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EUR/USD and GBP/USD under pressure, but USD/JPY makes upward progress

A strengthening dollar has put pressure on EUR/USD and GBP/USD, risking the re-emergence of downtrends for these pairs, while USD/JPY has continued to bounce.

USDSource: Bloomberg
 
 Chris Beauchamp | Chief Market Analyst, London | Publication date: Wednesday 01 June 2022 

EUR/USD weakness builds despite consumer price index rise

Tuesday’s surge in inflation data did little to lift EUR/USD, which is turning lower as last week’s revived risk appetite begins to fade. The argument for tighter policy in the eurozone remains strong, but the European Central Bank (ECB) remains aware of the weakness of the economy and so will likely pursue a more cautious hiking policy than that seen in the US.

The brief sojourn above the 50-day Simply Moving Average (SMA) appears to be over, with the sellers apparently taking control again. This could spell the resumption of the downtrend, which would points towards a move in the direction of the May lows below $1.04.

Buyers will need to reverse the losses and close the price back above $1.08 to open the way to $1.093 and higher.

EUR/USD chartSource: ProRealTime

GBP/USD weakens on UK economic outlook

GBP/USD seems at risk of rolling over too, having seen its bounce from the May lows ease off over the past 24 hours. UK data has been quiet this week but the overall view remains that of an economy struggling to maintain forward momentum. The Bank of England's (BoE) increasingly-cautious hiking policy has left sterling at the mercy of the dollar; the brief counter-trend bounce may well be over.

As with EUR/USD, a fresh turn lower could mark the resumption of the downtrend, putting the May lows around $1.218 back into view. A recovery above Tuesday’s high and above $1.266 would suggest that the buyers are beginning to regain control, and could point towards a bounce back above the 50-day SMA.

However, the longer-term downtrend is still firmly in place, with the next lower high at $1.31 acting as a hurdle.

GBP/USD chartSource: ProRealTime

USD/JPY continues its bounce

After drifting lower for most of May USD/JPY has begun to rebound. Enthusiasm for the US dollar over the Yen reached a peak in late April, as talk of 75 basis points (bps) hikes appeared, but this has eased off of late, and the latest set of the Federeal Reserve (Fed) minutes suggested that the Fed would not look to alter the steady pace of its tightening of interest rates.

The decline in mid-May brought the pair back to the 50-day SMA, and we have seen a rally off this indicator. This has been accompanied by a turn higher in stochastics from a low level, creating the view that a higher low is in place and that a fresh move higher is underway.

Sellers will need to drive the price below ¥126.4 to open the way to some additional short-term downside.

USD/JPY chartSource: ProRealTime
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EUR/USD and EUR/GBP remain bid but AUD/USD stalls

EUR/USD and EUR/GBP remain quietly positive while AUD/USD consolidates ahead of RBA’s rate decision.

 

 

 Axel Rudolph | Market Analyst, London | Publication date: Monday 06 June 2022 

EUR/USD still flirts with the 55-day simple moving average

EUR/USD recovery from last week’s low at $1.0628 has taken it back to the 55-day simple moving average (SMA) at $1.0743 amid quiet trading due to many European countries enjoying a long Pentecost Monday weekend. Last week’s strong US Non-Farm Payrolls (NFP) data bolstered the US Federal Reserve’s (Fed) aggressive monetary tightening to try to combat soaring inflation which pushed the EUR/USD cross lower.

As long as last week’s low at $1.0628 underpins, however, overall upside pressure is expected to be maintained ahead of Thursday’s European Central Bank (ECB) policy meeting and Friday’s US consumer price index (CPI) data with the currency pair’s one-month high at $1.0787 remaining in sight.

First, though, EUR/USD needs to break through the March low and February-to-May downtrend line at $1.077. Above $1.0787 sits the late April high at $1.0936. Minor support continues to be seen along the one-month support line at $1.069.

EUR/USD chartSource: IT-Finance.com

EUR/GBP continues its ascent

EUR/GBP gradual ascent from its late May low at £0.848 has reached the £0.8587 to £0.8618 resistance area which so far caps the cross as investors return after a prolonged Queen’s Jubilee weekend ahead of UK BRC-KPMG Retail Sales Monitor (RSM) retail sales monitor and Halifax house price index data, out Tuesday and Wednesday respectively.

Were the May peak at £0.8618 to be exceeded, the July and September 2021 highs at £0.8658 to £0.8669 would be targeted next.

