Thursday ended with the EUR/USD being high above of local resistance of 1.10. What's the target now?
Evergreen buck is near a two-week minimum
On Wednesday, the key US currency traded near a two-week minimum against the pack of main assets after Chinese President Xi Jinping's pledge to cut import tariffs relieved concerns over the trade clash between the US and China.
On Tuesday, Chinese leader Xi Jinping pledged to open the Chinese economy and diminish import duties for products such as vehicles in his speech at the Boao forum. It’s viewed as an attempt to "neutralize" the growing trade conflict with the United States.
World stocks rose and oil prices increased by more than 3% on Tuesday, as President C's comments softened concerns about the risk of a trade war between the two largest economies in the world that could be fatal to global growth.
Improved sentiment about risk led to higher commodity prices and currencies in emerging markets, as well as to the growth of the US currency against the Japanese yen. The yen is an active refuge that attracts demand during times of economic uncertainty and vice versa.
The Australian dollar slightly lost its yesterday's positions after the publication of data on inflation in China, which was weaker in March than forecasts and the previous value.
According to the National Bureau of Statistics of China, the producer price index rose 3.1% on an annualized basis in March having leapt 3.7% in February. Economists expected inflation to grow by 3.2%.
The currency pair USD/JPY lost 0.07% being worth 107.11. Japan’s producer price index for March came in at 2.1%, which is in line with market expectations.
Additionally, the currency pair AUD/USD lost up to 0.13% reaching 0.7750. The Australian dollar responded to the downbeat Chinese inflation reports. China turns to be Australia’s largest trading partner, therefore the Chinese data can be a directional driver for the sentiment-linked commodity currency of Australia.
The Reserve Bank of Australia will publish its statement and announce the interest rate on July 7, at 7:30 MT time.
The overall market sentiment was mixed after the USA recorded the largest increase in virus cases since May 9. The data even offset the better-than-expected NFP.
The risk-on tone is back on the market again. Let’s look at main trading opportunities.