Euro rally loses steam ahead of business confidence data

The Australian dollar rose today as investors reacted to the relatively mixed news from Australia. The data showed that private new capital expenditure declined by 1.6% in the first quarter. That was slightly better than the previous decline of 2.8%. Building capital expenditure declined by 1.1%, which was also slightly better than the previous decline of 5.9%. In the same quarter, plant and machine capital expenditure declined by 2.3%, which was worse than the previous increase of 0.8%. The Aussie has been relatively strong recently because of how fast the Australian and Chinese economies have recovered.

Asian stocks rose today as investors remained optimistic about the economy and the likelihood of more stimulus. In Japan, the Nikkei 225 rose by more than 2% while in China, the A50 and Shanghai rose by 0.75% and 0.40% respectively. The only major laggard was the Hang Seng, which declined by 0.25%. That was after the US announced that it no longer considers Hong Kong to be autonomous from China. As a result, that puts at risk the special relationship that exists between the United States and Hong Kong. The decision came shortly after China announced it was bypassing Hong Kong’s legislature in passing security laws.

Looking ahead, we will receive the preliminary consumer price index data from Spain, Germany, and other eurozone countries. We will also get the business and consumer confidence data from the region. These will come a day after the European Commission unveiled a $826 billion recovery fund. From the United States, we will get the second reading of the GDP data. That will also include statistics on consumer spending. Also, we will get the durable goods orders, initial jobless claims, and pending home sales.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1037, which was the highest it has been since March. The price is still above the 100-day and 50-day exponential moving average and is between the 50% and 38.2% Fibonacci retracement level. Also, the RSI has remained slightly below the overbought level of 70. Therefore, the pair will likely remain in an upward trend as bulls attempt to test the important resistance level of 1.1066.

USD/CAD

The USD/CAD pair declined sharply in overnight trading. The price is now trading at 1.3732, which is the lowest it has been since March 16. On the four-hour chart, the price is below the important support level of 1.3857 and is also below the medium-term and longer-term moving averages. Also, the price has moved below the Ichimoku cloud. The pair will likely continue to fall as bears aim for the next support at 1.3650.

AUD/USD

The AUD/USD pair rose to an intraday high of 0.6632. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages. It is also above the yellow trendline shown below. Therefore, the pair may continue rising today as bulls attempt to test the previous high of 0.6676. On the flip side, a move below 0.6500 will invalidate this thesis. This price is an important psychological level as well as the 100-day EMA.