Listless Price Development On Growing Risk-Aversion

Dear Traders,

The current market environment leaves much to be desired and given the listless price development it remains difficult for traders to take advantage of the muted market conditions. Even though the market should be repricing the prospects for higher interest rates in the USA, investors became far more risk-averse and showed reluctance to invest. So we will have to wait for an increase in risk appetite among investors in order to benefit from larger market movements and new trends.

Market participants await U.S. data on housing today for clues on the health of the economy. In the meantime, Fed policy makers continue to reinforce the likelihood of imminent rate increases with Fed President Bullard saying that he doesn’t see the U.K.’s vote on EU membership influencing the FOMC meeting that will be held the week before the referendum. Traders are currently pricing in a 30 percent chance of a rate hike in June and a 48 percent chance for a July hike. The focus could thus be on strong economic data, such as U.S. New Home Sales, scheduled for release at 14:00 UTC.If data fails to impress the dollar could weaken.

Before the U.S. data, U.K. Public Finances (8:30 UTC) and the German ZEW Survey (9:00 UTC) are scheduled for release.

Technically, the EUR/USD remains confined to a narrow trading range between 1.1250 and 1.1180. Let’s wait and see whether momentum accelerates after a break above or below this range.

The British pound ended the day unchanged against the U.S. dollar. We see a current resistance at 1.45 whereas a lower bound could currently be at 1.44.

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