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EURUSD Parity Holds As Early Greenback Strength Reverses

FOREX
  • Having started the Tuesday session as the best performer, the dollar was knocked off its perch by fierce defence of parity in EUR/USD, which marked not just a key psychological level but also the base of the bear channel drawn off the February highs.
  • Currency futures markets showed considerable spikes in activity that coincided with the EUR/USD approach to 1.00 - suggesting sizeable defence of the level and helped a recovery back above 1.0050 ahead of the London close.
  • As a result, the USD became one of the weakest currencies of the session into the close, partially reversing the week's 1.00% rally in the USD Index.
  • Meanwhile, an extension of the downleg in commodity prices worked against oil-tied FX, with NOK underperformance persisting and putting the currency at new multi-year lows against the USD. The NOK weakness posted since Monday continues to put the currency below the Norges Bank's projections outlined at the June policy meeting - adding more pressure to the board to tighten policy and contain any imported inflationary pressures.
  • USD weakness was further reflected in the USD/JPY pullback to Y136.50, however the outlook remains bullish following the break of key resistance at 137.00 earlier in the week. This confirmed the resumption of the primary uptrend and highlights that corrections remain shallow, reinforcing underlying bullish conditions.
  • Final German CPI data crosses Wednesday, as well as UK industrial and manufacturing production data and the US CPI reading for June. Markets expect core CPI Y/Y to decelerate to 5.7% from the 6.0% posted in May. The Bank of Canada also decide on rates, with analysts expecting a 75bps rate rise to 2.25%. The full MNI Preview can be found here: https://marketnews.com/mni-boc-preview-jul-22-eyei...
Energy BulletsCommodities
Energy BulletsCommodities

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