Highlights: Bank of England decided not to change the £375B asset purchase program and kept interest rates at 0.5%. Yesterday’s decision was welcome by traders, more on this below. The US Dollar Index (DXY) resumed recent downtrend and is set to test major support. The long-dollar bet that the greenback will continue to rally seems to be coming under a pressure given Fed being unlikely to raise interest rates this year and the trade deficit (trade balance) grew to multi-year high of $-51.37B, as reported last Tuesday by the Bureau of Economic Analysis.



EURUSD

There’s little change in Eurozone’s fundamental outlook as the EU still faces internal troubles with Greece. Recent price action – buy dips – continue to pay off. However, as there’s not an awful lot to fundamentally support the Euro, any gain will be connected with probable further greenback selloff.

With the RSI(14),H4 chart showing another divergence and plenty of room before falling into an overbought area, the market is likely to test 1.1350, break above could see fast paced move towards 1.15. Less likely scenario is a break below this week’s low at 1.1130, then below major support at 1.10-1.1020.



GBPUSD

The British Pound continues strengthening not only versus the greenback but versus most of currencies. The majority win for Conservative party in parliamentary election in the UK last week was widely approved by investors and traders around the world. Together with last week’s trade deficit report for March being better than for previous month by some £0.68B and steadily growing manufacturing and production, the UK is what some may see ‘in a good course for economic recovery’.

With the RSI(14),H4 chart showing divergence in the overbought area, GBPUSD is likely to retrace from current levels to 1.55 before resuming its way up. Traders will be looking to buy dips and join bull run above 1.57 towards 1.59. On the other side, a break below 1.55 could see closing the gap around 1.5250.



USDCAD

Following our view for the last few weeks, there’s a little change as the Loonie continues adding pressure for the US Dollar. With Oil prices pushing higher and overall sentiment being against the greenback, USDCAD is likely to break 1.20 and test 1.16s price level in coming weeks.