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With no first tier economic data out of Europe and North America, EURUSD direction will be dictated by political developments in the continent especially in France where the conservative presidential candidate Francois Fillon was pressured to quit as well as Marine Le Pen now leading the pack which will come under close scrutiny from investors. That along with coming elections in Italy, Netherlands & Germany and the IMF getting concerned with Greece’s bailout program will limit any upside in the single currency.
The Forbes (BoE) inspired rally in Cable has lost steam as the focus turns to the outcome of the voting of the article 50 bill with Brexit concerns to keep sterling bulls cautious. Another event worth watching we believe has to be the fall in China’s reserves below $3 trillion which may well lead the world’s second largest economy to cut its purchases of commodities and this may well provide a perfect excuse for investors to take profits on the commodity which has rallied strongly over recent months.
The US dollar is the big story this morning as still as it fails to hold on to any gains, with the US dollar index still failing at the higher level. This time the index failed to hold above the 20 day moving average at 100.48, an area it hadn’t traded since early January. Despite the weaker average earnings report last Friday and even without Trump’s unveiling of his economic policies, Fed speak is getting increasingly hawkish which will see the greenback bulls ready for the next charge which could well come sooner rather than later.
