EURUSD bounces on widespread US Dollar selling as the Chinese PBoC chooses to raise the Renminbi on Monday.
EURUSD is trading approximately a tenth of a percent higher at the start of the week, in the lower 1.0800s. Potentially due to widespread US Dollar (USD) selling. After the People’s Bank of China (PBoC) unexpectedly fixed the Renminbi higher on Monday morning, according to Bloomberg News.
Despite being up for the day, the pair appears to be in a fresh short-term downtrend. And is now solidly below the 200-day The last important MA preventing additional decline is the Simple Moving Average (SMA) at 1.0838.
Euro rebounds on profit-taking following sell-off.
EURUSD is bouncing on Monday, maybe owing to profit taking. The pair fell sharply at the conclusion of last week. Following the release of Eurozone and US flash PMI data, which underlined US exceptionalism.
The figures revealed that the US economy is still doing well. And that the Federal Reserve (Fed) may be overly optimistic in its expectation of three interest rate decreases this year. If the Fed changes its mind and lowers interest rates more gradually. The US Dollar will benefit because higher interest rates attract more foreign capital inflows.
Comments from prominent central bankers could influence the pair on Monday.
Despite Monday’s rebound, the Euro is “fragile” to additional decline. According to ING analysts, the surprise Swiss National Bank (SNB) move to decrease interest rates on Thursday has prompted “increased scrutiny of ECB communication,” looking for clues that the European bank will follow suit. The ECB and SNB have a history of copying each other. However often the SNB follows the ECB rather than the other way around.
“Since last week’s unexpected cut by the Swiss National Bank, there has been intensified scrutiny of ECB communication. This remains split, with one hawk on Friday predicting an April rate decrease. Notably, money markets continue to assign a very low chance to such an outcome, which we suspect will alter much this week given the absence of crucial data,” ING stated in a recent note.
ING continues to view a low possibility of an early interest rate drop by the ECB, and volatility is expected to remain muted due to a lack of crucial data for the Euro this week and the forthcoming Easter vacations.
In terms of calendar events, European Central Bank President Christine Lagarde will talk on Monday at 10:00 GMT.
Raphael Bostic, President of the Federal Reserve Bank of Atlanta, is also slated to talk later in the day at 13:45 GMT, followed by Lisa Cook, a member of the Federal Reserve’s Board of Governors.
The Chicago Fed National Activity Index and US New Home Sales data will be announced.
