News & Data:
The USD strengthened in the past 24 hours, just two days ahead of the FOMC minutes release. While there weren’t any important data releases or events yesterday, the combination of positioning adjustments pre-FOMC and renewed worries about Greece were enough to help the Dollar rise against all other major currencies.
Overnight, the RBA released its meeting minutes and the AUD/USD dropped about 40 pips on the initial reaction as the bank kept its dovish bias. However, there was nothing surprising in the minutes and the move was quickly retraced, with AUD/USD now back at 0.7990. The Kiwi Dollar jumped higher after inflation expectations rose to 1.85 % from a previous 1.80 %. NZD/USD reached a high of 0.7425. Meanwhile, the Canadian Dollar gave up all of the previous week’s gains on broad USD strength and slightly weaker Oil prices overnight. Resistance at 1.2170 has held for now, but a break above 1.22 could pave the way for a move back to 1.2350.
EUR sentiment remains negative as the focus has returned back on Greece. EUR/USD fell below the 1.1320 support level, taking out stops in good size below and extended losses towards 1.1285. The Pound has also retraced, but 1.5630 support is holding for now. Traders are looking forward to the UK CPI release this morning, with the headline numbers expected at 0.4 % month-on-month and 0.0 % year-on-year.
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