Forex Investment and Currency Trading

Yesterday’s late afternoon equity rally in the US helped EUR-USD recover overnight from the lows posted on Wednesday. Nonetheless, technical damage has been done with the S&P 500 still having closed below its 200-day moving average, suggesting further declines. In this context, US initial jobless claims are likely to be highlight of Thursday’s session where further declines from the late May high (of continuing claims) would be risk positive and vice versa. Taking a step back from the daily gyrations in risk appetite, the multi-day grind down in EUR-USD put the pair on Wednesday close to significant support at 1.3750, the break-out point from late April/early May. A push below this level would suggest that EUR-USD is moving into a new (albeit well-worn earlier this year) range.

USD-CAD has retreated from yesterday’s highs but the broader trend (up) remains intact with the pair having broken above trend line resistance from the March 09 high last week and resistance at 1.1655 (the 38.2% retracement of the decline from the March high to June low) having been definitively broken through earlier this week. In this context, traders look for a continued push higher despite today’s pull-back. The pair is likely to be driven by the USD side of the equation today, but focus on Friday will shift to the monthly Canadian employment report. There are downside risks to the Bloomberg consensus of -30.0k, and this could potentially be the catalyst for the push higher to 1.1925, the 50% retracement of the aforementioned move.