June 15th 2021: Dollar Motionless Ahead of Looming Fed Meeting

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.8 percent as of current trade.

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure unchanged from previous analysis.

In recent analysis, the chart breakdown highlighted softness south of Quasimodo resistance at 1.2278 since May 25th. This swings the technical pendulum in favour of shaking hands with a 50.00% retracement ratio at 1.1986, a horizontal level sharing chart space with the 200-day simple moving average around 1.1988.

The timeframe’s bearish setting is braced by the RSI value travelling through both support at 51.36 in addition to the 50.00 centreline (a 50.00 cross indicates a weakening of upside movement).

H4 timeframe:

Technical structure unchanged from previous analysis.

Ahead of Wednesday’s impending Fed meeting, Monday’s session echoed an uninspiring tone.

Yet EUR/USD bulls did manage to defend the 61.8% Fib retracement at 1.2094, a value (green) stationed north of demand from 1.2044-1.2071.

Technically speaking, 1.2044-1.2071 boasts a solid floor to be mindful of, infested with Fibonacci studies, including extension levels, expansions and projections.

Space south of demand throws light on support coming in at 1.1990.

H1 timeframe:

For those who read Monday’s technical briefing you may recall the following (italics):

Aided by a 1.618% Fib expansion at 1.2095 and a 1.272% Fib projection at 1.2098, the 1.21 figure embraced price action amidst US hours on Friday. Of course, we can also see 1.21 entered the frame at the same time the RSI indicator’s value dipped into oversold territory and shook hands with support at 14.74.

Another point worth highlighting is breakout stops plotted beneath the 1.2104 June 4th low (blue box). Tripping these orders as price greets bids around 1.21 has so far facilitated what’s known as a bear trap. This, therefore, could fuel additional buying as breakout sellers panic and liquidate (forming additional buy orders).

As evident from the chart, short-term sentiment navigated higher levels; breakout sellers clearly had a bad day on Monday, consequently delivering the currency pair to within striking distance of resistance at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value.

It is important to identify that should price move lower today and challenge 1.21 once again, demand at 1.2075-1.2085 is strategically positioned a touch under the psychological level. North of current resistance, however, shines light on the 100-period simple moving average, currently circling around 1.2156.

Observed levels:

Having seen the daily chart underline possible moves to a 50.00% retracement ratio at 1.1986, and the H1 chart showing signs of demand for lower prices ahead of resistance at 1.2132, retesting 1.21 is possible, from a short-term technical standpoint.

An alternative scenario, of course, is H4 bulls maintain position north of the 61.8% Fib retracement at 1.2094, targeting resistance at 1.2158.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Technical structure largely unchanged from previous analysis.

The daily chart’s technical scenery has been a dull affair since April 20th.

Despite a fleeting whipsaw to a low of 0.7645, resistance at 0.7816 and support from 0.7699 have outlined a range (yellow) since April 20th. However, technicians will note the recent pop south likely damaged the lower range edge, increasing the odds of sellers eventually taking the wheel.

Support at 0.7563 is in view as a potential objective below the current consolidation, deriving additional (dynamic) support from the 200-day simple moving average, circling 0.7542.

Above 0.7816, supply falls in at 0.8045-0.7985.

With respect to trend, we have been higher since early 2020, though we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging with space beneath the 50.00 centreline, unable to penetrate the latter since mid-May. This warns upside momentum hangs by a thread and a drop in on support from 37.92 could be on the cards.

H4 timeframe:

The technical story out of the H4 chart has the currency pair exploring no man’s land right now, at least according to basic chart studies.

A prominent technical ceiling exists at 0.7782: Quasimodo resistance, while downriver singles out familiar demand at 0.7632-0.7653—helped facilitate a sizeable rally at the beginning of the month.

H1 timeframe:

A closer examination of price action on the H1 chart reveals the unit locked horns with resistance at 0.7722 on Monday, dovetailing closely with a 38.2% Fib retracement at 0.7720, and, heading into the early hours of US trading, pursued lower levels.

0.77—associated with a 61.8% Fib retracement marked in green at 0.7695—calls for attention as workable support, levels that claimed position late Friday and early Monday. Downstream, demand from 0.7634-0.7649 is on the radar.

Presented through the RSI indicator, momentum remains under its 50.00 centreline, a sign bears maintain control for the time being. Structure to be cognisant of are resistance from 72.21 and support at 19.30.

Observed levels:

Based on technical studies, sellers appear to have the upper hand.

This is largely due to the decisive short-term dip from resistance at 0.7222—a location Monday’s technical briefing highlighted as a base sellers may be drawn to—and the daily timeframe threatening to conquer the lower side of its range at 0.7699.

A H1 close south of the 0.77 figure could attract additional bearish curiosity, taking aim at H1 demand from 0.7634-0.7649 (secured within H4 demand at 0.7632-0.7653).

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.5 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

USD/JPY, as you can see, demanded a bullish setting on Monday, ahead of Wednesday’s Fed meeting.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention overhead, sheltered a handful of pips under supply from 111.73-111.19.

108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85, are positioned downriver.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April.

The RSI continues to oscillate around resistance at 57.00, with the value recently establishing mild bottoms ahead of the 50.00 centreline and attempting to find grip above the barrier. Additional structure can be found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

Monday’s supportive tone was likely a welcomed sight for USD/JPY buyers out of demand at 109.02-109.20—an area joining the fight at the beginning of last week and noted in previous analysis as a base to keep an eye on. Technical eyes will also note the nearby trendline support present, taken from the low 107.48.

A key feature to remain aware of is the chart demonstrates scope to rally as far north as supply at 110.85-110.46 (houses Fib studies).

H1 timeframe:

For those who read Monday’s technical briefing you may recall the following (italics):

In fact, this supply [110.18-110.09] is strategically positioned to help facilitate a stop run above 110. Unhinging 110.18-110.09 reveals Quasimodo resistance at 110.41.

What adds credibility to the aforementioned supply zone—recently welcomed price action—is the overriding bearish position out of its base (red arrow), disturbing 109.63 and 109.52 lows. With this, and stops triggered above 110 fuelling 110.18-110.09 offers, a bearish theme is possible back under 110.

From the RSI indicator, the value is engaging with overbought conditions, mildly rotating from session peaks of 78.76.

Observed levels:

Although H1 supply at 110.18-110.09 stresses sturdy position, the concern is higher timeframes. The monthly chart has buyers attempting to take hold of a breached descending resistance, and the daily chart demonstrates scope to test long-term resistance at 110.94-110.29 (located above H1 supply), as well as the H4 chart also displaying room to reach for supply at 110.85-110.46 (boasts a connection with the daily timeframe’s resistance area).

With this in mind, bearish attempts from 110.85-110.46 are unlikely to deliver anything earthshattering. In fact, 110 serving as support should not surprise, with a reaction perhaps targeting 110.29 as an initial base.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis.

Sterling against the dollar has emphasised an uneventful picture since May 18th, fluctuating between gains and losses south of Quasimodo resistance at 1.4250. Monday finished in the shape of a doji indecision candle.

Support at 1.4003 remains within reach. Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position, with Monday closing in on the 50.00 centreline.

H4 timeframe:

The passage below was taken from previous analysis (italics):

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. Interestingly, an additional consolidation pencilled in its presence at the beginning of June between 1.4188 and 1.4083. As you can see, the fact price left the larger upper range resistance at 1.4219 unchallenged informs traders that sellers could be gaining muscle. To confirm this, of course, traders would require a breakdown that not only conquers the lower edge of both consolidations (1.4096/1.4083), but also trendline support, drawn from the low 1.3668, consequently unmasking support at 1.4007.

Monday occupied the lower boundaries of the aforementioned consolidations, within a stone’s throw of trendline support.

H1 timeframe:

Support at 1.4078 and the 1.41 figure invited a bullish phase on Monday, aided by the RSI value scraping oversold territory.

Despite bulls displaying interest, upside momentum levelled off heading into US hours, consequently forming RSI resistance around the 50.00 centreline. We do have the unit currently retesting 1.41, which if accepted, unlocks a possible move to the 100-period simple moving average at 1.4133.

Territory below 1.4078 directs focus to Quasimodo support at 1.4026, as well as the widely watched 1.40 figure.

Observed levels:

The lack of buying interest off H4 range supports (two consolidations exist at 1.4096/1.4219 and 1.4188/1.4083), together with the daily timeframe absent of support until 1.4003, underscores a bearish theme.

Ultimately, to help validate a bearish presence, traders will want to see price below the said range supports and neighbouring H4 trendline support, from the low 1.3668.

Should 1.4078 break, H1 Quasimodo support at 1.4026 and the key figure 1.40 would be in view—joins closely with daily support from 1.4003.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

AUD/USD Price Forecast – Australian Dollar Continues Same Range

The Australian dollar has rallied a bit during the trading session on Monday to reach towards the 50 day EMA yet again. The 0.77 level looks to be supportive, and therefore I do not have any interest in trying to short this pair, but then again, I am not looking for a major move either. The 0.7 a level is the beginning of resistance, although I would be the first to point out that the overall sideways ranges somewhat sloppy so I would not get overly excited about this pair but recognize that there is the possibility of short-term trading back and forth.

AUD/USD Video 15.06.21

At this point, I think that the market is trying to figure out where we are going longer term when it comes to inflation and of course growth, as most of the world has been playing the reopening trade, but it is worth noting that the Aussie has stopped rallying. This suggests that there is a lot of uncertainty out there, and therefore I anticipate that we will have a bigger move, but it may quite frankly be towards the end of the summer.

