Forex - Euro rallies up to 1.6019 on expectation ECB may raise rates

Forex News and Events: Euro rose against the Dollar on Tuesday trading above 1.6000 for the first time since its 1999 inception amid growing expectations that the European Central Bank's next move may be an interest rate hike. ECB Governing Council Member Christian Noyer said the bank would do what is needed to bring inflation back to its target of just below 2%, adding that the central bank would move rates if needed. That followed comments from Governing Council member Yves Mersch, who said the ECB has to ask itself each month whether a rate rise is needed to control inflation. The comments, combined with a mixed reading on US existing home sales in March, helped push the European currency through the key 1.6000 level. EurUsd traded as high as 1.6019 but later gave back some its gains to close at 1.5975 +0.39%. UsdJpy traded down 0.22% at 102.92. UsdChf dropped 0.48% to 1.0036 and GbpUsd rose 0.69% to 1.9961. ECB is seen keeping rates at least at a six-year high of 4% for a while. In contrast, markets expect the Federal Reserve to lower benchmark US rates further from the current 2.25% at a policy meeting on April 29-30. US economic data on Tuesday showed the housing market remains soft, with existing home sales falling 2% last month to 4930k. Elsewhere, the Canadian dollar fell after the Bank of Canada cut its benchmark interest rate by 50bp as expected. UsdCad last traded up 0.2% at 1.0081.

Today's Key Issues (time in GMT): 07:30 SEK Riksbank Rate 4.25% vs 4.25% 07:30 SEK March Unemployment 6.5% vs 6.1% 08:00 EUR April Euro-zone Manufacturing PMI 51.6 vs 52 08:30 GBP Minutes of the Bank of England’s April 9/10th MPC meeting 09:00 EUR February Euro-zone Industrial new Orders 0% vs 2% 09:00 EUR February Euro-zone Industrial new Orders 5.9% vs 7.3% 12:30 USD March National Activity Index previous -1.04 12:00 NOK Norges Bank interest rate decision 5.50% vs 5.25% 12:30 CAD February Retail Sales ex-autos 0.4% vs 1.3% (MoM) 12:30 CAD February Retail Sales 0.1% vs 1.5% (MoM) 17:00 GBP Bank of England’s Sentence speaks, London 21:00 NZD Res. Bank of New Zealand rate decision 8.25% vs 8.25%

The Risk Today: EurUsd Euro posted a new all time high at 1.6019 yesterday. Medium term trading range is set between 1.5800 – 1.6200. Strong support hold 1.5528 (23.6% retracement of 1.4311-1.5904 advance). Psychological 1.5000 level marks strong key support before 1.4500 pivot point. Key resistance holds 1.6200 market target. Initial support hold 1.5511 April 3rd low. Minor resistance holds 1.6000 key level. GbpUsd Cable is consolidating over 1.9800. Further strength may open the way toward 2.0000 psychological level. Confirmation over 2.0100 major pivot point would set Cable free for more uptrend. Actual trading range is 1.9800 – 2.0000. Renewed pressure below 1.9800 may open the way down to 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). UsdJpy It is currently holding just over 102. Further strength may open the way up to 105, then 110.10 strong (Trendline) resistance and mid January double top ahead of 111.92 early January high. Fail to overtop 105 will bring back weakness in 100 – 103 consolidation trading range. Minor support holds 102.95 early April high. UsdChf Market still remains weak below 1.0200. It is currently looking for direction with an ongoing triangle chart figure. Below 1.0000; strong support holds 0.9639 17th March low. Over 1.0000: uptrend would only return with a confirmation over 1.0200 resistances. Early January double top 1.1191 marks strong resistance.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.6200 T 2.0577 T 111.92 K 1.0500 S 1.6019 M 2.0447 S 110.10 T 1.0285 M 1.6000 K 2.0100 P 105.00 S 1.0200 S 1.5980 1.9895 103.10 1.0055 1.5528 S 1.9650 S 102.95 M 1.0000 P 1.5400 T 1.9337 S 100.00 P 0.9639 K 1.5000 K 1.9105 K 95.74 S 0.9500 T S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot