Economic Data from China and the UK to Distract the Markets Ahead of the FED

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 this morning, with economic data from China in focus later this morning.

For the Kiwi Dollar

Current account figures were out in the early hours.

In the 1st quarter, the current account deficit widened from NZ$2.70bn to NZ$2.90bn, quarter-on-quarter. Economists had forecast a narrowing to NZ$2.23bn.

Year-on-year, the current account deficit widened from NZ$2.55bn to NZ$7.24bn. Economists had forecast a widening to NZ$6.68bn.

The Kiwi Dollar moved from $0.71205 to $0.71215 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.13% to $0.7130.

For the Japanese Yen

Trade data and core machinery orders were in focus this morning.

In April, core machinery orders increased by 0.6%, month-on-month, following a 3.7% rise in March. Economists had forecast a 2.7% rise.

Year-on-year, core machinery orders were up by 6.5% versus a forecasted 8.0% increase. In March, core machinery orders had been down by 2.0% year-on-year.

More significantly, however, Japan’s trade balance slumped from a ¥253.1bn surplus to a ¥187.1bn deficit in May. Economists had forecast a deficit of ¥91.2bn. Exports rose by 49.6%, year-on-year, versus a forecasted 51.3% rise. In April, exports had been up by 38.0%.

According to figures released by the  Ministry of Finance,

  • Exports to China jumped by 23.6%, with exports to Australia and NZ surging by 115.3%.
  • Exports to the U.S surged by 87.9%, with exports to Western Europe up 69.9%.
  • Year-on-year, imports increased by 27.9% in May, which was up from 12.8% in April.

The Japanese Yen moved from ¥110.088 to ¥110.093 upon release of the figures. Through the early hours, the Japanese Yen was down by 0.02% to ¥110.10 against the U.S Dollar.

Out of China

Industrial production, retail sales, fixed asset investment, and unemployment figures are due out. Expect the industrial production and retail sales figures to garner the greatest interest.

At the time of writing, the Aussie Dollar was up by 0.03% to $0.7689.

The Day Ahead

For the EUR

It’s a quiet day ahead on the economic data front. 1st quarter wage growth figures for the Eurozone are due out later today.

Barring particularly dire numbers, however, we don’t expect the numbers to have too much impact on the EUR.

The markets will be looking ahead to the FED’s monetary policy decision and projections late in the day. With the ECB doves in control for now, we could see monetary policy divergence weigh on the EUR.

At the time of writing, the EUR was down by 0.03% to $1.2122.

For the Pound

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

Inflation figures for May are due out later this morning. With little else for the markets to consider, expect the numbers to influence.

A delay in the full reopening of the UK may have eased some pressure on the BoE. A marked pickup in inflationary pressure could fuel speculation of a near-term move, however.

At the time of writing, the Pound was down by 0.02% to $1.4081.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. Key stats include building permit and housing start figures from the housing sector. Import and export price index figures are also due out.

With the FED in action later in the day, however, don’t expect the numbers to have much impact on the Greenback.

Near-term direction will be hinged on FED chatter vis-à-vis any tapering and the latest projections… How FED Chair Powell delivers any shift in stance will be key during the press conference.

At the time of writing, the Dollar Spot Index was up by 0.01% to 90.548.

For the Loonie

It’s a busy day ahead on the economic data front. Inflation figures for May are due out along with wholesale sales figures for April.

Expect the inflation figures to have the greatest influence on the Loonie.

Crude oil inventory numbers will also provide direction along with this morning’s economic data from China.

At the time of writing, the Loonie was flat at C$1.2184 against the U.S Dollar.

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

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet

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 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 1.1990.

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.

Against a basket of six foreign currencies, the US dollar index (ticker: DXY) eked out modest gains and clocked fresh monthly tops on Tuesday. In terms of news events, we had US retail sales register a lower-than-anticipated print of 1.3 percent in May, with the core metric lower by -0.7 percent. In a separate report, the Producer Price Index (PPI) increased by 0.8 percent in May vs. 0.6 percent in April. Next on tap, we have the US Fed taking centre stage.

Technically speaking, the H4 chart is unmoved. EUR/USD defended the 61.8% Fib retracement at 1.2094 on Monday—a value (green) stationed north of demand from 1.2044-1.2071—with Tuesday on track to maintain the short-term bullish narrative.

1.2044-1.2071 demand 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:

The combination of a 1.618% Fib expansion at 1.2095, a 1.272% Fib projection at 1.2098, and the 1.21 figure, deserves notice as a support zone on the H1. To the upside, resistance at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value, also recently made an entrance and developed a ceiling.