In the meantime, the market is only going to do more of the same, as the Chinese and the Australians continue with a trade spat, and for what it is worth it is probably notable that the Chinese stock markets have not been acting well. On the other hand, a lot of people are going to wonder about tapering coming out of the United States. With all of this noise, I am afraid the Aussie probably has nowhere to be.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Trying to Establish Support at .7711-.7669 Short-Term Retracement Zone

The Australian Dollar is edging higher on Monday on light volume with the markets closed domestically for a public holiday. The Fed’s two-day policy meeting will likely dominate investor behavior in the Australian Dollar.  Although the central bank is not expected to take any action, its forecasts for interest rates, inflation and the economy could move the greenback and Aussie.

At 11:13 GMT, the AUD/USD is trading .7718, up 0.0015 or +0.19%.

In Australia, investors will get the opportunity to react to a speech by RBA Governor Philip Lowe on June 17, shortly before the release of reports on Employment Change and Unemployment Rate. The Employment Change report is expected to show the economy added 30.5K new jobs, offsetting last month’s dismal -30.6K reading. The Unemployment Rate is expected to remain steady at 5.5%.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend changed to up on Friday when buyers took out the previous main top at .7774, but the rally stalled at .7776. Technically, a trade through this level will signal a resumption of the uptrend, while a move through .7646 will change the main trend to down.

The minor trend changed to down on Friday. This shifted momentum to the downside.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is currently being tested. This zone has provided support for over a month.

The minor range is .7646 to .7776. Its 50% level or pivot at .7711 forms a support cluster with the short-term 50% level.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is major resistance, having stopped rallies four times since early May.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to the short-term 50% level at .7711.

Bullish Scenario

A sustained move over .7712 will indicate the presence of buyers. If this move can create enough upside momentum this week then look for the move to extend into at least .7770 to .7776.

Bearish Scenario

A sustained move under .7711 will signal the presence of sellers. This could trigger a resumption of the sell-off with the next target .7669, followed by .7646.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data and Central Bank Chatter Put the EUR, the Loonie, and the Pound in Focus

Earlier in the Day:

It was a quiet start to the week on the economic calendar this morning, with Australian and China markets closed today. Later this morning, the Japanese Yen will be in action, however.

For the Japanese Yen

Through the early hours, the Japanese Yen was down by 0.10% to ¥109.77 against the U.S Dollar. Later this morning, finalized industrial production figures for April are due out.

Barring any marked revisions, however, we don’t expect the numbers to influence.

According to prelim figures, industrial production increased by 2.5%, month-on-month. In March, production had risen by 1.7%.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.10% to $0.7700, while the Kiwi Dollar was up by 0.13% to $0.7139.

The Day Ahead

For the EUR

It’s a quiet day ahead on the economic data front. April industrial production figures for the Eurozone are due out later today.

Following some disappointing production figures from France and Germany, a weak set of numbers would pin the EUR back.

At the time of writing, the EUR was down by 0.07% to $1.2101.

For the Pound

It’s a particularly quiet day ahead on the economic calendar.

There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of government plans vis-à-vis remaining COVID-19 restrictions and updates from the G7 Summit.

On the monetary policy front, BoE Gov. Bailey is due to speak late in the day and could move the dial…

At the time of writing, the Pound was up by 0.04% to $1.4113.

Across the Pond

It’s also a quiet day ahead on the economic calendar. There are no material stats due out of the U.S to provide the Dollar with direction.

The lack of stats will leave the Greenback in the hands of market sentiment towards this week’s FOMC meet.

At the time of writing, the Dollar Spot Index was up by 0.02% to 90.576.

For the Loonie

It’s a quiet day ahead on the economic data front. Manufacturing sales figures for April are due out late in the day.

With little else to focus on, we can expect some influence from the numbers.

Ultimately, however, market risk sentiment will be the key driver at the start of the week.

At the time of writing, the Loonie was down by 0.01% to C$1.2159 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Federal Reserve Decisions Likely to Set Early Tone

The Australian and New Zealand Dollars finished sharply lower last week against the U.S. Dollar as investors bet interest rates would stay lower for longer in Australia and New Zealand, a day after currency markets shrugged off another surge in U.S. consumer inflation as likely to be temporary.

Last week, the AUD/USD settled at .7703, down 0.0041 or -0.53% and the NZD/USD closed at .7128, down 0.0084 or -1.16%.

Reopening US Economy Heats Up Consumer Inflation; Labor Market Recovery Gaining Traction

U.S. consumer prices rose solidly in May, leading to the biggest annual increase in nearly 13 years as a reopening economy boosted demand for travel-related services, while a global semiconductor shortage drove up prices for used motor vehicles.

The pandemic’s easing grip on the economy was also underscored by other data from the Labor Department on Thursday showing the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months.

The consumer price index increased 0.6% last month after surging 0.8% in April, which was the largest gain since June 2009. In the 12 months through May, the CPI accelerated 5.0%. That was the biggest year-on-year increase since August 2008 and followed a 4.2% rise in April. Economists polled by Reuters had forecast the CPI rising 0.4% in May and vaulting 4.7% year-on-year.

Core inflation increased 0.7% after soaring 0.9% in April. It was boosted by a 7.3% rise in used cars and truck prices. New vehicle prices also increased strongly. The core CPI shot up 3.8% in the 12 months through May, the largest increase since June 1992.

In another report last Thursday, the Labor Department said initial claims for state unemployment benefits fell 9,000 to a seasonally adjusted 376,000 for the week ended June 5. That was the lowest since mid-March 2020 when the first wave of COVID-19 infections barreled through the country, leading to closures of nonessential businesses.

Weekly Outlook

The Fed’s two-day policy meeting will likely dominate investor behavior in the risky Australian and New Zealand Dollar’s this week. Although the central bank is not expected to take any action, its forecasts for interest rates, inflation and the economy could move the greenback, Aussie and Kiwi.

Fed Chairman Jerome Powell speaks to the press after the central bank issues its statement at 18:00 GMT on Wednesday, June 16. He is expected to affirm the Fed’s commitment to easy policy. However, concerns over inflation and how the Fed could react is likely to influence market direction, especially after a hotter-than-expected consumer inflation reading for May was reported last Thursday, CNBC reported.

In Australia, investors will get the opportunity to react to a speech by RBA Governor Philip Lowe on June 17, shortly before the release of reports on Employment Change and Unemployment Rate. The Employment Change report is expected to show the economy added 30.5K new jobs, offsetting last month’s dismal -30.6K reading. The Unemployment Rate is expected to remain steady at 5.5%.

In New Zealand, the quarterly GDP report is expected to come in at 0.5%, up from the previously reported -1.0%. Although the economy is growing, the news is not expected to change Reserve Bank monetary policy. Last month, the central bank signaled a possible rate hike in September 2022.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – A Busier Economic Calendar and the FED to Keep the Markets Busy

On the Macro

It’s a busier week ahead on the economic calendar, with 60 stats in focus in the week ending 18th June. In the week prior, 45 stats had been in focus.

For the Dollar:

Early in the week, Wholesale inflation and retail sales figures will be in focus.

While inflation figures remain a key area of interest, retail sales will likely be the main focal point.

On Thursday, Philly FED Manufacturing and weekly jobless claim figures will also influence.

Other stats include industrial production, housing sector data, and manufacturing numbers out of NY State. We don’t expect these to have too much influence in the week, however.

On the monetary policy front, it will be the FED’s June monetary policy decision that will be the main event.

The markets are expecting discussions on a tapering to the asset purchasing program to begin. Will there be talk of a shift in sentiment towards interest rates? The projections will hold the key.

In the week, the Dollar ended the week up by 0.46% to 90.555.

For the EUR:

It’s a relatively quiet week on the economic data front.

Eurozone industrial production, trade, and wage growth figures are due out Monday through Wednesday.

With little else for the markets to consider, we can expect the numbers to influence.

Finalized inflation figures for May are also due out for France, Germany, Italy, and the Eurozone.

Barring marked revisions to prelim figures, however, the numbers should have limited impact on the EUR.

The EUR ended the week down by 0.48% to $1.2108.

For the Pound:

It’s a busier week ahead on the economic calendar.

Employment figures are due out on Tuesday. Expect claimant counts and the unemployment rate to be the key numbers.

On Wednesday, inflation figures will also influence ahead of retail sales figures on Friday.

Impressive numbers will fuel speculation of a near-term move by the BoE. Much will depend upon the government’s reopening plans, however.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak in the week. Expect any forward guidance to influence.

The Pound ended the week down by 0.35% to $1.4107.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

At the start of the week, manufacturing sales figures are due out ahead of inflation figures on Wednesday.

Expect the inflation figures to be key.

Crude oil inventory numbers will also influence mid-week.

The Loonie ended the week down 0.61% to C$1.2158 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead.

Employment figures for May are due out on Thursday. The numbers remain key, with the RBA unwilling to make a move until the slack is removed. Weak numbers would certainly test support levels.

On the monetary policy front, the RBA meeting minutes early in the week will provide direction.

The Aussie Dollar ended the week down by 0.40% to $0.7708.

For the Kiwi Dollar:

It’s also a quiet week ahead.

1st quarter current account and GDP numbers are due out.

Expect the GDP number on Thursday to be key.

Economic data from China will also influence early in the week.

