Following last weekend’s U.S. employment data, dollar buying has been dominant. The retreat of ruling parties in Germany and France during the European parliamentary elections, coupled with France’s announcement of national assembly elections, added to political uncertainty, leading to euro weakness and risk-averse dollar buying. However, the dollar buying has paused somewhat, and some adjustments are being observed.
The dollar buying since the beginning of the week has been primarily led by the EUR/USD. The key point of interest is whether it will fill the gap at 1.0770-90 created early Monday morning. If the adjustment gains momentum, a rise above the 1.08 level could be expected. However, a return to pre-employment data levels near 1.09 would likely require fresh dollar-selling catalysts.
The economic indicators to be released in the overseas market today include the South Africa SACCI Business Confidence Index (May), South Africa Manufacturing Production (April), Mexico Industrial Production Index (April), and Canada Building Permits (April). There are no major indicators scheduled for the UK, US, or Europe.
Regarding event-related comments, speeches are scheduled from Simkus (Lithuanian Central Bank Governor), Villeroy de Galhau (Governor of the Bank of France), Lane (ECB Chief Economist), and Elderson (ECB Executive Board Member). These are expected to focus on explanations following the June rate cut, and may not provide new insights for future policy direction.
Overall, with key events such as the U.S. Consumer Price Index (CPI) and the Federal Open Market Committee (FOMC) meeting tomorrow, it is likely that new position formation will be restrained today.
While the dollar is exhibiting a nervous trend ahead of tomorrow’s CPI, the euro is clearly in a sell trend, so today we will focus on selling the euro.