It is important to identify that should price move lower and challenge 1.21 again, demand at 1.2075-1.2085 is strategically positioned a touch under the psychological level. A whipsaw through the big figure—tripping sell-stops—could provide enough fuel for 1.2075-1.2085 bids.

North of current resistance shines light on the 100-period simple moving average, currently circling 1.2142.

As for the RSI indicator, we are seeing the value establish a mild recovery off 38.27 to reclaim 50.00+ status. Securing position north of here signals upside momentum may gather traction in the direction of overbought territory. Structure to be mindful of are resistance at 78.97 and support from 14.74.

Observed levels:

Placing longer-term monthly action on the back burner for now, we can see the daily timeframe on the verge of sinking further, taking aim at a 50.00% retracement ratio at 1.1986. This, therefore, places a question mark on H1 breakout buying north of resistance at 1.2132. In fact, moves above this barrier, along with the 100-period simple moving average around 1.2142, could help facilitate a bearish theme off H4 resistance from 1.2158 (buy-stops driving price into H4 resistance offers, essentially providing fuel to move lower, assuming offers are heavy).

Ultimately, despite the lacklustre presence, the daily, H4 and H1 exhibit a downside bias for the time being.

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).

June is currently down by 0.6 percent.

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:

As anticipated (see Tuesday’s technical briefing), bearish forces took the wheel Tuesday. Helped lower by downbeat risk sentiment and a moderately buoyant greenback, the pair ruptured the lower side of a two-month range between resistance at 0.7816 and support from 0.7699 (yellow).

Support at 0.7563 is in view as a potential objective, deriving additional (dynamic) support from the 200-day simple moving average, circling 0.7545.

With respect to trend, despite a directionless tone since 2021, the currency pair has been higher for most of 2020 (from pandemic lows at 0.5506).

The RSI has worked with space south of the 50.00 centreline since May 20th—signs the value is headed for support at 37.92.

H4 timeframe:

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:

Latest developments out of the H1 chart reveals early London pulled the currency pair through 0.77 and retested the lower side of the horizontal base heading into US hours. Subsequent movement called price action lower, reaching a low of 0.7674.

Downstream, demand from 0.7634-0.7649 is on the radar, an area working with a 100% Fib projection at 0.7639, which many harmonic traders will note represents an AB=CD formation.

In terms of the RSI indicator’s position (38.16), bullish divergence is currently underway (note some traders require a simultaneous oversold signal to validate divergence).

Observed levels:

With H1 navigating below 0.77—and scope to approach demand at 0.7634-0.7649—in addition to the daily timeframe slicing through range support at 0.7699 and H4 bound for demand at 0.7632-0.7653, a (technical) bearish scenario is in the offing. Note H1 demand at 0.7634-0.7649 is enclosed within H4 demand at 0.7632-0.7653.

Traders are also urged to pencil in the possibility of H1 retesting 0.77, a level that may draw bearish curiosity.

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 unchanged from previous analysis.

USD/JPY demanded a bullish setting on Monday, but motivated limited follow-through buying Tuesday.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains within reaching distance, 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, should sellers regain consciousness.

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. Additional structure can be found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

USD/JPY left behind a muted vibe on Tuesday, as markets await today’s Fed meeting.

For those who read Tuesday’s technical briefing, the piece underlined the following (italics):

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:

Given Tuesday’s lacklustre performance, it’s worth reminding ourselves of where we stand on the H1 chart. Tuesday’s technical briefing highlighted the following (italics):

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.

Note that demand from 109.44-109.55 offers a reasonable technical target south of the 110 base.

Adding to the above, the RSI indicator recently dropped through trendline support, drawn from the low 20.25.

Observed levels:

Recent technical research noted the following (italics):

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.

As we can see, 110 did indeed prove supportive, though H1 supply remains in the frame at 110.18-110.09. Ultimately, a breakout beyond either area will be interesting and likely witness follow-through momentum. With 110.29 arranged as a possible upside target, below 110 could have bears target H1 demand from 109.44-109.55.

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 0.9 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:

Sterling dropped to one-month lows versus the US dollar on Tuesday; the catalyst is unclear.

From a technical perspective, the decline moved GBP/USD to within a stone’s throw of support from 1.4003, forged north of demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Overhead, Quasimodo resistance remains stationed at 1.4250.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position. This, coupled with the value tunnelling through the 50.00 centreline, suggests downside momentum may be on the cards.

H4 timeframe:

The passage below is 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.

As evident from Tuesday’s drop, price action sliced below both H4 consolidation supports and took on the aforementioned trendline support, perhaps squeezing out longs around the latter.

Does the above mean we’re making our way to 1.4007 support?

