The dollar slipped, allowing EUR/USD to reverse overnight losses, as COVID-19 treatments nFWN2EG1B3 and vaccines nL4N2EH2R8 optimism tempered risk aversion over surging U.S. infections, while sterling gains targeted its 200-day moving average nL1N2EH1KV.
An unexpectedly large rebound in French May industrial output, nearly erasing April’s pandemic plunge nL8N2EH1GM, and lingering optimism the EU will narrow differences over its pandemic recovery plan at the July 17-18 meeting nL8N2EH1E6 helped the euro.
The rebound in stocks, despite China's rally finally stumbling after the country's state funds announced stake cuts in companies nAZN00JMJT, diminished safe-haven dollar demand.
EUR/USD uncovered demand by the 21- and 30-day moving averages near the 1.1255 EBS session low.
The uptrend off March’s pandemic panic lows needs a weekly close above the 200-week moving average and the 38.2% Fibo of the 2018-20 drop at 1.1335/69 to gain fresh momentum, something to watch for after next week’s EU meeting.
GBP/USD’s rebound was capped just below Thursday’s 1.3669 July high by the upper 21-day Bolli, in a consolidative session marked by dollar weakness lending support to sterling.
Given the UK is seen suffering the sharpest major-economy peak-to-trough 2020 GDP slide from the pandemic, according to Moody’s nL8N2EH2NR, along with Brexit uncertainty, sterling's recent risk-on recovery against the dollar and euro may be vulnerable nL1N2EH10T.
The yen surrendered some intraday haven gains as stocks rebounded, along with Treasury-JGB yield spreads, but USD/JPY’s fall to a 106.635 EBS low breached the June 26 swing low at 106.80, as well as the weekly kijun and monthly tenkan props at 106.70, before recovering.
A bearish close below the 106.70 Ichimoku pivot points may be forestalled, along with a retest of the May-June lows by 106, but the 21-day moving average has gone from support earlier in the month to resistance, last at 107.23.
Global risk gauge AUD/JPY flirted with a bearish close below its 30-day moving average that has underpinned prices since April, now at 74.34 nL1N2EH15G.
High-beta and emerging market currencies were mostly soggy following the hiccup in China's bull market and USD/CNY ending the week right by the pivotal 7.0 level.
Copper's first new 2020 highs since January inspired little fanfare, nor did oil’s rebound from Thursday’s drop.
Thursday’s June retail sales update will take the economic spotlight, forecast at +4.5% following May’s surprisingly strong 17.7% recovery that was goosed by re-openings and pent-up demand that is fading and faces potential headwinds from renewed pandemic mitigation efforts.
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