The Kiwi Dollar ended the week down by 1.16% to $0.7130.

For the Japanese Yen:

Finalized industrial production figures are due out at the start of the week. Expect any marked revisions to influence ahead of trade data on Wednesday.

Inflation figures on Friday should have a muted impact, with the BoJ in action at the end of the week.

The Japanese Yen fell by 0.13% to ¥109.66 against the U.S Dollar.

Out of China

Industrial production, retail sales, and fixed asset investments will be in focus.

Following disappointing numbers for April, the markets will be looking for improvement. Weaker numbers would test support for riskier assets on Wednesday.

The Chinese Yuan ended the week down by 0.05% to CNY6.3988 against the U.S Dollar.

Geo-Politics

There are no major risks to consider in the week ahead. Key takeaways from the G7 will likely influence, however.

As always, however, the markets will need to continue monitoring chatter from Capitol Hill and Beijing.

The Iranian presidential election is in the week ahead…

Weekly Technical Market Insight: 14th – 18th June 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Last week’s session observed the US dollar—according to the US dollar index—abandon its two-week indecisive phase and establish moderate gains (0.4 percent).

Earlier weekly reports shined the technical spotlight on a descending wedge pattern (a shape exhibiting decreased downside momentum within converging walls [91.43/90.42]). Traders will note both converging lines received at least two tests, yet some textbooks require three to form at the upper base. Nevertheless, the beginning of June had the unit retest the upper boundary of the wedge and develop support, following a breakout higher on May 28th.

Recent analysis also highlighted the following points (italics):

  • Since the DXY topped out at the 93.43 31st March peak, and cooked up reasonably decisive downside movement, the wedge, and subsequent upside breach, is perhaps a reversal signal.
  • The pattern’s upside target rests beneath resistance at 91.36 (red), stationed south of the 200-day simple moving average, circling 91.56. Should pattern bids hold the buck higher this week, price targeting 91.36 is a reasonably logical approach.
  • However, it’s important to note a bearish narrative has clouded the greenback since the early months of 2020, by way of well-defined lower lows and lower highs. Many analysts likely refer to this downward movement as a primary trend, as it’s visible structure from the weekly scale. Consequently, this unlocks the possibility of fresh lower lows beyond 89.34 support over the coming weeks (see black arrows), with sellers taking aim at Quasimodo support from 88.43.

Momentum studies, through the RSI indicator, shows the line elbowed north of the 50.00 centreline last week and finished on the doorstep of indicator resistance at 55.67.

Should an extension to the current pullback materialise, a bearish scenario—in line with the current downtrend—unfolding off 91.36 resistance remains a possible scenario this week. 91.36 is reinforced not only by a nearby 200-day simple moving average (dynamic resistance) at 91.56, but also the wedge pattern’s take-profit target around 91.32. At the same time, failure to maintain gains may result in a dip to support at 89.34, a level which echoes vulnerability and could unlock the door to Quasimodo support at 88.43.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 1 percent as of current trade.

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

A closer reading of price action on the daily chart shows the single currency cut away at recent attempts to explore higher.

Quasimodo resistance at 1.2278, as you can see, was left untested in recent weeks, with latest downside tipping the scales in favour of testing dynamic support around 1.1987: the 200-day simple moving average. Technicians will note the aforementioned SMA shares chart space with a 50.00% retracement ratio at 1.1986.

Adding weight to the downside is the RSI indicator. As sellers strengthened their grip Friday, the RSI value brushed aside support at 51.36 in addition to the 50.00 centreline (a 50.00 cross indicates a weakening of upside movement).

H4 timeframe:

Friday’s one-way slide watched the currency pair lock horns with a 61.8% Fib retracement at 1.2094, a horizontal value (green) stationed just north of interesting demand from 1.2044-1.2071. Technically speaking, this area boasts a solid floor to be mindful of this week, overrun with Fibonacci studies, including extension levels, expansion levels and projections.

Space south of demand, however, throws light on support coming in at 1.1990.

H1 timeframe:

Aided by a 1.618% Fib expansion at 1.2095 and a 1.272% Fib projection at 1.2098, the 1.21 figure embraced price action amidst US hours on Friday. Of course, we can also see 1.21 entered the frame at the same time the RSI indicator’s value dipped into oversold territory and shook hands with support at 14.74.

Another point worth highlighting is breakout stops plotted beneath the 1.2104 June 4th low (blue box). Tripping these orders as price greets bids around 1.21 has so far facilitated what’s known as a bear trap. This, therefore, could fuel additional buying as breakout sellers panic and liquidate (forming additional buy orders).

Demand at 1.2075-1.2085, nevertheless, is strategically positioned a touch under 1.21. Overhead, resistance is found at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value.

Observed levels:

Long term:

From the monthly chart, the outlook continues to emphasise a bullish bias, taking aim at 2021 tops around 1.2349 and ascending resistance. Before discovering northerly ground, the daily timeframe argues a test of the 200-day simple moving average (1.1987) and neighbouring 50.00% retracement at 1.1986 may be in store.

Short term:

The combination of the 1.21 figure on the H1 and associated Fib studies, together with the possibility of breakout sellers’ orders being liquidated to form buy orders and a 61.8% Fib retracement on the H4 at 1.2093, signals a possible test of H1 resistance at 1.2132 early week (joined with a 38.2% Fib retracement).

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Technical structure unchanged from previous analysis.

The daily chart’s technical scenery has been a dull affair since April 20th.

Despite a fleeting whipsaw to a low of 0.7645, resistance at 0.7816 and support from 0.7699 continue to outline a defined range (yellow).

Support at 0.7563 is in view as a potential objective in the event sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7540. Above 0.7816, supply falls in at 0.8045-0.7985.

With respect to trend, we have been higher since early 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging with space beneath the 50.00 centreline, unable to penetrate the latter since mid-May. This warns upside momentum could suffer this week and drop in on support from 37.92 and maybe oversold territory.

H4 timeframe:

Leaving Quasimodo resistance at 0.7782 unopposed on Friday, sellers took the reins and extended losses to highlight 0.7632-0.7653 demand this week. Note this was an area that helped facilitate a sizeable rally at the beginning of the month.

H1 timeframe:

Following a test of supply from 0.7783-0.7771 during early Europe Friday (holds H4 Quasimodo resistance within at 0.7782), the early hours of US trading had price test the resolve of 0.77. Helped by a 61.8% Fib retracement (green) nestled just under the round number from 0.7695, a mild recovery occurred. Also reinforcing the 0.77 test is the RSI value dipped a toe in oversold waters and missed support at 19.30 by a whisker before exiting the area into the close.

Resistance at 0.7722 is on the radar, dovetailing closely with a 38.2% Fib retracement at 0.7720, while any sustained movement beneath 0.77 unlocks the door to demand at 0.7634-0.7649 (fixed within the walls of H4 demand at 0.7632-0.7653).

Observed levels:

Long term:

Looking over the monthly and daily charts echoes a bearish vibe. The monthly is contained under major supply and trendline support-turned resistance. The daily timeframe has been carving out a consolidation since mid-April between 0.7816 and 0.7699. Notably, though, June has watched price toy with the lower side of the said range, offering uninspiring bullish intent. With that, daily support at 0.7563 could be targeted.

Short term:

Scope to navigate deeper water on the H4 timeframe until crossing swords with demand at 0.7632-0.7653 signals the 0.77 figure on the H1—despite holding Friday and working with additional 61.8% Fib support from 0.7695—is on the verge of stepping aside and unmasking demand at 0.7634-0.7649 (which as we know is connected with H4 demand at 0.7632-0.7653). However, before any downside attempt takes shape, a 0.7722 resistance test could form—a location sellers may be drawn to early week.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.1 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Alternating between gains and losses, last week wrapped up largely unmoved.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April. Subsequent months witnessed a sizeable retracement, followed by attempts to recapture losses.

The RSI continues to oscillate around resistance at 57.00, with the value recently establishing mild bottoms ahead of the 50.00 centreline. Additional structure seen are support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

The emergence of a broad USD bid, along with a risk-on theme, elevated USD/JPY on Friday, consequently maintaining a bullish vibe above demand at 109.02-109.20—an area joining the fight at the beginning of last week.

A key feature to be aware of is not only does the chart demonstrate scope to rally as far north as supply at 110.85-110.46 (houses Fib studies), the noted demand is positioned nearby trendline support, drawn from the low 107.48.

Failure to hold current demand, attention shifts to another layer of proven demand printed at 108.20-108.43.

H1 timeframe:

Arranged by way of the 1.10 figure, resistance at 109.95, a three-drive bearish formation at 109.93 (albeit not perfect), a 100% Fib projection at 109.88, and a 61.8% Fib retracement at 109.89, the 110.00-109.88 area forms relatively dense resistance.

Upstream, 110.18-110.09 supply is in focus (this area is particularly standout due to the momentum derived out of its base which dug below a handful of support points). In fact, this supply is strategically positioned to help facilitate a stop run above 110. Unhinging 110.18-110.09 reveals Quasimodo resistance at 110.41.

109.30 lows, on the other hand, is evident to the downside, closely tailed by familiar demand at 109.07-109.19 (fixed within H4 demand at 109.02-109.20).

On the basis of the RSI indicator, the value pulled away from overbought status Friday and now eyes trendline support, drawn from the low 20.25.

