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By XE Market Analysis May 19, 2017 7:26 am
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    XE Market Analysis: North America - May 19, 2017

    The dollar has given back nearly all of yesterday's gain, with the narrow USD index presently showing a 0.4% decline at 97.35, down from the high seen during the New York PM session at 97.97. Yesterday's low is at 97.28, which is the lowest level seen since the U.S. presidential election last November. EUR-USD has vaulted back to within a whisker of the six-month high seen on Tuesday at 1.1171, Cable has lifted back above 1.3000, while USD-CAD has logged new three-week lows. One notable exception is USD-JPY, which has remained relatively bid, with the yen underperforming amid a risk-on backdrop in Europe, where equities have rallied.

    [EUR, USD]
    EUR-USD recovered to the mid 1.11s after printing a two-session low at 1.1076 yesterday as political tensions ease in the U.S. On the euro side of the equation, data have been generally encouraging, which along with the abatement of political existential risk in the Eurozone following the French election earlier in the month, looks set to pave the way for the ECB to finally make a start at de-stimulating monetary policy. We recommend following the upward EUR-USD trend. Former resistance is at 1.1053-55 now reverts as support, while the high from last November at 1.1299 provides an upside marker.

    [USD, JPY]
    USD-JPY bucked the generally softer dollar theme of the London AM session today, with the pair remaining relatively bid, with the yen underperforming amid a risk-on backdrop in Europe, where equities have rallied, reflecting an ebb in Trump-related political anxieties in the U.S. Resistance is at 111.90-91, and Support is at 111.13-15.

    [GBP, USD]
    Cable has lifted back above 1.3000 amid a bout of dollar selling during the London AM market. The pair closed out yesterday at levels around 1.2935, well off the eight-month high that had been logged earlier at 1.3048. The pound still needs to finish above the 1.2977 level to "close the gap" of the October-6 flash crash on a closing basis. While incoming UK fundamental leads have been pound positive, volatility over the last day has stemmed form the dollar side of the equation, linked to the trials and tribulations of the Trump presidency. We retain a near- to-median term bullish view of Cable, though remain wary of Brexit-related shocks (Euronext warned today that Brussel's will seek to relocate the euro clearing business into the EU once the UK has left). Support is at 1.2894-1.2900.

    [USD, CHF]
    EUR-CHF has recovered to around the 1.0900 level after logging a 10-day low at 1.0866. The volatility has stemmed from the impact the Trump intrigues have been having, which has been affecting safe haven currencies. The cross remains well up on the sub-1.07 levels that were prevailing in April before the French presidential elections, however.

    [USD, CAD]
    USD-CAD has seen some whippy price action over the last three days, though closing levels have consistently held around 1.3590 and 1.3600. With oil prices remaining perky, we anticipate a break lower in USD-CAD. Trend support is at 1.3533-35, resistance at 1.3622-25.

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