April 19, 2021 13:09:32
Headlines
* USD hits six-week lows amid positive European vaccine news
* US stock futures dip, European stocks ease after record high
* Bitcoin bounces after near 14% weekend fall on fears of US money laundering crackdown
USD bears are in full force to start the week breaking through key March support on USDX at 91.31 on reports of improving vaccine supply for the EU. News that Pfizer and BioNTech will offer the region an additional 100 million vaccine doses this year has pushed EUR/USD through 1.20, while cable is rising for the sixth straight session.
US equity futures are pointing to a lower open after the record closes on Friday. Buoyant domestic data plus a stonking start to the earnings season, or one that is at least favouring banks and value stocks is helping the bid.
Market Thoughts – No love for the king
We wrote last week about the dollar sell-off continuing and 91 support getting hit on USDX, so we are near that point already this week. Low volatility (remember the dollar generally behaves poorly in a risk-on environment), speculative positioning (the heavyweight punters are losing interest in covering USD shorts) and steadier US market rates are all ganging up on king dollar, while today’s vaccine news is the shot in the arm that Europe needed on the rollout front, as let’s be honest, it hasn’t been the best time for policymakers in the bloc.
Chart of the Day – EUR/USD bearish channel broken?
The world’s most traded currency pair has bounced nicely off the bottom of the trend channel just above 1.17 since the start of this month. After consolidating a couple of moves higher, prices have broken out of the 1.1950/95 range where there was an abundance of resistance. We have broken out of the top part of the channel, around the halfway mark of the pairs losses since the January high and the 100-day SMA is at 1.2059. Support lies around 1.1950 intraday and the 50-day SMA at 1.1962.
The ECB is the key risk event to watch on Thursday, even though there shouldn’t be any Lagarde fireworks, which means go with the bullish momentum and technical break in the near-term.
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