Observed levels:

Long term:

The descending resistance-turned possible support, etched from the high 118.66, belonging to the monthly chart has buyers attempting to take hold. Technically, this places the daily timeframe’s long-term resistance zone at 110.94-110.29 in question and, therefore, may have buyers set up a defence around 108.60 lows if tested.

Short term:

The H4 scale currently trades in unison with the monthly timeframe: scope to approach at least supply at 110.85-110.46.

Lower down, any H1 buying must face a number of notable resistances until Quasimodo resistance at 110.41, which essentially marks the lower boundary of H4 supply.

Therefore, in light of the picture out of both monthly and H4 timeframes, any bearish attempts from the said H1 resistances could be short-lived and promote a bullish scenario to approximately 110.40ish.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis.

Sterling against the dollar has emphasised an uneventful picture since May 18th, fluctuating between gains and losses south of Quasimodo resistance at 1.4250.

GBP/USD finished on the ropes for a second straight week amid raised concerns regarding a full reopening, placing support at 1.4003 within reach this week. Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position, with last week wrapping up within touching distance of the 50.00 centreline.

H4 timeframe:

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. Interestingly, an additional consolidation pencilled in its presence at the beginning of June between 1.4188 and 1.4083. As you can see, the fact price left the larger upper range at 1.4219 unchallenged informs traders that sellers could be gaining muscle. To confirm this, of course, we would require a breakdown that not only conquers the lower edge of both consolidations (1.4096/1.4083), but also trendline support, drawn from the low 1.3668, consequently unmasking support at 1.4007.

H1 timeframe:

From June onwards, the theme on the H1 chart has been set around the 1.41 and 1.42 figures, along with the 100-period simple moving average, currently circling in between at 1.4146. Also, important areas to recognise are support at 1.4078 and resistance plotted at 1.4246. In fact, 1.4078 served as a substantial floor on Thursday, serving to help more informed traders capitalise on the stop run south of 1.41.

Price action failing to touch gloves with 1.42 since June 7th signals possible moves through 1.41 and support at 1.4078 this week, targeting Quasimodo support from 1.4026.

As you can see, the week ended forming a mild recovery from 1.41, confirmed by the RSI indicator bouncing from oversold space and chalking up what’s known as hidden bullish divergence (essentially signalling price strength despite momentum squeezing lower—these are usually seen as continuation patterns).

Observed levels:

Long term:

The monthly timeframe’s trendline resistance breach in December 2020 underlines a bullish stance. Before buyers change gears, however, touching gloves with support at 1.4003 or demand at 1.3857-1.3940 on the daily timeframe could be in the offing.

Short term:

Shorter term, nonetheless, the H4 timeframe’s ranging action (two clear consolidations exist at 1.4096/1.4219 and 1.4188/1.4083) calls attention to the recent jaded upside. Ultimately, to help validate weakened bulls, price must tunnel below the said range supports and neighbouring trendline support.

Given the H4 timeframe’s picture, 1.41 on the H and support from 1.4078 may deliver little early week and suffer a breach. Should this come to fruition, a 1.4078 break potentially drives moves to H1 Quasimodo support at 1.4026 and the key figure 1.40, which joins closely with daily support from 1.4003.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

The Weekly Wrap – Monetary Policy and Economic Data Accompanied Market Optimism

The Stats

It was a quieter week on the economic calendar, in the week ending 11th June.

A total of 45 stats were monitored, following 80 stats from the week prior.

Of the 45 stats, 23 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. There were just 3 stats that were in line with forecasts in the week.

Looking at the numbers, 29 of the stats reflected an upward trend from previous figures. Of the remaining 16 stats, 15 reflected a deterioration from previous.

For the Greenback, economic data and market anticipation ahead of next week’s FOMC policy decision remained the key drivers. In the week ending 11th June, the Dollar Spot Index rose by 0.46% to 90.5550. In the previous week, the Dollar had risen by 0.12% to 90.136.

Out of the U.S

JOLT’s job openings and trade data were in focus early in the week.

The stats were skewed to the positive. In April openings jumped from 8.288m to 9.286m, with April’s trade deficit narrowing from $75.0bn to $68.9bn.

While the stats were market positive, there was limited impact on the Dollar and the broader markets.

The focus was on the weekly jobless claims and inflation figures due out on Thursday.

Also skewed to the positive, the annual core rate of inflation accelerated from 3.0% to 3.8%. Economists had forecast a pickup to 3.4%.

Core consumer prices and consumer prices continued to rise in the month of May and by more than had been expected.

Month-on-month, core consumer prices increased by 0.7% off the back of a 0.9% rise in April.

Initial jobless claim figures were also positive but perhaps not impressive enough to force the FED into action. In the week ending 4th June, initial jobless claims fell from a revised 405k to 376k. Economists had forecast a decline to 370k.

At the end of the week, prelim consumer sentiment figures wrapped things up.

In June, the Michigan Consumer Sentiment index climbed from 82.9 to 86.4. Economists had forecast a rise to 84.0.

In the equity markets, the Dow fell by 0.80%, while the NASDAQ and the S&P500 saw gains of 1.85% and 0.41% respectively.

Out of the UK

It was a relatively quiet week, GDP, manufacturing and industrial production, and trade data in focus.

The markets had to wait until Friday, however, for the numbers.

In April, the UK economy grew by 2.3% in the month, following 2.1% growth in March.

Trade data for April was also positive. The trade deficit narrowed from £11.71bn to £10.96bn, with the non-EU deficit narrowing from £6.55bn to £5.55bn.

While GDP numbers and trade data were positive, production figures disappointed.

Manufacturing production fell by 0.3% versus a forecasted 1.5% increase. Industrial production declined by 1.3% versus a forecasted 1.2% increase.

In the week, the Pound fell by 0.35% to end the week at $1.4107. In the week prior, the Pound had fallen by 0.22% to $1.4147.

The FTSE100 ended the week up by 0.92%, following a 0.66% rise from the previous week.

Out of the Eurozone

 

It was a busy 1st half of the week on the economic data front.

 

The German economy was in focus.

 

In April, German factory orders (-0.20%) and industrial production (-1.00%) unexpectedly fell, following solid gains from March.

 

A modest increase in Germany’s trade surplus also disappointed, falling short of forecasts.

 

Economic sentiment figures from Germany and the Eurozone were also skewed to the negative. Sentiment towards the German and the Eurozone economies weakened marginally in June.

The numbers were not enough to spook the markets ahead of Thursday’s ECB policy decision and press conference.

 

Providing support in the early part of the week were finalized 1st quarter GDP numbers for the Eurozone.

 

Quarter-on-quarter, the Eurozone economy contracted by a modest 0.3%, revised up from a prelim 0.6% contraction.

 

In the 2nd half of the week, the focus was on the ECB and the all-important press conference.

 

Upward revisions to growth and inflation for this year coupled raised the prospects of a possible nearer-term tapering. Talk of unwavering support through the coming months was therefore key. The ECB’s inflation forecasts also pointed to easing inflationary pressures in 2022 and 2023, which also pegged the EUR back.

For the week, the EUR fell by 0.48% to $1.2108. In the week prior, the EUR had fallen by 0.21% to $1.2167.

The DAX30 ended the week flat, while the CAC40 and the EuroStoxx600 rose by 1.30% and by 1.09% respectively.

For the Loonie

It was a quiet week. Economic data was limited to trade data for April, which was positive for the Loonie.

In April, Canada’s trade balance rose from a C$1.35bn deficit to a C$0.59bn surplus.

A further increase in crude oil prices was also Loonie positive.

The main event, however, was the BoC monetary policy decision on Wednesday.

In line with market expectations, the BoC stood pat on monetary policy. Following May’s more hawkish messaging, the BoC took a more cautious approach, avoiding a Loonie rally.

The key takeaway was that the BoC would continue to deliver extraordinary monetary policy support until the 2% inflation target was sustainably achieved.

In the week ending 11th June, the Loonie declined by 0.061% to C$1.2158. In the week prior, the Loonie had fallen by 0.07% to C$1.2084.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 11th June, the Aussie Dollar fell by 0.40% to $0.7708, with the Kiwi Dollar sliding by 1.16% to $0.7130.

For the Aussie Dollar

It was a quiet week. Business and consumer confidence figures were in focus, with the stats skewed to the negative.

In May, the NAB Business Confidence Index slipped from 23 points to 20 points. The modest decline had a limited impact on the Aussie Dollar.

For June, the Westpac Consumer Sentiment Index fell by a further 5.2%. In May, the index had fallen by 4.8%.

Concerns over the a 2-week lockdown in Melbourne weighed on sentiment in the month. Once more, the Aussie Dollar brushed aside the decline.

Market optimism towards the economic outlook and demand for commodities continued to provide support. A U.S Dollar rally from Friday left the Aussie Dollar in the red for the week.

For the Kiwi Dollar

It was also a quiet week.

Electronic card retail sales and Business PMI numbers were in focus.

In May, electronic card retail sales rose by a further 1.7%, following a 4.4% jump in April.

Also positive was an increase in the Business PMI from 58.4 to 58.6. While the headline figure was positive, a slide in the employment sub-index will have been a cause for concern. A marked increase in new orders, however, raises the prospects of a pickup in hiring in the coming months.

For the Japanese Yen

It was a busier week.

Early in the week, finalized 1st quarter GDP numbers were in focus. Upward revisions from prelim numbers were a positive for the Yen.

In the 1st quarter, the economy contracted by 1.0%, revised up from a prelim 1.3% contraction.

