Trump and geopolitics have been the driver of the currency market during the last 24 hours. Trump’s interview with the WSJ triggered a decline of the US dollar. He did not accuse China of a currency manipulator. “I like her, I respect her”, said about Janet Yellen but “it’s very early” to discuss a nomination for another term. After a decline across the board, the USD managed to stabilize and then recovered ground, particularly against European currencies. On Thursday during the American session, another Trump-related story hit the wires: the US dropped the largest non-nuclear bomb in Afghanistan to an ISIS tunnel complex. The impact on markets was modest. Equity indexes extended the decline and Treasuries gained momentum.
The bearish trend continues to dominate Wall Street equity indexes amid the risk aversion scenario. Gold consolidated all the Trump interview gains and it was hovering around $1285, up $30 for the week so far. Liquidity is likely to dry in the next hours amid Good Friday and most markets will remain closed. That scenario could favor low volatility. Over the next hours until Tuesday, price action is expected to remain limited, the main risk appears to be in the geopolitical front.
The EUR/USD pair jumped late Wednesday but during all Thursday it pulled back. Before the Asian session, the short-term trend and momentum continue to favor the retreat. The pair was testing the 20-SMA in four-hour charts at 1.0610/15, a consolidation below could lead to an extension of the slide. The next supports are located at 1.0590 and 1.0570. A consolidation under the last one would leave the pair vulnerable to a bearish acceleration. To the upside, if the euro holds above the 1.0600/10 area, a rebound seems likely; above 1.0640 it would gain support for a rally. The area around 1.0670/80, has become a barrier before the 1.0700 handle.
Support levels: 1.0600 1.0560 1.0525
Resistance levels: 1.0640 1.0670 1.0705