EUR/USD: economists expect EU economy to contract in Q1
The currency pair EUR/USD is holding around the level of 1.0709, and all attempts of its growth are restrained by weak macroeconomic statistics from the European Union.
Today the gross domestic product (GDP) for the first quarter is expected to be published. Analysts expect the pair to show zero growth compared to the previous 0.1%, which will lead to the slowdown of the annual rate from 1.8% to 1.2%. Some experts believe these forecasts are overstated, given the decline in the region's key economic indicators. For example, industrial production in Germany and Italy in April adjusted down to 1.75% and 3.2%, respectively, from a previous reading of 2.07% and 5.8%.
At the moment there are almost no prospects for the euro growth, and taking into account the stable dynamics of the American dollar the EUR/USD trading instrument is likely to continue its decline.
- Resistance levels: 1.0760 and 1.0900.
- Support levels: 1.0630, 1.0460.
USD/CAD: bears have taken the initiative in the pair.
During the Asian session, the pair USD/CAD strengthened the dominance of the "bears" in the short term, which led to a renewal of the local lows set on May 8.
The Canadian dollar received additional support from April export statistics, which increased from $63.24 billion to $64.85 billion, while imports declined from $63.01 billion to $62.91 billion. That boosted the trade surplus from $0.23 billion to $1.94 billion. On Friday, the May labor market report is expected to be released, which could determine the future dynamics of this asset. The unemployment rate is projected to increase from 5.0% to 5.1% and the number of employed people is expected to adjust from 41.4 thousand to 23.2 thousand. This will confirm further pressure on the economy.
- Resistance levels: 1.3400, 1.3450, 1.3500, 1.3550.
- Support levels: 1.3350, 1.3300, 1.3250, 1.3200.
GBP/USD: pound is showing a weak uptrend
At the moment the pair GBP/USD is recovering and holding near the levels reached on June 2, around 1.2452, after trading with mostly mixed dynamics.
Recently published macroeconomic statistics from the UK and the U.S. did not have a noticeable impact on the movement of this instrument. The Halifax housing price index for May showed zero dynamics after a decline of 0.4% in the previous month. On an annualized basis (over the last 3 months), the index declined 1.0% after rising 0.1% in the previous period, with a forecast of -0.95%. Demand for real estate is declining under the influence of high interest rates of the Bank of England and rising inflation. According to the forecast of the Organization for Economic Cooperation and Development (OECD), the United Kingdom will face the most significant inflation rate among developed countries this year, which could reach 6.9%. Next year, inflation is expected to fall to its target of 2.0% due to falling energy costs, but the baseline will remain above 3.2%.
- Resistance levels: 1.2450, 1.2500, 1.2550 and 1.2600.
- Support levels: 1.2419, 1.2390, 1.2350, 1.2307.
Silver price analysis
At the moment, the pair XAG/USD showed an unsteady corrective growth after the extremely volatile session that took place the day before. During this session, the instrument was able to renew the local highs set on May 16 and tested the level of 24.00, but finished the session in the "red" zone, closing at 23.40.
The volatility of the instrument is gradually declining towards the end of the current trading week, which is connected with the expectations of the upcoming meeting of the U.S. Federal Reserve System next week. It is predicted that the U.S. regulator will not tighten the current monetary policy, and the interest rate is likely to remain at 5.25%. However, the Fed may leave open the possibility of rate adjustments in the future depending on economic conditions as the inflation target in the 2.0-3.0% range has not yet been reached.
- Resistance levels: 24.00, 24.42, 25.00, 25.35.
- Support levels: 23.50, 23.29, 23.00, 22.65.