At the end of the week, manufacturing sector data disappointed but had a muted impact on the Yen.

For the 2nd quarter, the BSI Large Manufacturing Conditions Index fell from 1.6 to -1.4.

The Japanese Yen fell by 0.13% to ¥109.66 against the U.S Dollar. In the week prior, the Yen had risen by 0.30% to ¥109.52.

Out of China

Trade data and inflation figures were key areas of focus.

Weaker than expected exports tested support for riskier assets at the start of the week.

Exports were up 27.9% year-on-year, falling short of a forecasted 32.1%. In April, exports had been up by 32.3%.

On the inflation front, wholesale inflationary pressures built up further in May. The annual rate of wholesale inflation accelerated from 6.8% to 9.0%. Economists had forecast a pickup to 8.5%.

In the week ending 11th June, the Chinese Yuan fell by 0.05% to CNY6.3988. In the week prior, the Yuan had fallen by 0.42% to CNY6.3953.

The CSI300 and the Hang Seng ended the week down by 1.09% and by 0.26% respectively.

AUD/USD Weekly Price Forecast – Australian Dollar Continues Flat Lining

If you ever wondered where money went to die, the most recent answer would be the Australian dollar. It is not that it has not been a performer in the past, it is just that the last month or so has been a miserable exercise in range bound trading. Whether or not we can break out anytime soon is an open question, but I quite frankly do not expect to see that happen in the short run. The 0.75 level on the bottom is the floor, while the 0.7850 level is the ceiling.

AUD/USD Video 14.05.21

Looking at the chart, you can see how range bound this market has been, and I just do not see that changing in the short term. Ultimately, this is a market that I think has to make a bigger decision but is digesting a massive amount of gains over the last year or so. Furthermore, I think it is also difficult to get above the major resistance barrier, which extends between 0.80 and 0.81 above. It is not until we break above all of that that the market could go much higher, perhaps reaching towards the 0.90 level.

If we were to break down to the downside, meaning that we get below the 0.75 handle, the market could drop down towards the 0.71 level, possibly even the 0.70 level. That being said, I do not see that the market is ready to make a move in either direction anytime soon, so I think we continue to go back and forth more than anything else as we head through the summer. In other words, longer-term opportunities are probably going to be scarce here.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Gives Up Early Gains

The Australian dollar has initially tried to rally during the trading session on Friday but gave back the gains to turn around and fall towards the 50 day EMA. The 50 day EMA of course is an area that has acted quite a bit like a magnet for price lately, and I do not see that changing anytime soon. Because of this, the market is likely to go back and forth in this general vicinity, just as we have over the last couple of weeks. Quite frankly, we desperately needs some type of catalyst to get the Forex markets moving, which we simply do not have at the moment.

AUD/USD Video 14.06.21

Stagnation is probably the keyword here, as we do not have any clear cut direction one way or the other over the last couple of months. Because of this, I think the pair has been relegated to a five-minute scalping type of situation, and that is only if you have the time to sit and watch the market. Because of this, the market will probably continue to see a lot of choppy short-term behavior, so as far as a longer-term signal is concerned, it is essentially going to be thought of as “dead money”, as there is no clear directionality.

However, if we were to break above the 0.80 level that would be an extremely bullish sign, just as a break down below the 0.75 level would be extremely bearish. At this point, we seem content to simply sit in the middle of all of that and spin our wheels. The trade spat between China and Australia could also have an effect on this pair as people are waiting to see how that plays out.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Could Be Poised for Strong Breakout Over .7774

After weeks of treading water while trapped inside a pair of retracement zones, the Australian Dollar appears to be finally ready to breakout above resistance as investors shrugged off a high U.S. inflation number, putting the U.S. Dollar under pressure.

At 06:32 GMT, the AUD/USD is trading .7762, up 0.0010 or +0.12%.

On Thursday, the U.S. government showed consumer prices up 5% year-on-year, the sharpest rise in more than a dozen years and core inflation surging 0.7% in a month. But hefty contributions from short-term rises in airline ticket prices and used cars helped convince traders it was not going to drive interest rates higher any time soon.

Economists also believe that rising inflation could be temporary since the increases were largely centered in areas impacted by the pandemic.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7774 will change the main trend to up. A move through .7646 will signal a resumption of the downtrend.

The minor trend is also down. The minor trend will change to up on a move through .7766. A trade through the minor bottom at .7718 will be a sign of weakness.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is support.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance, but also the trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday is likely to be determined by trader reaction to the long-term 50% level at .7770.

Bullish Scenario

A sustained move over .7770 will indicate the presence of buyers. This could trigger the start of a strong rally with .7826 the primary upside target. Before the AUD/USD can reach this level, however, the buying is going to have to be strong enough to take out three main tops at .7774, .7796 and .7814.

Bearish Scenario

A sustained move under .7770 will signal the presence of sellers. This could trigger a pullback into yesterday’s low at .7718, followed by the main 50% level at .7711. Look for a technical bounce on the first test of the level, but if it fails then look for the selling to possibly extend into .7669.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data from the UK Puts the Pound in the Spotlight

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action in the early hours.

For the Kiwi Dollar

In May, the Business PMI increased from 58.3 to 58.6. According to the May survey,

  • The production sub-index climbed from 64.2 to 65.3, with the new orders sub-index rising from 61.0 to 63.7.
  • In May, the deliveries sub-index was also on the rise, while the employment sub-index slipped from 52.2 to 51.5. It was a second consecutive monthly decline and a 3rd decline in 5-months.

The Kiwi Dollar moved from $0.71940 to $0.71932 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.14% to $0.7192.

For the Japanese Yen

The BSI Large Manufacturing Conditions Index fell from 1.60 to -1.40 for the 2nd quarter. There was little market reaction in spite of the decline, with Japan’s manufacturing sector continuing to struggle.

The Japanese Yen moved from ¥109.383 to ¥109.377 upon release of the figures. Through the early hours, the Japanese Yen was down by 0.06% to ¥109.40 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.03% to $0.7752.

The Day Ahead

For the EUR

It’s another quiet day ahead on the economic data front. Finalized May inflation figures from Spain are due to later today.

We don’t expect the numbers to have a material impact on the EUR, however. Expect further reaction to the ECB press conference, however.

At the time of writing, the EUR was up by 0.12% to $1.2184.

For the Pound

It’s a busy day ahead on the economic calendar.

GDP, industrial and manufacturing production, and trade data for April are due out later this morning.

While the GDP and the manufacturing production figures will be the key drivers, expect continued interest in the trade data.

Away from the economic calendar, any further updates on the UK Government’s plans to full reopen will also be key.

On the monetary policy front, BoE Governor Bailey is also scheduled to speak.

At the time of writing, the Pound was down by 0.01% to $1.4176.

Across the Pond

It’s a quieter day ahead on the economic calendar. Prelim consumer sentiment figures for June will be in focus later today.

With little else for the markets to consider, expect sensitivity to the numbers.

Away from the economic calendar, chatter from the G7 Summit will also need monitoring.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.019.

For the Loonie

It’s another particularly quiet day ahead on the economic data front, with no major stats to consider.

The lack of stats will leave the Loonie in the hands of market risk sentiment and the IEA monthly report on the day.

At the time of writing, the Loonie was up by 0.05% to C$1.2090 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

June 11th 2021: DXY off Session Peaks After US Inflation Data; Eyes 90.00 Support

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Thursday, as you can see, wrapped up in the shape of a doji indecision candle. In light of the candle’s location on the chart (established within a mild range), this portrays a measure of caution in the market.

In terms of where we stand on the chart’s framework, Quasimodo resistance at 1.2278 remains in the light, while, as stated in recent writing, navigating deeper water from current price underlines dynamic support around 1.1985: the 200-day simple moving average.

Activity out of the RSI demonstrates the value attempting to hold on to support from 51.36, action following a deterioration from peaks fashioned just south of overbought status.

H4 timeframe:

In what was a somewhat choppy session—oscillating between gains and losses—EUR/USD ended the day mostly unchanged as the market digested upbeat US inflation data and ECB commentary.

From a technical standpoint, the currency pair remains languishing south of the 61.8% Fib retracement at 1.2206, which made an entrance on Wednesday.

For those who read previous analysis you may note that the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094).

Recent reports also highlighted additional areas to be watchful of on this timeframe: resistance at 1.2244 and demand coming in at 1.2044-1.2071, an area sharing chart space with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

The bulk of yesterday’s movement occurred around the 100-period simple moving average at 1.2176.

This leaves resistance between 1.2211 and 1.22 on the table today (note the area houses the H4 timeframe’s 61.8% [AB=CD] Fib level at 1.2206), with a break perhaps unmasking two Quasimodo resistances at 1.2257 and 1.2241. Moves lower, on the other hand, throw light on 1.2132 support, followed by the psychological figure 1.21.

With regards to the RSI indicator, we are seeing the value explore space under the 50.00 centreline after flirting with peaks around 60.00ish.

Observed levels:

On the basis of short-term charts—H4 and H1—this market continues to echo a downward bias, largely as a result of the recent rejection from H1 and H4 resistances between 1.2211, 1.2206 and 1.22. As aired in Thursday’s technical briefing, this could mean a H1 close south of the 100-period simple moving average around 1.2176, with downside to perhaps hone in H1 support at 1.2132 and, with some oomph, maybe the 100% Fib projection at 1.2123 on the H4 and then the 1.21 figure.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Technical structure unchanged from previous analysis.

