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FOREX: Euro Reverses Monday Advance as Markets Await More Significant Event Risk

FOREX
  • G10 currencies have shown only moderate adjustments Tuesday, as the USD index (+0.20%) reversed the majority of Monday’s move lower. In similar vein, EURUSD finds itself down 0.26%, oscillating either side of 1.0700 as French political risks continue to linger in the background.
  • GBP/USD's early progress off the Monday low had the pair again testing 1.2700 and further gains through 1.2724 would form the beginnings of a reversal pattern off the recent low and support at the 50-dma. GBP’s resilience on Tuesday has seen EURGBP edge lower once more, having respected resistance around 0.8475 in the prior session.
  • The greenback bid has helped USDJPY rise roughly 50 pips from session lows of 159.19 to once again narrow the gap to the psychological 160.00 mark. For now, the technical trend in USD/JPY remains bullish, but the intraday volatility noted during the Monday session shows markets remain subject to corrective pullbacks, especially against the backdrop of rising verbal intervention once more.
  • USD strength was more notable in emerging markets, especially for USDMXN (+1.15%) as post-election volatility remains heightened ahead of Thursday’s Banxico decision. The current bull cycle in USDMXN remains in play and the pullback from the Jun 12 high still appears to be a correction. Support to watch lies at 17.9786, the 20-day EMA. It has been pierced, however, a clear break would be needed to expose the 50-day EMA at 17.5048. 
  • Australian CPI and US new home sales headline the data calendar on Wednesday before both the Riksbank and multiple emerging market central bank decisions on Thursday.
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