Important events today:

15:00 UTC – US: Fed Board of Governors Chairman Jerome Powell will deliver a speech.

This currency pair has updated a six-month high and a technical correction to the 137.76/137.20 area is imminent. According to the latest US Federal Reserve data, the surplus of dollar liquidity in the American banking system increased by $54.6 billion over the last week, which is also negative for the American currency. On the other hand, I expect a continuation of the uptrend in the stock markets, which is positive for the currency pair, as it is historically strongly correlated with the stock markets.

A surplus of dollar liquidity is negative for the dollar, but positive for equity markets. The U.S. Treasury will spend $86.4 billion and the Fed will reduce its bond portfolio by $23 billion before the end of May. Thus, the liquidity in the system will grow by $63.4 billion, which will encourage traders to buy securities. On that background the SP500 has a good chance to go up to the yearly high of 4324 points.

Recommendations: flat 137.70 – 138.60.