The daily chart’s technical scenery is tedious.

Since April 20th—despite a fleeting whipsaw to a low of 0.7645—resistance at 0.7816 and support from 0.7699 continues to outline a defined range (yellow).

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7538. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging the 50.00 centreline, following last week slicing to 40.00s. North of here, we have trendline resistance, drawn from the peak 79.74.

H4 timeframe:

The US dollar index (ticker: DXY) finished off best levels as recent US inflation data and ECB action failed to spark movement.

Technically, however, AUD/USD derived modest support from 0.7726—Monday’s session low. In the event the market maintains a bid, Quasimodo resistance from 0.7782 is in the offing. Space under 0.7726, on the other hand, could guide price action as far south as 0.7632-0.7653 demand.

H1 timeframe:

For those who read Thursday’s technical briefing you may recall the following (italics):

Made up of a 38.2% Fib retracement at 0.7720, a 1.272% Fib expansion at 0.7723, a 100% Fib projection at 0.7728 and the 100-period simple moving average around 0.7727, the 0.7720-0.7728 area welcomed price movement in recent hours and stirred a bullish vibe (note the hammer formation).

As you can see, the unit held its bid-on-dip scenario from 0.7720-0.7728 support on Thursday, scaling to a high of 0.7763 and highlighting supply at 0.7783-0.7771 (holds H4 Quasimodo resistance within at 0.7782, and is situated under 0.78 [H1]). Territory south of noted Fib structure draws attention to 0.77, a psychological base in the company of a 61.8% Fib retracement at 0.7692.

As for the RSI indicator, overbought space is plotted nearby, possessing obvious resistance from 72.21.

Observed levels:

Prime focus is on H1 supply at 0.7783-0.7771. Recognising the area shares space with H4 Quasimodo resistance at 0.7782, bearish activity could develop from this neighbourhood.

Bearish interest, however, may also want to consider the 0.78 figure. Not only is this a widely watched level, daily resistance is located nearby at 0.7816.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.2 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies, nevertheless, reveal the pair has been trending higher since the beginning of April. Subsequent months has witnessed a sizeable retracement, followed by an attempt to recapture higher levels.

The RSI is stationed under resistance at 57.00, yet currently challenging the 50.00 centreline. Should a break lower materialise, oversold might be in store, eyeing support at 28.19.

H4 timeframe:

Although demand at 109.02-109.20 motivated bullish activity at the beginning of the week, USD/JPY came under renewed pressure Thursday and has price loitering within a stone’s throw of the noted demand base. The key point to be mindful of is should we shake hands with this demand once more, trendline support, drawn from the low 107.48 intersects with the upper side of the demand and may trigger another bullish attempt.

Failure to hold the current demand, technical attention shifts to another layer of proven demand printed at 108.20-108.43.

H1 timeframe:

Following an earlier bull trap—movement in which price spiked to highs of 109.79 and deceived breakout bulls north of the previous higher high at 109.67—the technical pendulum swung in favour of sellers, with price toying with space a touch north of demand at 109.07-109.19 (set within H4 demand at 109.02-109.20), which is positioned within striking range of the 109 figure.

Information derived from the RSI informs traders that momentum is on the verge of entering oversold space, a zone between 0 and 30.00 which indicates extreme levels (gone too far in a particular direction according to the indicator) and a place where a reversal could emerge.

Observed levels:

The combination of the 109 figure, H1 demand at 109.07-109.19, H4 demand at 109.02-109.20, and H4 trendline support, extended from the low 107.48, could provide enough technical evidence to encourage a bullish reaction should the aforementioned area be tested today.

What’s also interesting is the H1 and H4 zones are supported by monthly action balancing off descending resistance-turned support.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.2 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis.

Versus the US dollar, sterling ended Thursday on the front foot, following upbeat inflation data out of the US and recent ECB commentary.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week with recent action cruising within range of the 50.00 centreline.

H4 timeframe:

Technical structure unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact. As evident from the chart, Thursday, although whipsawing the lower side of the aforesaid range, produced an almost one-sided recovery to a high of 1.4178.

Technical structure above the consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Support from 1.4078 welcomed price movement on Thursday, following a rapid push through 1.41 bids. Subsequent action witnessed GBP/USD reclaim 1.41+ status and dethrone the 100-period simple moving average around 1.4148.

Despite mild selling, as we write, resistance could potentially form at 1.42, with a break uncovering additional resistance coming in at 1.4246.

The picture from the RSI shows the value nearing the oversold range, in particular resistance at 71.00ish.

Observed levels:

The 1.42 figure based on the H1, dovetailing closely with the upper side of the H4 range at 1.4219, forms potential resistance. The caveat, of course, is a possible whipsaw forming to test daily Quasimodo resistance at 1.4250.

With scope to pilot higher levels, an alternative short-term scenario to be mindful of is H1 retesting the 100-period simple moving average around 1.4148 and driving moves to 1.42.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

AUD/USD Forex Technical Analysis – Needs Stronger Volume to Trigger Breakout Over .7774

The Australian Dollar is trading higher against the U.S. Dollar late in the session on Thursday as a drop in U.S. Treasury yields made the greenback a less-attractive investment. Although U.S. consumer prices jumped more than expected in May, the surge in inflation looks to be temporary and should not push the Federal Reserve to tighten policy for now.

At 18:55 GMT, the AUD/USD is trading .7755, up 0.0023 or +0.30%.

On Thursday, the U.S. government reported the consumer price index rose 5% in May on a year-over-year basis, the highest since the summer of 2008, when oil prices were skyrocketing. Excluding food and energy, core CPI rose 3.8% year over year, the highest pace since 1992.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7774 will change the main trend to up. A move through .7646 will signal a resumption of the downtrend.

The minor trend is also down. A trade through .7766 will change the minor trend to up and shift momentum to the upside. A new minor bottom has formed at .7718.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is support.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance.

Both areas have been holding the AUD/USD in a range for nearly two months.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD into the close on Thursday is likely to be determined by trader reaction to the main 50% level at .7770.

Bullish Scenario

A sustained move over .7770 will indicate the presence of buyers. Taking out the main top at .7774 will change the main trend to up and could drive the market into the next main top at .7796. Taking out this level will reaffirm the uptrend with .7814 the next target.

Bearish Scenario

A sustained move under .7769 will signal the presence of sellers. If this move creates enough upside momentum then look for the selling pressure to possibly extend into the short-term retracement zone at .7711 to .7769.

Side Notes

The AUD/USD appears to be forming an upside bias, but traders could continue to hold it in a range until after the Federal Reserve makes its policy announcements on June 16.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Continues to Sit at The 50 day EMA After CPI

The Australian dollar has done very little during the trading session, but it has held the 50 day EMA as support. Ultimately, we are still very much in a range, but now that the Consumer Price Index has been at least in the United States, traders are starting to focus on the longer-term outlook again. If that is going to be the case, then it makes quite a bit of sense that this pair probably creeps to the upside, perhaps towards the 0.7850 level. That being said, I do not necessarily think that it is going to be easy for massive gains to be the outcome. However, it certainly looks as if there is quite a bit of buying pressure underneath. With that in mind, buying short-term dips may continue to work out quite well.

AUD/USD Video 11.06.21

To the downside, even if we do break down a little bit it is very likely that we will continue to see support near the 0.7650 level, possibly even the 0.76 handle. With that being the case, I think that if we do pull back there will be plenty of buyers looking for “value” down there, but I would not look for some type of major breakout in the short term. If we did break down below the 0.75 handle, that could in the entire uptrend, but I just do not see an argument for that right now as inflation seems to be taking hold, and that could continue to push the price of commodities higher, helping the Australian dollar in general.

For a look at all of today’s economic events, check out our economic calendar.

The ECB Press Conference Puts the EUR in the Spotlight, with U.S Inflation also in Focus

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. There were no material stats to provide the markets with direction early in the Asian session.

For the Majors

At the time of writing, the Aussie Dollar was down by 0.04% to $0.7728, with the Kiwi Dollar down by 0.14% to $0.7170.

Through the early hours, the Japanese Yen was flat at ¥109.63 against the U.S Dollar, while

The Day Ahead

For the EUR

It’s a quieter day ahead on the economic data front. French nonfarm payrolls for the 1st quarter are due out ahead of the European open.

We don’t expect too much influence from the numbers, with COVID-19 lockdown measures likely to have influenced.

Later in the day, the ECB will deliver it’s June monetary policy decision, which is the main event of the week.

With the markets expecting the ECB to stand pat on policy, any talk of tapering and the ECB’s outlook on inflation and the economic recovery will be key. Ahead of the meeting, the ECB doves had assured the markets that there would be no tapering to the asset purchasing program any time soon.

At the time of writing, the EUR was down by 0.02% to $1.2178.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

Near-term, the Pound remains torn between an optimistic economic outlook and concerns over new strains of the coronavirus.

At the time of writing, the Pound was down by 0.04% to $1.4112.

Across the Pond

It’s a busier day ahead on the economic calendar. May inflation and weekly jobless claims figures will be in focus.

Sensitivity to any marked pickup in inflationary pressures will likely spur demand for the Greenback. A marked fall in jobless claims would also add demand for the Dollar ahead of next week’s FOMC meeting. The willingness to begin discussing a tapering to the asset purchasing program coupled with positive stats would raise the prospects of a nearer-term move by the FED.

Away from the economic calendar, chatter from Capitol Hill will also need monitoring.