Minor support below Friday’s low at £0.8541 can be spotted at the late May high at £0.8529.

EUR/GBP chartSource: IT-Finance.com

AUD/USD pauses advance ahead of RBA meeting

AUD/USD dropped back from last week’s one-month high at $0.7283 as better-than-expected US NFP bolstered the US dollar, practically taking the cross back to its one-month uptrend line at $0.7183 earlier today, ahead of tomorrow’s Reserve Bank of Australia (RBA) rate decision.

The cross is currently hovering above last week’s low at $0.7141 whilst remaining below Friday’s $0.7283 peak as traders await tomorrow’s rate hike which is widely expected to come in at 25 basis points (bps), though some analysts expect a larger 40 bps increase.

From a technical point of view the cross seems to be struggling around the $0.7266 early May high. A slip trough last week’s low at $0.7141 would most likely lead to the 23 May high at $0.7127 being reached and probably also the $0.7053 to $0.7036 support zone which contains the early May low, 11 May high and 25 May trough. Were a rise and daily chart close above the current one-month high at $0.7283 to be made, however, the early March and late April highs at $0.7441 to $0.7458 would be in focus.

AUD/USD chartSource: IT-Finance.com
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EUR/USD slips, AUD/USD stalls but USD/JPY surges ahead

EUR/USD drops for a third day in a row, AUD/USD is mixed post surprise 50 bps RBA rate hike and USD/JPY rallies in 20-year highs.

 

 

 Axel Rudolph | Market Analyst, London | Publication date: Tuesday 07 June 2022 

EUR/USD slips for a third day in a row

EUR/USD is heading back down towards last week’s low at $1.0628 for the third day in a row, having been rejected by the 55-day simple moving average (SMA) at $1.0743 as the US dollar continues to strengthen on the back of the Federal Reserve (Fed) hawkish stance.

Last week’s stronger than anticipated US Non-Farm Payrolls (NFP) data, which showed the US economy added 390,000 jobs in May, meant that the Fed will likely stick to its course of aggressive tightening to try to combat soaring inflation.

As long as last week’s low at $1.0628 underpins on a daily chart closing basis, however, overall upside pressure is expected to be maintained ahead of Thursday’s European Central Bank (ECB) policy meeting and Friday’s US consumer prince index (CPI) data with the currency pair’s one-month high at $1.0787 possibly being revisited.

First, though, EUR/USD needs to break through the March low and February-to-May downtrend line at $1.0760. Above $1.0787 sits the late April high at $1.0936.

A slip through $1.0628 would engage the 19 May high at $1.0607.

EUR/USD chartSource: IT-Finance.com

AUD/USD mixed post surprise RBA 50 basis point rate hike

AUD/USD is having a volatile session today as the Reserve Bank of Australia (RBA) surprised market players by raising its cash rate by 50 basis points to 0.85% during its June meeting, its first back-to-back rate hike in 12 years.

Analysts had expected a 25-basis point (bp) rate hike with even the more hawkish not pricing in more than a 40-basis point rise, leading to a volatile intraday session as the central bank pointed out that the Australian labour market is strong, and that huge monetary support is no longer needed amid the strength of the economy and in view of soaring inflationary pressures.

The cross briefly shot up to $0.7247 before dipping to $0.716 so far today, thus remaining within its recent confines of $0.7141 and $0.7283. A drop trough last week’s low at $0.7141 would most likely lead to the 23 May high at $0.7127 being touched and probably also the $0.7053 to $0.7036 support zone which contains the early May low, 11 May high and 25 May trough. Were a rise and daily chart close above the current one-month high at $0.7283 to unfold over the coming days, however, the early March and late April highs at $0.7441 to $0.7458 would be eyed.

AUD/USD chartSource: IT-Finance.com

USD/JPY trades in 20-year highs

USD/JPY continues its upward trajectory and trades in 20-year highs on the back of last week’s stronger than expected US employment data and dovish comments by the Bank of Japan’s (BoJ) Governor Kuroda which highlight diverging US and Japanese monetary policies.

Kuroda sticks to his dovish stance despite Japan’s increasing inflationary pressures as he believes that the bank must continue to support households by retaining an easy monetary policy and that the benefit of a weak Yen and the disadvantage of higher prices roughly cancel each other out.

The January 2002 high at ¥135.18 is within reach, a rise above which would put the June 1991 peak at ¥142.80 on the map. The practically uninterrupted June advance in USD/JPY is so far not showing any signs of slowing down but were a minor retracement to take place, the May peak at ¥131.34 is expected to offer support.

