. The relative strength index is locating at the selling zone between 30 and 50, indicating a bearish outlook. Hence, below 0.9350, expect another down leg with targets at 0.9310 and 0.9290 in extension. In an alternative scenario, crossing above 0.9350 would trigger a technical rebound with 0.9375 and 0.9400 as targets.
USD/CAD Intraday:
Under pressure. The pair is capped by a declining trend line drawn from July 20. Currently, the 20-period moving average has dropped further below the 50-period one, and the relative strength index remains subdued in the 30s, suggesting that the bearish bias persists. Below the key resistance at 1.3475, expect a decline to 1.3420 and 1.3400. Alternatively, a break above 1.3475 would trigger a rebound to 1.3500.
EUR/JPY Intraday:
Further upside. The pair stays on the upside after breaking above its previous high. Currently, support is provided by both the 20-period and 50-period moving averages, while the relative strength index stands in the 60s, signaling continued upward momentum. Unless the key support at 122.79 is violated, the pair should advance to 123.62 and 123.83. Alternatively, a break below 122.79 would trigger a pull-back to 122.44.
EUR/GBP Intraday:
Rebound. The pair has broken above a bullish falling wedge pattern. In fact, the 20-period moving average has crossed above the 50-period one, and the relative strength index has climbed to the 60s, indicating a bullish bias. As long as the key support at 0.9037 holds, the pair should target 0.9096 and 0.9111 on the upside. Alternatively, below 0.9037, expect a return to 0.9011 on the downside.