The Dollar Spot Index rose by 0.05% to end Wednesday at 90.120.

For the Loonie

It’s a particularly quiet day ahead on the economic data front, with no major stats to consider.

The lack of stats will leave the Loonie in the hands of crude oil prices and OPEC’s monthly report.

At the time of writing, the Loonie was down by 0.01% to C$1.2112 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

June 10th 2021: EUR/USD Flat as Attention Shifts to ECB Meeting

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Ahead of today’s European Central Bank meeting and impending US inflation release, EUR/USD concluded Wednesday notably off session tops. This formed what many will recognise as a shooting start candlestick pattern—a bearish signal.

Technical structure on the daily chart remains fixed on Quasimodo resistance at 1.2278, while navigating deeper water from current price underlines dynamic support around 1.1985: the 200-day simple moving average.

Momentum studies, according to the RSI, reveals the value holding position north of support at 51.36. As long as the indicator maintains this position, momentum could head for overbought status.

H4 timeframe:

For those who have followed our recent technical briefings you may recall the following (italics):

Technically speaking, Tuesday’s retreat shaped just south of a 61.8% Fib retracement at 1.2206. Harmonic traders will note the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094).

As evident from the H4 chart, the 61.8% Fib retracement at 1.2206 made an entrance on Wednesday and effectively took out the second take-profit target from the AB=CD 1.2123 formation.

Areas to be mindful of going forward are resistance at 1.2244 and demand coming in at 1.2044-1.2071, an area sharing chart space with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

In Wednesday’s technical briefing, the report highlighted the following (italics):

Against the backdrop of higher timeframe structure, the space between the 1.22 figure and resistance at 1.2211 on the H1 may still be of interest to lower timeframe traders, which houses the H4 timeframe’s 61.8% (AB=CD) Fib level at 1.2206.

As you can see, short-term action did indeed shake hands with the 1.2211/1.22 neighbourhood on Wednesday and withdrew to within reach of the 100-period simple moving average, currently circling around 1.2165. Support at 1.2132 could call for attention should sellers topple the aforementioned SMA today.

Helping to frame resistance yesterday, of course, was RSI resistance at 78.97, boasting historical significance since early 2021.

Observed levels:

Based on H4 and H1 charts, given both timeframes addressed resistance on Wednesday, short-term direction appears poised to explore lower levels. This could mean a H1 close south of the 100-period simple moving average around 1.2165, with subsequent downside to perhaps hone in H1 support at 1.2132.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Technical structure unchanged from previous analysis.

Since April 20th—despite a fleeting whipsaw to a low of 0.7645—resistance at 0.7816 and support from 0.7699 continues to outline a defined range (yellow).

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7536. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging the 50.00 centreline, following last week slicing to 40.00s.

H4 timeframe:

The Australian dollar tunnelled lower against a ‘recovering’ USD (US dollar index: ticker DXY) on Wednesday. This led the currency pair to challenge 0.7726—Monday’s session low—which, if a breach comes to pass could guide price action as far south as 0.7632-0.7653 demand.

A 0.7726 recovery, on the other hand, throws light on Quasimodo resistance from 0.7782.

H1 timeframe:

Made up of a 38.2% Fib retracement at 0.7720, a 1.272% Fib expansion at 0.7723, a 100% Fib projection at 0.7728 and the 100-period simple moving average around 0.7727, the 0.7720-0.7728 area welcomed price movement in recent hours and stirred a bullish vibe (note the hammer formation).

Although sellers made a show and we’re now back at the aforementioned support, upside objectives rest at the 38.2% and 61.8% Fib retracement levels at 0.7740 and 0.7750, respectively. Harmonic traders will note these targets are derived from the AB=CD (the 100% Fib projection).

Territory south of the noted Fib structure draws attention to 0.77, a psychological base in the company of a 61.8% Fib retracement at 0.7692.

In terms of where we stand on the RSI, the value registered 40.00 on Wednesday. Knowing we’re plotting space south of the 50.00 centreline—breaking beneath this level suggests weakening upside—oversold territory could be on the cards, targeting support at 19.30.

Observed levels:

Up till now, upside strength echoes a fragile tone off H1 Fib support from 0.7720-0.7728. Moving through the latter today opens the door to a short-term bearish theme, with initial targets arranged around the 0.77 figure and nearby 61.8% Fib retracement at 0.7692. Below here, sellers may also take aim at H1 demand from 0.7634-0.7649, housed within the walls of H4 demand at 0.7632-0.7653.

However, to reach 0.7632-0.7653 involves pushing through the lower side of the daily timeframe’s consolidation at 0.7699.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.1 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI remains stationed under resistance at 57.00, though recently rebounded from the 50.00 centreline. Should a break lower materialise, oversold might be in store, eyeing support at 28.19.

H4 timeframe:

For those who’ve been following recent technical reports you may recall the following (italics):

Limited change was observed on Tuesday, though bulls did manage to maintain position north of demand at 109.02-109.20, which, as underlined in previous writing, represents a decision point to initially push above 109.71 tops. Also technically notable is trendline support, drawn from the low 107.48, intersecting with the noted demand base.

Assuming the market remains bid, supply is seen fixed just north of tops (110.33—last Thursday’s peak) at 110.85-110.46, which happens to house a 100% Fib projection at 110.59 and a 1.618% Fib expansion at 110.69.

With USD/JPY eking out modest upside on Wednesday, this reinforces a bullish wind today, targeting the above noted resistance structures.

H1 timeframe:

It was noted in Wednesday’s technical briefing that short-term direction was potentially bound for the 100-period simple moving average around 109.60ish. This followed Monday’s recovery from demand at 109.07-109.19—set within H4 demand at 109.02-109.20.

Going forward, H1 price taking on the said SMA today unlocks the trapdoor to possible follow-through buying towards resistance at 109.95 and the 110 figure.

With reference to the RSI, the value is within a stone’s throw from touching gloves with overbought, following yesterday driving through the 50.00 centreline.

Observed levels:

H1 and H4 demand areas standing ground (109.07-109.19 and 109.02-109.20), in conjunction with monthly action balancing off descending resistance-turned support, brings to light a potential bullish scene above the 100-period simple moving average on the H1 scale around 109.60, targeting 110 (H1).

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week and recently witnessed the value cruise towards the 50.00 centreline.

H4 timeframe:

Technical structure unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact.

Technical structure above the current consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Technical structure unchanged from previous analysis.

Aside from short-term fluctuations developing around the 100-period simple moving average at 1.4146 this week, focus, as noted in previous reports, remains on the 1.42 and 1.41 figures (the latter joins with a 61.8% Fib), echoing a similar picture to the H4 (see above).

Outside of these levels, emphasis is on support at 1.4078 and resistance formed from 1.4246.

The RSI, however, is trekking just ahead of oversold territory.

Observed levels:

Technical structure unchanged from previous analysis.

Aside from the monthly and daily timeframes showing us price trades near 2021 highs at 1.4250, immediate technical structure on these timeframes is limited for the time being. Despite this, traders are urged to keep an eye on daily Quasimodo resistance at 1.4250 and daily support at 1.4003.

The H4 timeframe’s range between 1.4096 and 1.4219 is likely still on the radar for medium-term traders, looking to fade range extremes. This will see H1 traders hone in on the 1.41/42 figures.

It’s also worth pointing out the technical convergence existing between H4 support at 1.4007 and the key figure 1.40 on the H1 (below current structure—not visible on the screen). The 1.40 zone could actually prove a solid platform to help facilitate a fakeout through H4 trendline support seen just above it around 1.4030ish.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

AUD/USD Price Forecast – Australian Dollar Continues to Slide Back and Forth

The Australian dollar has rallied a bit during the course of the trading session on Wednesday, but stayed within the tight consolidation area that we have been in. The 50 day EMA is essentially a magnet for price, and at this point unless you are a short-term scalper, it is going to be difficult to trade the Aussie dollar. As you can see, the market has seen a lot of selling pressure just above the 0.78 handle, just as the market has seen support just below the 0.77 handle.

AUD/USD Video 10.06.21

Looking at this chart and this market in general, I think what we need is some type of catalyst. Whether or not we get it might be a different question, but at this point in time it is likely that the CPI numbers on Thursday will be the most important figure for the week, as it could give us a sign of what inflation is actually doing in the United States.

That being said, what we should keep in mind is that the commodity market has been booming while the Australian dollar has done almost nothing over the last several months. This might be because the Chinese and the Australians are in a bit of a trade spat, but at the end of the day the Chinese will more than likely come back to Australia for coal as an example, as China is in desperate need of raw materials. At this point time, it has become a bit of a game of “chicken.”

Until we get some type of clarity, I suspect that this is going to be a tough market to get overly large and, but if you are comfortable with the five and 15 minute charts, this might be an acceptable market.

For a look at all of today’s economic events, check out our economic calendar.

Without Yield Support, the Dollar Wilts

The JP Morgan Emerging Market Currency Index is edging higher for the fourth consecutive session. The lower yields are not doing equities much good today. Outside of China, the large equity markets in the region fell, and the MSCI Asia Pacific Index is posting back-to-back losses. The three-day rally in Europe’s Dow Jones Stoxx 600 is at risk as most sectors, but health care and real estate, are losing ground. Financials are the largest drag.

US future indices are a little changed to slightly firmer. Oil and other industrial commodities are firmer, and the CRB Index closed yesterday at new six-year highs. Gold is unable to benefit from the weaker dollar and lower interest rates. The upside momentum that had carried it briefly above $1900 fizzled.