USD/JPY chartSource: IT-Finance.com
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EUR/USD holds steady, as GBP/USD falls and USD/JPY makes headway

EUR/USD is still holding firm, while the pound has dropped back against the dollar. Meanwhile, USD/JPY is making further strong gains.

GBPSource: Bloomberg
 
 Chris Beauchamp | Chief Market Analyst, London | Publication date: Wednesday 08 June 2022 

EUR/USD holds its ground

EUR/USD continues to drift lower, but for now continues to hold the $1.063 area, preventing a deeper fall for the time being. Much will depend on the European Central Bank (ECB) on Thursday, and whether they succeed in sounding more hawkish on monetary policy or not.

A move below $1.063 signals the beginning of a move back towards the lows of May towards $1.035, reviving the downtrend of the past year. A short-term bounce targets $1.0727 and then $1.0778, before moving on towards $1.088.

EUR/USD chartSource: ProRealTime

GBP/USD drops back from $1.26

GBP/USD's expectations of a renewed drop yesterday were confounded by the surge seen on Tuesday. Sterling seemed to shrug off concerns about the economy and the potential for more clashes with the EU over Northern Ireland, rallying from $1.243 towards $1.26.

Now we look to see if the pair can push on and move above $1.26, before heading on to challenge the late-May highs around $1.266. This sustained recovery has yet to really undermine the broader downtrend, with the mid-April highs near $1.304 and $1.314 still some way away.

GBP/USD chartSource: ProRealTime

USD/JPY climbs further

USD/JPY has leapt off the 50-day simple moving average (SMA), which it touched at the end of May, moving to a new higher high in a very short space of time. As yet there is no sign of a reversal in play, but if one were to occur then the ¥131.34 high from early May comes firmly into view.

Below this the 50-day SMA (currently ¥128.00) may offer support, and from there a move down brings the late May low at ¥126.60 into view. Early-2002’s high at ¥135.00 comes into play next, with the next big level after this taking us back into the 20th century and the 1998 high at ¥147.63.

USD/JPY chartSource: ProRealTime
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EUR/USD and EUR/GBP await ECB decision while GBP/JPY falters at April peak

EUR/USD remains side-lined and EUR/GBP bid ahead of Thursday’s ECB meeting and press conference while GBP/JPY rally stalls at its April peak.

EUR/USDSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Thursday 09 June 2022 

EUR/USD side-lined ahead of ECB rate decision

EUR/USD has been capped by the 55-day simple moving average (SMA) at $1.0726 and this year’s downtrend line at $1.0744 for the past week while range trading ahead of Thursday’s European Central Bank (ECB) meeting and press conference. No rate hike is expected to be announced but talk of one in July is likely to be on the table.

As long as last week’s low at $1.0628 underpins on a daily chart closing basis, overall upside pressure is expected to be maintained ahead of Friday’s US consumer price index (CPI) release with the currency pair’s one-month high at $1.0787 possibly being revisited on a rise above the downtrend and yesterday’s high at $1.0748. Above $1.0787 sits the late-April high at $1.0936.

Good support continues to be found between the 25 May, 1 and 7 June lows at $1.0653 to $1.0628. A slip through $1.0628 would engage the 19 May high at $1.0607.

EUR/USD chartSource: IT-Finance.com

EUR/GBP has resumed its ascent ahead of ECB meeting

After briefly dipping to £0.8585 earlier in the week, EUR/GBP is seen heading back up towards the £0.8587 to £0.8589 on 24 May and early-June highs ahead of Thursday’s ECB meeting and press conference in which talk of a July rate hike is expected to feature.

Above £0.8589 beckons the £0.8618 May peak. Were it to be exceeded, the July and September 2021 highs at £0.8658 to £0.8669 would be next in line.

Minor support below the three-month uptrend line, late-May low and this week’s low at £0.85 to £0.8582 comes in between the 200- and 55-day SMA as well as the 23 May low at £0.8443 to £0.8433.

EUR/GBP chartSource: IT-Finance.com

GBP/JPY falters around April peak

The May-to-June advance in the GBP/JPY from its May low at ¥155.61 has taken it back to its April peak at ¥168.43 before rapidly coming off today after 11 consecutive positive sessions.

The reason for this technical reversal probably has to do with profit taking ahead of today’s ECB meeting and possible fears by traders of some verbal intervention from the Bank of Japan (BoJ) which sticks to its ultra-easy monetary policy despite rising inflation.