H1 timeframe:

Tuesday’s spirited whipsaw to lows ahead of Quasimodo support at 1.4026 caught a number of traders off guard.

Interestingly, price reclaimed 1.4078 as support heading into US hours and, as we write, remains moderately loyal, despite 1.41 clouding the base.

Recent movement had the RSI dip a toe in oversold water, with the value circling space under the 50.00 centreline.

Observed levels:

Having recognised scope to drop in on support at 1.4003 via the daily chart, in conjunction with H4 moving through the lower side of two consolidation areas (1.4096/1.4219 and 1.4188/1.4083), the 1.41 figure based on the H1 chart is in position to perhaps forge resistance.

As noted in Tuesday’s technical briefing, should 1.4078 break, H1 Quasimodo support at 1.4026 and the key figure 1.40 are in view—joins closely with daily support from 1.4003.

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EUR/USD Price Forecast – Euro Gives Up Early Gains

The Euro initially rallied during the trading session on Tuesday, but as you can see it has given back quite a bit of the gains to shrink down towards the 50 day EMA again. That being said, the market continues to see a lot of noise, and at this point it looks as if it is going to try to break down below the 1.21 handle. If it does, then we are almost certainly going to go looking towards the 1.20 handle, which is an area that I think a lot of attention will be drawn towards the market. If we were to break down below the 1.20 handle, it is likely that the 200 day EMA then comes into the picture that could offer support as well.

EUR/USD Video 16.06.21

It is at that point, when we break down below the 200 day EMA, that I think that the Euro gets absolutely crushed. That would almost certainly be a major “risk off” type of event that people would be paying attention to. Ultimately, if we break above the top of the candlestick for the trading session on Tuesday, then we could see a move towards the 1.2250 level. Breaking above there then opens up the possibility of a move towards the 1.25 handle, but we are obviously struggling to get to that scenario.

With this, I think that the market continues to see a lot of choppy behavior but at the end of the day we are probably going to have to wait for the end of the Federal Reserve meeting to have any real clarity as to the next move that we are making.

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

EUR/USD Mid-Session Technical Analysis for June 15, 2021

The Euro is trading lower on Tuesday after giving up earlier gains. This is a sign that traders have turned cautious ahead of the Federal Reserve’s two-day policy meeting, which could potentially provide hints of plans to start tapering its bond purchases.

Ahead of the meeting, Fed policymakers have stressed that rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time to come. However, recent economic data has raised concerns that price pressure could force an earlier stimulus withdrawal.

These are the reasons Euro traders are being so cautious. They simply cannot be certain which scenario will sway the Federal Open Market Committee’s (FOMC) next monetary policy decisions.

At 11:53 GMT, the EUR/USD is trading 1.2111, down 0.0008 or -0.07%.

In other news, traders showed little reaction to data that showed the Euro Zone’s unadjusted trade surplus was almost five times higher in April than a year earlier, but still smaller than expected.

On the trade front, the head of the European Commission announced that the bloc and the U.S. had resolved a 17-year dispute over aircraft subsidies.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.2093 will signal a resumption of the downtrend. A move through 1.2218 will change the main trend to up.

The short-term range is 1.1986 to 1.2266. The EUR/USD is currently straddling its 50% level at 1.2125.

The minor range is 1.2218 to 1.2093. Its 50% level at 1.2155 is the nearest upside target.

On the downside, a pair of longer-term 50% levels come in at 1.2027 and 1.1985.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to the pivot at 1.2125.

Bearish Scenario

A sustained move under 1.2125 will indicate the presence of sellers. This could trigger a further break into 1.2093. This price is a potential trigger point for an acceleration into the nearest main bottom at 1.2052.

Bullish Scenario

A sustained move over 1.2125 will signal the presence of buyers. This could trigger a quick move into the pivot at 1.2155. Look for sellers on the first test of this level. Taking it out, however, could trigger an acceleration to the upside with 1.2218 the next short-term target.

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

Inflation Figures and Trade Data from the Eurozone Deliver Mixed Results for the EUR

It was a busier morning on the economic calendar, with finalized inflation figures for France, Germany, and Italy in focus. Trade data from the Eurozone was the key stat of the day, however.

Eurozone Trade

In April, the Eurozone’s trade surplus narrowed from €15.8bn to €10.9bn. Economists had forecast a narrowing to €14.4bn.

According to Eurostat,

  • Exports to the rest of the world was up 43.2% to €135.3bn in April when compared with April 2020.
  • Imports from the rest of the world increased 37.4%, year-on-year, to €133.0bn.
  • In April 2020, the trade surplus had stood at €2.3bn.
  • Intra-euro area trade rose to €178.9bn in April 2021, up by 61.9% compared with April 2020.

