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By XE Market Analysis June 22, 2020 2:59 pm
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    XE Market Analysis: Asia - Jun 22, 2020

    A largely risk-on N.Y. session on Monday weighed on the Dollar as safe-haven flows were reversed, seeing the DXY pull back from Friday's three-week high of 97.72, to a low of 97.01. Wall Street headed moderately higher after opening in the red, while Treasury yields were little changed. Incoming U.S. data had May exiting home sales, which were in line with expectations, and had no market impact to speak of. EUR-USD topped at 1.1270, up from under 1.1210 at the open, as USD-JPY fell to 106.79 from over 106.95, later reclaiming 106.90. USD-CAD fell to 1.3527 after starting near 1.3590. Cable meanwhile, recovered over 1.2470 from 1.2380.

    [EUR, USD]
    EUR-USD rallied to four session highs of 1.1270, up from early lows of 1.1207. The Dollar generally pulled back from the three-week highs seen on Friday, largely as risk-on conditions prevailed, reversing safe-haven flows. The pairing's direction going forward will likely be driven by improving incoming data, though countered by fears for further virus outbreak. EUR-USD support is now at 1.1218, the 20-day moving average, with resistance at last Wednesday's high of 1.1295.

    [USD, JPY]
    USD-JPY recorded an inside day on Monday, ranging between 106.96 at the open, and 106.79 in late morning trade. Global economic and virus uncertainty will likely see the risk-sensitive Yen continue to move in line with sentiment, though until the next risk event presents itself, we look for the recent trading band between about 106.50 and 107.50 to prevail. The pairing headed back over 106.95 into the close. USD-JPY resistance comes at the 50-day moving average, currently at 107.44, with support at the June 12 low of 106.58.

    [GBP, USD]
    Cable recovered from three-week lows of 1.2335 seen during the Asian session, later recovering to 1.2471 highs after the London close, on a generally weaker USD. The U.K. focus this week is on the UK's preliminary June PMI surveys, due Tuesday, with BoE and Brexit news expected to be thin this week. The UK government is expected to detail a further relaxation in lockdown rules on Tuesday as well, which is expected to confirm the reopening of the hospitality industry on July 2 in the UK. This won't likely be a mover of the Pound in the event the prime minister confirms this.

    [USD, CHF]
    EUR-CHF edged over 1.0675 on Monday, after hitting a June low of 1.0637 on Friday. The cross has fallen back over the last week, though has continued to trade comfortably above the series of lows near 1.0500 that were seen from March through to mid May. Committed SNB intervention prevented the 1.0500 level from being breached over this period, when the consequences of the pandemic increasing bets about a possible breakup of the euro area, and even the EU. The SNB policy meeting was on Thursday, which stuck with negative rates for the foreseeable future and strengthened its commitment to intensify FX intervention if necessary to keep the CHF under control.

    [USD, CAD]
    USD-CAD pulled back from one-week highs if 1.3630, later bottoming at 1.3527 in North American trade. WTI crude prices consolidated over the $$40 mark, helping to support the CAD. The pairing's decline today appeared to also be driven by the risk backdrop, which turned positive, and has resulted in general USD weakness. Overall, USD-CAD has remained rangebound over the past week, and more of the same can be expected until a better feel for the virus and the economy make themselves known.

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