The Week Ahead: Agree to Disagree

Protracted talks on EU’s rescue fund keep the euro under water

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EURCAD Feels Pressure as Rescue Talks Linger

The euro continues to slide against the Canadian dollar from its March peak as the prospect of a pan-European stimulus drags on. EU leaders have failed so far to find common ground on the size and form of a joint fund for member states.

In the meantime, this week’s data could add its weight and show that economic activity in the eurozone has come to a halt.

The single currency may continue to bear the burden as long as the rescue package remains elusive. The pair is grinding down towards 1.5000. A failure to rebound could trigger a sell-off to 1.4800.

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USDJPY Consolidates Before BOJ’s Intervention

The Japanese yen may break out of its month-long consolidation range as the Bank of Japan holds its policy meeting this week.

The central bank is expected to follow the Fed’s lead and take more aggressive actions. By removing the cap on its bond-buying program, the BOJ would assure businesses and markets that policymakers would do whatever it takes to protect the economy. Though the prospect of unlimited liquidity could weaken the yen.

If the US dollar stays above the psychological level of 107.00, a rebound could send the pair towards 111.00.

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USDCHF Recovers Ahead of FOMC

The US dollar is going into another volatile week as a string of data will shed light on the economic fallout from the pandemic. The economy is expected to have shrunk more than 4% year-over-year in the first quarter, while employment and industrial activity would paint another grim picture.

The upcoming Fed meeting may offer insight of the prevailing sentiment among policymakers. The greenback could react positively if there is a hint of a plateauing in the crisis.

The US dollar has found strong buying interest near 0.9600. On the upside, 0.9900 is the major resistance level to lift before any extended rally.

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AUDCAD Grinds to March’s High

The Australian dollar has been grinding up across the board as risk appetite makes its timid comeback in the market. The collapse in oil prices has given the Aussie a lead against the loonie.

However, the latest recovery in commodity prices may offer some support to the latter.

As the pair inches up to the March high of 0.9050, Wednesday’s CPI could increase the volatility. A bullish breakout could send the exchange rate towards 0.9200. On the downside, 0.8700 is a key support to keep sentiment upbeat.

audcad

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