Inflation

In May, German consumer prices increased by 0.5%, which was in line with forecasts. German consumer prices had risen by 0.7% in April.

From France, consumer prices increased by 0.3% in May, which was also in line with forecasts. In April, consumer prices had risen by 0.1%.

In Italy, consumer prices stalled in May after having risen by 0.4% in April. This was also in line with forecasts.

While the numbers were mixed for the month of May, all three member states reported in a pickup in the annual rate of inflation.

Germany’s annual rate of inflation accelerated from 2.0% to 2.5%, with France’s ticking up from 1.2% to 1.4%.

In spite of consumer prices stalling in May, Italy’s annual rate of inflation picked up from 1.1% to 1.3%.

Market Impact

Ahead of the trade data, the EUR had fallen to a pre-stat and current day low $1.21139 before rising to a pre-stat high $1.21281.

In response to the inflation and trade data, the EUR rose to a post-stat and current day high $1.21474 before falling back to a post-stat low $1.21208.

At the time of writing, the EUR was up by just 0.01% to $1.21225.

EURUSD 150621 Hourly Chart

Next Up

Retail sales, wholesale inflation, industrial production, and manufacturing numbers from the U.S. Expect the retail sales figures to be key…

EUR/USD Daily Forecast – U.S. Dollar Continues To Lose Ground Against Euro

Euro Is Moving Higher Against U.S. Dollar

EUR/USD is currently trying to settle back above the resistance at 1.2130 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below 90.50 and is moving towards the support level at 90.30. In case the U.S. Dollar Index gets to the test of the support at 90.30, EUR/USD will get more support.

Today, foreign exchange market traders had a chance to take a look at the final reading of inflation report from Germany. Inflation Rate increased by 0.5% month-over-month in May. On a year-over-year basis, Inflation Rate grew by 2.5%.

Germany’s inflation report was in line with the analyst consensus, and traders’ focus will soon shift to economic data from the U.S. Producer Prices are projected to grow by 6.3% on a year-over-year basis, but it remains to be seen whether markets will worry about higher inflation.

The yield of 10-year Treasuries has recently made an attempt to settle above 1.50% but failed to gain sufficient upside momentum and pulled back. A move above 1.50% will open the way to the test of the 20 EMA at 1.55% which will be bullish for the U.S. dollar, but traders will likely wait for the Fed Interest Rate Decision on Wednesday before making big moves.

Technical Analysis

eur usd june 15 2021

EUR/USD is currently testing the resistance at 1.2130. In case this test is successful, EUR/USD will move towards the next resistance level which is located at the 20 EMA at 1.2155.

A move above the 20 EMA will push EUR/USD towards the resistance at 1.2175. If EUR/USD manages to settle above this level, it will head towards the resistance at 1.2200.

On the support side, EUR/USD needs to get back below 1.2130 to have a chance to develop downside momentum in the near term. The next support level is located at 1.2115. It should be noted that the 50 EMA is in the nearby, so EUR/USD may get material support in the 1.2115 – 1.2130 range. If EUR/USD declines below the support at 1.2115, it will move towards the next support level at 1.2080.

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

A Busy Economic Calendar Puts the EUR, the Pound, and the Greenback in Focus

Earlier in the Day:

It was another quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action this morning.

For the Aussie Dollar

House price figures and the RBA meeting minutes were in focus this morning.

In the 1st quarter, house prices increased by 5.4% year-on-year, coming up short of a forecasted 5.5% rise. House prices had been up by 3.0% in the 4th quarter of last year.

Salient points from the RBA meeting minutes included:

  • Inflation and wage pressures remained subdued, despite the strong recovery in the economy and employment.
  • Borrowing rates for households and businesses on outstanding loans had continued to drift lower and were also at historical lows.
  • The Bank’s policy package had contributed to a lower exchange rate than would otherwise have been the case.
  • Monetary policy would likely need to remain highly accommodative for some time yet.
  • Government bond purchases discussed and the Board would decide upon future purchases at the July meet that comes ahead of the completion of the second $100 billion of purchases in early September.
  • Options include:
    • Ceasing purchasing bonds in September.
    • Repeating $100 billion of purchases for another 6-months.
    • Scaling back the amount purchased or spread the purchases over a longer period of time.
    • Move to a more frequent review of bond purchases, based on the flow of data and the economic outlook.
  • The Board would not increase the cash rate until actual inflation is sustainably within the 2-3% target range. For this to occur, wages growth would need to be materially higher than it currently is.
  • This would require significant gains in employment and a sustained return to a tight labor market.
  • Members view these conditions unlikely until 2024 at the earliest.

