Mid-Week Summary: July 2-6

By: Nikolas Xenofontos

EUR/USD

The Euro (EUR) commenced the week with apparent selling pressure against the US Dollar (USD), following Friday’s 223 pips rebound. A better than expected eurozone Manufacturing PMI on Monday and higher Retail Sales on Wednesday were not able to improve sentiment. On Thursday, the European Central Bank (ECB) is expected to announce a rate cut to 0.75% and investors worldwide will closely monitor this announcement at 11:45 GMT and the press conference at 12:30 GMT.

GBP/USD

The British Pound (GBP) versus the US Dollar (USD) showed some appetite to attain higher highs on Monday but the pair’s upside potential proved limited. A much worse than anticipated Construction PMI on Tuesday, followed by a disappointing Services PMI on Wednesday pushed the Sterling lower. An announcement regarding the Bank of England’s interest rate and further asset purchases is due on Thursday at 11:00 GMT and may move the pair accordingly.

EUR/JPY

The single currency plunged against the Japanese Yen (JPY) as the pair failed to break above the 101.60 resistance level. The relatively lackluster economic calendar from Japan leaves the pair susceptible to sizeable swings caused by developments in the eurozone. Market participants should be alert for headlines that may induce or remove risk appetite.

EUR/GBP

The Euro (EUR) versus the British Pound (GBP) had a volatile start to the week, which saw the pair opening higher at 0.8071 and then diving to 0.8017. Rate decisions from both central banks on Thursday and the respective statements that follow may heavily influence the exchange rate among the two currencies.

USD/CHF

The week commenced with the US Dollar (USD) weakening against the Swiss Franc (CHF). This was due to risk aversion following the positive resolutions reached during the EU summit held last week. The level to watch for this pair lies at 0.9570. A break and hold above this area could push the greenback higher.