Inflation Fears Fade Somewhat for Now

USD SLIDES, EQUITIES REBOUND AS TAPER TALK CONCERNS EASE

The US dollar turned down against all but one of the other G10 currencies on Thursday and during the Asian session Friday. It lost the most ground versus CHF, SEK, GBP and EUR in that order, while it underperformed the least against AUD and NZD. The greenback eked out some gains only versus NOK.

EURO STOXX 50 — TECHNICAL OUTLOOK

The Euro Stoxx 50 cash index traded higher yesterday and today in Asia, and it is now approaching the key resistance of 4042, which has been preventing the index from drifting higher since April 16th. Overall, the price structure on the 4-hour chart shows a sideways movement, and thus, we will stay neutral for now. In order to get confident on more advances, we would like to see a clear break above 4042.

EUR/USD — TECHNICAL OUTLOOK

EUR/USD also edged north yesterday, but the recovery was stopped once again near the 1.2243 barrier, marked by Wednesday’s high, as well as by the high of February 25th. Today, the rate pulled back somewhat. Overall, EUR/USD continues to trade above the upside support line drawn from the low of March 31st, and thus, we would consider the near-term outlook to be positive.

AS FOR THE REST OF TODAY’S EVENTS

We have the UK retail sales for April, Canada’s retail sales for March, and the US existing home sales for April. The UK retail sales are expected to have slowed somewhat, but to have still increased at a strong rate. Canada’s sales are also expected to have slowed, while the US existing home sales are forecast to have risen.

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