The Aussie Dollar moved from $0.77111 to $0.77027 upon release of the figures and the minutes. At the time of writing, the Aussie Dollar was down by 0.13% to $0.7702.

Elsewhere

Through the early hours, the Japanese Yen was flat ¥110.07 against the U.S Dollar, while the Kiwi Dollar was down by 0.14% to $0.7134.

The Day Ahead

For the EUR

It’s a busy day ahead on the economic data front. Finalized inflation figures for Germany, France, and Italy are due out along with trade data for the Eurozone.

Barring marked revisions from prelims, however, we would expect the trade data for April to have greater influence.

At the time of writing, the EUR was down by 0.02% to $1.2117.

For the Pound

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

Employment figures are due out later this morning. Expect April’s unemployment rate and May’s claimant count to have the greatest impact on the Pound.

Away from the economic calendar, greater certainty over the timing of the UK’s full reopening is going to be needed to support the Pound.

At the time of writing, the Pound was down by 0.07% to $1.4102.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include retail sales, wholesale inflation, and industrial production figures.

Following the marked pickup in inflationary pressures, expect the retail sales figures to be key.

Other stats due out include inventory figures for April and the NY Empire State Manufacturing Index numbers for June. Barring particularly dire numbers, however, these should have limited impact on the Dollar and broader market risk sentiment.

At the time of writing, the Dollar Spot Index was flat at to 90.520.

For the Loonie

It’s a quiet day ahead on the economic data front. Housing sector data is due out later today.

We don’t expect the numbers to have much influence on the Loonie, however, leaving the Loonie in the hands of market risk sentiment.

At the time of writing, the Loonie was down by 0.02% to C$1.2147 against the U.S Dollar.

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

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.

Dollar Steady as Fed Meeting Looms; Bitcoin Pops Above $40,000

Currency markets settled in tight ranges with implied volatility plumbing to multi-year lows after last week’s strong inflation readings and a dovish European Central Bank meeting failed to dislodge currencies from recent trading levels.

“It’s all about the FOMC this week, and we’ll be watching to see exactly how much taper talk has really been going on and if it has any impact on the medium term outlook,” Brad Bechtel, global head of FX at Jefferies, said in a note.

The dollar index, which measures the greenback against a basket of six currencies, was about flat on the day at 90.512. Last week the index rose 0.4%, its largest weekly change in five weeks.

Muted FX moves in recent weeks crushed the Deutsche Bank FX Volatility Index down to 5.6 on Friday, its lowest in nearly 16 months.

Against the yen the dollar rose 0.38% to a more than one-week high of 110.09 yen.

“A modest uptick in Treasury yields has been supportive of the rate-sensitive pairing,” said Ronald Simpson, managing director, global currency analysis at Action Economics.

The dollar’s strength against the Japanese currency may be a sign the FX market is looking for a less dovish outcome from the Fed meeting, Simpson said.

The Fed begins a scheduled two-day policy meeting on Tuesday. Nearly 60% of economists in a Reuters poll said a much-anticipated taper announcement will come in the next quarter, despite a patchy recovery in the job market.

Recent data pointing to a surge in inflation has raised concerns that price pressure following the post-COVID-19 economic reopening could force policymakers into an earlier tapering of currency-depreciating stimulus.

Sterling was largely unmoved by Monday’s news that Britain is set to delay the end of social distancing measures as the government seeks to contain a rapid rise in COVID-19 infections.

In cryptocurrencies, bitcoin traded above $40,000 for the first time in more than two weeks, before pairing gains to trade at $39,649.03.

(Reporting by Saqib Iqbal Ahmed in New York and Saikat Chatterjee in London; Editing by Catherine Evans, Bernadette Baum and Jonathan Oatis)

 

EUR/USD Mid-Session Technical Analysis for June 14, 2021

The Euro is trading higher at the mid-session on Monday as investors start to position themselves ahead of this week’s U.S. Federal Reserve monetary policy announcements.

The Federal Open Market Committee (FOMC) is due to meet on Tuesday and Wednesday to discuss policy. Fed Chairman Jerome Powell is then set to hold a press conference following the meeting at 18:00 GMT on Wednesday.

The Fed is expected to reiterate its commitment to easy monetary policy. However, investors will be watching to see if concerns about inflation will have any effect on its forecasts, particularly given last week’s hotter-than-expected consumer price index reading for May.

At 17:26 GMT, the EUR/USD is trading 1.2121, up 0.0014 or +0.12%.

In other news, Euro Zone industrial production was stronger than expected in April, driven by a more than doubling of durable consumer goods output from a year earlier as economies steadily reopened after COVID-19 pandemic lockdowns, data showed on Monday.