Asia Pacific

China reported a smaller than expected rise in last month’s consumer prices but a larger rise in producer prices. Falling food prices helped temper the rise in consumer prices to 1.3% rather than 1.6% that the median in Bloomberg’s survey projected. The decline in pork prices helped keep food prices in check, while non-food prices rose by 0.9%. Producer price inflation accelerated to 9.0% from 6.8%. The median forecast was 8.5%. Oil, metals, and chemicals were the drivers. Beijing is trying to finesse lower producer prices by cracking down on unauthorized activity, but it does not appear sufficient.

Reports suggest it is considering some sort of cap on thermal coal prices before peak summer demand. One proposal would cap the price to the miners, while another proposal was to limit the price at the port. Still, the discussion shows that Chinese officials are still reluctant to allow supply/demand to adjust prices. If thermal coal prices or other commodities are not allowed to move freely, is Beijing really prepared to allow the yuan to be convertible as some are suggesting could take place with the introduction of a digital yuan?

The Reserve Bank of Australia did not adjust policy last week, but comments today suggest it may join the queue of central banks adjusting their stance as the inoculations are gradually allowing some return to normalcy. Former RBA member Edwards said that the RBA would likely scale back its QE next month, which others, including ourselves, had suggested was possible.

The RBA’s Assistant Governor Kent admitted he has been surprised by the strength of the rebound and is optimistic about growth fueling wage increases and inflation. Currently, the RBA targets the April 2024 bond at 10 bp. It is to decide next month whether to switch it to the November 2024 maturity. Targeting the 3-year yield at the cash rate is a way to underscore the lack of intent to raise rates in the interim.

The dollar is trapped in almost a 20-pip range against the yen today in the upper end of this week’s range. It has not been above JPY109.65 so far this week nor below about JPY109.20. There are about $1.2 bln in options in the JPY109.00-JPY109.10 area that roll-off today. The benchmark three-month implied volatility reached almost 5.53% yesterday, its lowest level since February 2020. The Australian dollar is steady, trading inside yesterday’s range, which was inside Monday’s range (~$0.7725-$0.7765). Like the dollar-yen, the Aussie is also in a 20-tick range so far today.

The Chinese yuan rose today, recouping the losses seen in the past two sessions. The dollar reached CNY6.4120 at the end of last week but has consistently recorded lower highs and lower lows this week. The PBOC’s reference rate for the dollar was set at CNY6.3956, spot on expectations. It is beginning to look as if official intent is more about breaking the one-way market that had appeared to develop and stabilize the yuan rather than reverse it. Whether defending a set line, which some have suggested at CNY6.35 or not, still has to be seen.

Europe

The ink G7 finance minister agreement on the minimum corporate tax is hardly even dry, and the first exception is being sought. The UK (and apparently the EU) want to exclude financial services from the new global tax regime. Separately, the US and the EU will have a rapprochement that will resolve the two outstanding disputes: The goal is to resolve the Boeing/Airbus subsidy issue by July 11 and end the steel and aluminum tariffs imposed by the Trump administration on national security grounds by the end of the year. The US has protested but will not escalate the sanctions for the Nord Stream 2 pipeline, and the tax reform would see European countries drop their digital tax initiatives.

Meanwhile, Europe is gradually taking a harder line against China. The EU Parliament is not proceeding with the ratification of the EU-China trade agreement struck at the end of last year. Italy, which was the only G7 country to sign on to the Belt Road Initiative, has blocked Chinese acquisitions under Prime Minister Draghi. Europe has endorsed the US call for new efforts to find the origins of Covid-19, even though the origins are unnecessary to combat virus and protocols to tighten security as labs during such work are necessary regardless of the precise origin.

Germany reported a 15.5 bln euro trade surplus in April, down from 20.2 bln in March. Exports growth slowed to 0.3% after a 1.3% gain previously. Imports fell by 1.7%, more than expected after the March series was revised to show a 7.1% gain (initially 6.5%). The smaller trade surplus translates into a smaller current account surplus (21.3 bln euros vs. 30.0 bln in March).

Unlike what we saw yesterday with the Japanese trade and current account figures, the German current account is driven by the trade balance. In Japan, the current account surplus is driven by foreign earnings, interest, royalties, and licensing fees, not trade in goods and services.

The euro is firm, but it too is trading inside yesterday’s range, which is inside Monday’s range (~$1.2145-$1.2200). There is an option for about 1.14 bln euros at $1.22 that expires today. The market is also circumspect ahead of tomorrow’s ECB meeting, for which a consensus has emerged that it will not return its bond-buying to that which prevailed before March.

We caution that knowing the ECB’s bond-buying plans does not help trade the euro or European rates, both of which have risen since the ECB accelerated its buying. Sterling, too is range-bound with last Friday’s range (~$1.4085-$1.4200). The general consolidative tone looks set to continue.

America

The Bank of Canada meeting is the highlight of the North American session today. At its last meeting in April, it announced it would slow its bond purchases and brought forward the closing of the output gap into H2 22. Since then, Canada has reported back-to-back job losses. The Canadian dollar has appreciated by almost 3.4% since that April meeting. It is the strongest of the major currencies. A decision on whether to proceed with tapering is expected at next month’s meeting, not today.

Yesterday, Canada reported an unexpected trade surplus for April. Exports and imports fell, with motor vehicle trade disrupted by the line shutdowns due to the shortage of semiconductors. Canada’s energy trade balance was in surplus by about C$6.8 bln, while the non-energy balance was in deficit by about C$6.2 bln. Canada had a C$6.4 bln surplus with the US and a C$2.2 bln deficit with China.

The US reports wholesale inventory data today ahead of tomorrow’s May CPI. The focus, however, is shifting to next week’s FOMC meeting. Yesterday, the US sold $58 bln 3-year notes. Although the high yield slipped fractionally, the bid cover ticked up, as did indirect bids. Today, the Treasury sells $38 bln 10-year notes and tomorrow $24 bln 30-year bonds.

Tomorrow’s four and eight-week bill auctions may draw more attention than usual as the earlier bill auctions showed a little uptick as the market anticipates that the Fed may have to tweak the interest it pays on reserves or the zero rate on the reverse repos (demand reached a new record of almost $500 bln yesterday). Separately, the US Senate passed (68-22) the bill to boost US competitiveness, which has some elements that were in the infrastructure bill. The bill now gets taken up by the House.

Mexico reports May CPI figures today. The year-over-year pace is expected to pull back from the 6.08% pace seen in April but not sufficiently to change anything. Moreover, the core rate is expected to quicken a little. Through April, Mexico’s core rate has risen by almost 5% at an annualized rate. The market appears to lean toward a rate hike by the end of the year and as much as four hikes by the middle of 2022. Brazil reports its IPCA inflation today as well.

The year-over-year pace is expected to have accelerated to nearly 8% from about 6.75% in April. The central bank has already indicated it will raise rates next week by 75 bp, the third such move of the year. It would lift the Selic rate above Mexico’s cash target rate after having begun the year at half of it.

A little position squaring yesterday lifted the US dollar to almost CAD1.2120, but it has come back offered today and traded CAD1.2085 in the European morning. This week’s low so far is about CAD1.2055. Key technical support is seen at CAD1.20, while CAD1.2145 marks the upper end of the recent range.

The Mexican peso is rising for the fourth consecutive session, the longest rally in two months. The greenback finished last week near MXN19.96 and is testing MXN19.62 now, its lowest level in five months. The next area of chart support is seen near MXN19.50. The US dollar is also on its 2021 lows against the Brazilian real. It has not been below BRL5.0 since last June.

This article was written by Marc Chandler, MarctoMarket.

AUD/USD Forex Technical Analysis – Struggling for Direction Inside 50% Pair at .7770 and .7711

The Australian Dollar is struggling for direction early Wednesday, as investors awaited updated U.S. consumer price data. Meanwhile, dovish comments from the Reserve Bank of Australia (RBA) helped nudge 10-year yields to their lowest since February at 1.525%. In other news, Wespac analysts continued to express surprise in the lack of upside movement by the Aussie given the rise in commodity prices.

At 05:23 GMT, the AUD/USD is trading .7740, up 0.0003 or +0.03%.

Volume remains below average with most of the major institutions on the sidelines ahead of Thursday’s U.S. inflation report with most expecting the Federal Reserve, which meets on June 15-16, to consider the rise in inflation as transitory when it comes to policy tapering.

RBA Assistant Governor Chris Kent on Wednesday downplayed the risks of inflation domestically and globally noting inflation expectations had only returned to where they were a few years ago.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7774 will change the main trend to up. A move through .7646 will signal a resumption of the downtrend.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance. This zone has stopped several rallies the past few months.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is potential support. This area has stopped several breakdown attempts over the past few months.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main 50% level at .7770.

Bullish Scenario

A sustained move over .7770 will signal the presence of buyers. If it creates enough upside momentum then look for buyers to take out the main top at .7774. This will change the main trend to up. Extending the rally through this level could lead to eventual tests of main tops at .7796 and .7814 as well as the main Fibonacci level at .7826. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7769 will indicate the presence of sellers. This could trigger a break into the short-term 50% level at .7711. If this potential support fails to hold then look for the selling to possibly extend into the short-term Fibonacci level at .7769 over the short-run.

For a look at all of today’s economic events, check out our economic calendar.