EUR/USD falls back from a two-week high in Asian trade on Wednesday
We take a look at the key support levels for EUR/USD, and highlight the important catalysts ahead of a big day of US data.
EUR/USD eased back in afternoon trading on Asian markets, after a brief continuation of its post-Easter rally.
The broader USD weakness seen yesterday continued into global markets, as the euro hit a two-week high of $1.0991 before the greenback found support ahead of the London open.
EUR/USD fluctuates around the level of its 50-day moving average
The price action across global markets on Tuesday proved to be a continuation of the trend in place just prior to Easter, which saw the USD retreating against all the major pairs.
Falls in the USD were accompanied by a measured increase in risk-on sentiment, as markets assessed the possibility of a peak in global COVID-19 infection rates.
As the US Dollar Index continued its retreat on Wednesday from the multi-year highs reached in late March, EUR/USD climbed back above its 50-day moving average (MA) of $1.0964.
But after threatening to challenge $1.10 on Wednesday afternoon, the EUR/USD rally ran out steam as the bullish market sentiment seen either side of the Easter break was replaced by a more cautious tone.
After another 3% rally for US stocks to start the week, S&P 500 futures were pointing lower ahead of the Wednesday open – as were futures markets for the FTSE 100 and STOXX 600.
Among the main moves in currencies during Asian trade was AUD/USD, as the Aussie slipped from one-month highs above $0.64 to fall by more than 1% for the session.
Widely viewed as one of the key barometers for global risk appetite, weakness in the AUD was reflective of a notable tone of caution in Wednesday trade.
In that environment, EUR/USD had edged back below its 50-day MA as London traders got to the desk, a short time ago trading in a narrow range just below $1.096.
Key US data catalysts in focus on Wednesday
With EUR/USD failing to find support at $1.10, traders will be keeping an eye on a crowded schedule of US economic data for March – the first month that was fully impacted by the COVID-19 pandemic.
Key data kicks off with retail sales, which are expected to slump by 8% for the month with discretionary spending 'particularly weak', Westpac currency strategist Sean Callow said.
That will be followed by industrial production figures, with the median forecast for a contraction of 4% amid supply-chain disruptions and a huge external supply shock.
Unexpected results for both data releases could impact the US dollar, with April’s National Association of Home Builders (NAHB) housing market index also due out while traders will be watching for any changes in economic commentary with the release of the Federal Reserve's (Fed's) Beige Book.
There’s also another group of big names on the earnings schedule, with Bank of America, Goldman Sachs and Citigroup all scheduled to report their trading results for the March quarter.
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