The European Union’s statistics office Eurostat said industrial output in the 19 countries sharing the Euro rose 0.8% month-on-month for a 39.3% year-on-year surge. Economists polled by Reuters had expected a 0.4% monthly and a 37.4% annual jump.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.2093 will signal a resumption of the downtrend. A trade through 1.2218 will change the main trend to up.

The short-term range is 1.1986 to 1.2266. The EUR/USD is currently trading on the weak side of its 50% level at 1.2125.

The minor range is 1.2218 to 1.2093. Its 50% level at 1.2155 is the nearest upside target and potential resistance.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to 1.2125.

Bearish Scenario

A sustained move under 1.2125 will indicate the presence of sellers. This could trigger a retest of Friday’s low at 1.2093. This is a potential trigger point for an acceleration to the downside with the main bottom at 1.2052 the next downside target, followed closely by a 50% level at 1.2027.

Bullish Scenario

A sustained move over 1.2125 will signal the presence of buyers. This could trigger a surge into 1.2155. Since the main trend is down, look for sellers on the first test of this level. Overcoming this level will indicate shorts are covering more aggressively.

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

EUR/USD Price Forecast – Euro Continues to Hang Around the 50 Day EMA

The Euro has gone back and forth during the trading session on Monday as we trying to disseminate whether or not the US dollar will strengthen, or if we are simply looking at a pullback in order to build up enough momentum to turn things around and reach towards the highs again. With this being the case, the market is likely to see a lot of choppy behavior, but the 50 day EMA is also an area that a lot of people will pay close attention to. However, when things are taken into full effect, the 50 day EMA is starting to flatten out a bit, so that shows that maybe we are trying to stabilize a bit.

EUR/USD Video 15.06.21

To the downside, if we do break down below the last couple of candlesticks, reaching down towards the 1.20 handle underneath. That of course is a large, round, psychologically significant figure and therefore I think a lot of attention will be paid to it. Furthermore, the 200 day EMA is starting to reach towards that level as well, so that of course could offer significant support.

On the other hand, if we turn around and rally, then it is likely that we could go looking towards the 1.23 handle, an area where we have seen a lot of resistance in the past and could open up the possible move towards the 1.25 handle, an area that of course could cause a significant amount of reaction, thereby offering a major barrier. By the end of the year, I fully anticipate that this market probably goes looking towards that area, unless of course we see a complete reversal in attitude.

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

USDX: The Cleanest Shirt Among the Dirty Laundry

The USD Index (USDX)

With the USD Index washing away its sins in recent weeks, the greenback has recorded five daily rallies of more than 0.40% since May 26. And with the up days growing stronger and the down days growing weaker, the change in the trend will be clear to more and more traders, which eventually would likely cause a shift in the sentiment. Case in point: while gold, silver and mining stocks are looking forward to their summer vacations (deep dives seem to be in the vacation plans, especially given today’s pre-market ~$20 decline in gold) , the USD Index has been hard at work rehabbing its reputation. And with the U.S. dollar easily the cleanest shirt among the currency basket of dirty laundry, the smell of fresh linen has begun to pique investors’ interest.

For one, not only are the USD Index’s fundamentals trending up, but the technicals are also moving in the same direction. And after the USD Index closed visibly above its previous weekly close, the greenback’s verified breakout above its declining resistance line remains a source of optimism. Moreover, while the USD Index still remains below its dashed rising resistance line and its 50-day moving average, subtle signs signal that the dollar is slowly cleaning up its act.

Please see below:

Second, while the USD Index’s rally occurred slowly at first in 2016, the momentum gathered steam as sentiment shifted. And while we’re only in the first stage of the two-stage process, it’s important to remember that investors are forward-looking.

Third, the USD Index recently bounced off of a triple (declining) bottom and prior instances were followed by significant rallies (the identical patterns formed in mid-and-late 2020 and are marked by the shaded green boxes above). During that time, the USD Index originally declined steadily before zigzag corrections culminated with new lows. However, with the third time being a charm, the third distinctive bottom was the final one.

For context, the USDX sunk like a stone in July 2020, before moving back and forth while still declining in August. Similarly, in November 2020, the USDX fell from grace once again (there was one exception) before moving back and forth while still declining in December. More importantly, though, ever since the final days of March, we’ve seen the same thing all over again. After the USD Index lost its confidence in April, we saw back-and-forth movement with lower lows and lower highs in May. However, with the third distinctive low likely already achieved, the USD Index’s best days may lie ahead.

Head & Shoulders Patterns Ahead

And what happened to gold, silver and mining stocks in the time of the two previous analogues?

Well, in August, gold topped without waiting for USD’s final bottom – which is natural, given how extremely overbought it was at the time. Likewise, in early January gold topped (which was much more similar to the current situation given the preceding price action) when the USDX formed its third and final distinctive bottom.

