The previous week was very important for investors, even despite the fact the elevated market volatility was observed only in 27% of the time. A bunch of reports from the U.S., Europe, U.K. and Japan made it even more complicated for policymakers, who will gather this week to assess the current state of their domestic economies. Some of them are projected to offer surprises, hence, markets can be more volatile this week rather than during the last five trading days.
The Aussie has lost some of its attractiveness in the recent weeks, erasing some of the earlier made gains. During last week the AUD/USD pair was supported by a 200-period SMA on the 4H chart, however, on Friday, the pair received a strong bearish bias from the upbeat labour market data from the U.S. and was dragged to a strong support around 0.92-mark. During May's meeting the RBA is likely to stay pat on the monetary policy, while unemployment data on Thursday can surprise markets to the downside. Less confident central bank and disappointing statistics, as well as strongly bearish market sentiment (66%) are likely to push the pair to another key level for short traders located at weekly and monthly support at 0.9175, while the next strong support will be found only at 0.9098.
The pair, which is definitely worth paying attention to this week is EUR/USD. On April 30, a report from the Bureau of Economic Analysis showed the world's largest economy almost stalled in the first quarter. The main upside pressure, as always, came from consumer spending, which added more than 2% to the output, however, it was partially offset by weak private investment, which cut almost a percentage point. Moreover, weak foreign trade subtracted around 0.83% from GDP. Policymakers, however, were still blaming bad weather for the deterioration. Stronger spending is suggesting the slowdown will be short-lived, while unexpectedly stronger hiring only confirms this fact. Dukascopy traders has been selling the EUR/USD pair in more than 60% of the time since the beginning of this year. This week they, finally, have an opportunity to enjoy an impressive movement to the south. In the first half of the week the pair is likely to remain calm and steadily decline, as single currency will remain under the pressure ahead of the ECB meeting, while greenback will benefit from Friday's data.
Thursday will be the crunch time for the ECB again, however, the governing council will most likely keep its powder dry following April's pickup in inflation. While Draghi may hold the fire once again, dovish comments and a pledge to "do whatever" it takes will be highly anticipated. The most traded currency pair has been underpinned by a 200-day SMA since September and as long as 1.3663 level stands, the long-term outlook will still be bullish. This week, however, the pair can easily plunge towards weekly and monthly support around 1.3725.