In addition, while the development is more of a wildcard at the moment, the USD Index might be in the early innings of forming an inverted head & shoulders pattern. For context, an inverted H&S pattern is a bullish development that if formed, could usher the USD Index to about 97-98. However, completing the right shoulder requires an upward breach of 93 (the blue line on the chart above), so at this point, it’s more of an indication than a confirmation.

However, if we turn the pattern upside down, the Euro Index might be in the midst of forming a bearish H&S pattern . If you analyze the right side of the chart below, you can see that the symmetrical pattern has the current price action mirroring the summer of 2020. And while we’re still in the early innings of forming the right shoulder, three peaks were recorded during the second half of 2020 before the Euro Index eventually rolled over.

Likewise, with a symmetrical setup that seems to already be in motion, the Euro Index may be heading down a similar path of historical ruin. In the second half of 2020, the decline was not that big, but it’s no wonder that this was the case as that was only the left shoulder of the pattern. Completion of the right shoulder, however, would imply another move lower, at least equal to the size of the head – to about the June 2020 lows or lower.

Please see below:

Moreover, with the USD Index’s triple bottom mirrored by a likely triple top in the Euro Index , last week’s decline actually ushered the Euro Index materially below the dashed resistance line of its monthly channel. And with the price action mirroring what we witnessed in mid-to-late 2020 – right before the Euro Index plunged – investors’ confidence could soon turn into fear.

Furthermore, the completion of the masterpiece could have a profound impact on gold, silver and mining stocks. To explain, gold continues to underperform the euro. If you analyze the bottom half of the chart above, you can see that material upswings in the Euro Index have resulted in diminishing marginal returns for the yellow metal. Thus, the relative weakness is an ominous sign, and if the Euro Index reverses, it could weigh heavily on the precious metals over the medium term. That’s another point for the bearish price prediction for gold.

The 2016 Analogue

Also, foretelling another revival, the USD Index has hopped into the time machine and set the dial to 2016. With the flashback scrubbing the stains off of the USD Index’s 2016 downswing, Mr. Clean could be arriving at just the right time.

As you can see on the above chart, what we saw this year is quite similar to what happened in 2016. If the analogy continues, the back-and-forth trading is likely to be followed by an upward acceleration. The trigger for it could be the rally back above the 50-day moving average and the rising dashed line. The confirmed breakout above both in 2016 resulted in sharper rallies in the USDX and much lower gold prices (gold declined about $200 between early October 2016 and its December 2016 lows).

Finally, the USD Index’s long-term breakout also remains intact . And when we steady the binoculars and observe the currency landscape, the greenback’s recent weakness is largely inconsequential.

Also, please note that the correlation between the USD Index and gold is now strongly negative (-0.93 over the last 10 days). The same thing happened in early January 2021 and in late July – August 2020; these were major tops in gold.

The bottom line?

Once the momentum unfolds , ~94.5 is likely the USD Index’s first stop. In the months to follow, the USDX will likely exceed 100 at some point over the medium or long term. Keep in mind though: we’re not bullish on the greenback because of the U.S.’ absolute outperformance. It’s because the region is outperforming the Eurozone and the EUR/USD accounts for nearly 58% of the movement of the USD Index – the relative performance is what really matters .

In conclusion, investors are well aware of the USD Index’s dirty laundry, and the euro’s squeaky-clean image is starting to show stains. Moreover, with the U.S. Federal Reserve (FED) poised to come clean and scale back its asset purchases in September, the USD Index should shine over the medium term. More importantly, though, with gold, silver and mining stocks exhibiting strong negative relationships with the U.S. dollar, the greenback’s eventual shower could send all of the precious metals’ gains down the drain.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

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

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

EUR/USD, GBP/USD Analysis & Setups 14 – 16 June 2021

The EUR/USD is testing the Fibonacci resistance zone after a strong bearish impulse. The GBP/USD is testing a key support zone after creating a choppy sideways zone.

If you think our videos, analysis, and education can help you become a better trader, then you can ask questions via our form and we will answer them in the weekly live webinar every Tuesday.

EUR/USD & GBP/USD Overview

The EUR/USD needs a clear bearish bounce at the shallow Fibonacci levels to confirm a potential bearish wave 3-4 pattern.

The GBP/USD needs a bearish breakout below the support zone or a bearish bounce at the resistance zone.

Check out the video below for the full analysis and trade plans on 14 – 16 June 2021:

EUR/USD, GBP/USD technical analysis: patterns, trends, key S&R levels

  • Explanation of potential trade ideas both up and down
  • Beginner friendly, explaining concepts in more detail

EUR/USD & GBP/USD Video

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

Good trading,

Chris Svorcik
CTA

 

Eurozone Industrial Production Figures for April Deliver EUR Support

It’s a quieter day on the economic data front this morning. Industrial production figures for the Eurozone were in focus this morning.

Industrial Production

In April, industrial production increased by 0.8%, coming in ahead of a forecasted and March 0.4% rise.

According to Eurostat,

  • Production of consumer goods rose by 3.4%, energy by 3.2%, capital goods by 1.4%, and intermediate goods by 0.8%.
  • Bucking the trend, however, was a 0.3% decline in the production of non-durable consumer goods.
  • Belgium (+7.4%), Malta (+5.6%), and Estonia (+4.4%) recorded the largest monthly increases.
  • Lithuania registered the largest monthly decrease of 2.4% in the month.
  • Compared with April 2020, industrial production was up by 39.3%.
  • The production of durable consumer goods was up by 117.3%, year-on-year.
  • There were also marked increases in the production of capital goods (+65.4%) and intermediate goods (+38.7%).
  • Non-durable consumer goods (+15.4%) and energy (+14.4%) production were up modestly by comparison.

Market Impact

Ahead of the trade data, the EUR had fallen to a pre-stat and current day low $1.20943 before rising to a pre-stat high and current day high $1.21208.

In response to the industrial production figures, the EUR slipped to a post-stat low $1.21085 before rising to a post-stat high $1.21187.

At the time of writing, the EUR was up by 0.06% to $1.21154.

EURUSD 140621 Hourly Chart

EUR/USD Daily Forecast – U.S. Dollar Stays Strong Against Euro

Euro Is Flat Against U.S. Dollar

EUR/USD managed to get below the 50 EMA at 1.2120 and is trying to settle below 1.2100 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the 50 EMA at 90.60 but failed to develop sufficient upside momentum and pulled back towards 90.50. If the U.S. Dollar Index declines below 90.50, it will move towards the support at 90.30 which will be bullish for EUR/USD.

Today, foreign exchange market traders will have a chance to take a look at Euro Area Industrial Production report for April. Analysts expect that Euro Area Industrial Production increased by 0.4% month-over-month in April after growing by 0.1% in March. On a year-over-year basis, Euro Area Industrial Production is projected to increase by 37.4% as it was under huge pressure in April 2020.

It remains to be seen whether the U.S. dollar will be able to gain significant momentum ahead of the Fed Interest Rate Decision, which will be released on Wednesday. However, U.S. Retail Sales, Industrial Production, Manufacturing Production and Producer Prices reports, which will be published on Tuesday, may serve as sufficient catalysts for significant moves.

Technical Analysis

eur usd june 14 2021

EUR/USD is currently trying to get below 1.2100. In case this attempt is successful, it will head towards the support level which is located at 1.2080.

A successful test of the support at 1.2080 will open the way to the test of the next support level at 1.2060. If EUR/USD gets below this level, it will move towards the support at 1.2040.

On the upside, the nearest resistance level for EUR/USD is located at the 50 EMA at 1.2120. If EUR/USD gets above this level, it will get to the test of the next resistance at 1.2130.

In case EUR/USD manages to settle above the resistance at 1.2130, it will move towards the next resistance at 1.2155. A move above the resistance at 1.2155 will open the way to the test of the resistance at 1.2175.

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

Euro Zone at a Turning Point but Too Early to Debate End of ECB Help: Lagarde

The ECB last week agreed to maintain an elevated pace of bond purchases to keep borrowing costs ultra low and policymakers did not even entertain questions about tapering support, even as growth rebounds faster than earlier predicted.

“I am not suggesting that the pandemic emergency purchase programme (PEPP) is going to stop on 31 March,” Lagarde was quoted on Monday as saying. “We have plenty of flexibility, but in terms of economic outlook we are heading in the right direction.

“It is far too early to debate these issues,” she said about winding down the 1.85 trillion euro PEPP, which is scheduled to last at least until March 31 or until the crisis phase of the pandemic is over.

Economists expect the ECB to start discussing the end of PEPP at their September meeting and the vast majority of ECB watchers polled by Reuters do not expect PEPP to be enlarged and extended again.

Instead, the ECB is more likely to shift policy support to an older and more rigid Asset Purchase Programme, which is likely to remain in place indefinitely as inflation is due to undershoot the ECB’s target for years to come.

“We are at a turning point where, bearing in mind alternative (virus) variants, we are on that recovery path, heading firmly towards a return to the pre-COVID-19 level,” Lagarde added.

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

(Reporting by Balazs Koranyi; Editing by Kim Coghill)

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.

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.

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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.