From a technical point of view an Elliott Wave zig-zag correction, also called an a,b,c correction, ended at the mid-May ¥155.61 low and is being followed by a five wave advance to above the April high. Three of those five waves have so far been formed with a fourth wave correction probably upon us. If so, a final and fifth wave to the upside should finally unfold.

The current fourth wave is expected to be messy and not as short lived as corrective wave two which can be sub-divided into three clear waves a,b and c. Over the coming days the March peak and one-month uptrend line at ¥164.64 may be revisited. A currently unexpected rise above this morning’s intraday high at ¥168.73 would lead to the ¥170.00 mark being targeted.

GBP/JPY chartSource: IT-Finance.com
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EUR/USD and EUR/GBP drop post ECB meeting while USD/CAD rallies

EUR/USD and EUR/GBP took a hit as ECB ends asset purchase plan and hikes rates while USD/CAD rallies ahead of US inflation and Canadian unemployment data.

CADSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Friday 10 June 2022 

EUR/USD tumbles post ECB meeting

EUR/USD trades in three-week lows as the European Central Bank (ECB) decided to end its asset purchase plan at the end of June and raise interest rates for the first time since 2011 in July.

The currency pair briefly rose to $1.0774 on the widely anticipated rate hike announcement but then fell in one swoop to three-week lows, so far to $1.0612 while forming a Bearish Engulfing pattern on the daily candlestick chart. It occurs when the body of a candle – the coloured area between the open and close – “engulfs” the previous day’s body of a candle and does so to the downside.

The long-term downtrend in EUR/USD may thus have resumed with the $1.05 region representing the first downside target zone. It is where the late April and early May lows were made. Immediate resistance can be found at the 7 June low at $1.0653 and further minor resistance along the 55-day simple moving average (SMA) at $1.0717.

EUR/USD chartSource: IT-Finance.com

EUR/GBP topped out after ECB meeting

After EUR/GBP briefly rallying to a one-month high at £0.8592, to just below the £0.8618 May peak, on the announcement that the ECB intends to hike its interest rates in July - for the first time in eleven years – the cross reversed its trend as the market priced in that the central bank will end its asset purchase plan at the end of the month.

EUR/GBP thus formed a Bearish Engulfing pattern on the daily candlestick chart which occurs when the body of a candle – the coloured area between the open and close – “engulfs” the previous day’s body of a candle and does so to the downside.

Minor support below yesterday’s low at £0.8486 comes in at the £0.8482 late May low ahead of the 200- and 55-day SMA and the 23 May low at £0.8443 to £0.8433. Minor resistance sits at the mid-May high at £0.8534.

EUR/GBP chartSource: IT-Finance.com

USD/CAD breaks through its two-month downtrend line

USD/CAD sharply reversed its trend on profit taking yesterday, ahead of today’s highly anticipated US inflation and Canadian unemployment data for the month of May, out at 1.30pm.

So far a 1.5% rally from this week’s six-week low at C$1.2518 has taken the currency pair through its one-month downtrend line to the 55-day SMA at C$1.2704 and close to the early May low at C$1.2714. Given the strength of yesterday’s bullish reversal, and since a downtrend line has been breached, further upside remains in store for the cross with the 23 May low at C$1.2765 representing the next upside target, followed by the 25 May high at C$1.2885.

Slips should find support along the 200-day SMA at C$1.2662 with further support being found at the 7 June high at C$1.2618.

USD/CAD chartSource: IT-Finance.com
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EUR/USD tumbles, USD/JPY rallies and EUR/GBP rises amid appreciating US dollar

EUR/USD falls out of bed ahead of Wednesday’s FOMC meeting, USD/JPY trades in 20-year highs and EUR/GBP rises on UK recession risk ahead of Thursday’s BOE meeting.

 

 

 Axel Rudolph | Market Analyst, London | Publication date: Monday 13 June 2022 

EUR/USD tumbles towards its $1.035 May low on stronger US dollar

EUR/USD has been rejected by the 55-day simple moving average (SMA) at $1.0706 and this year’s downtrend line at $1.0756 last week before sliding by over 2% in the past three days alone amid higher than expected 40-year high US inflation at 8.6% year-on-year (YoY). This led investors to price in more aggressive Federal Reserve (Fed) rate hikes by as much as 75 basis points (bp), perhaps as soon as at Wednesday’s Federal Open Market Committee (FOMC) meeting, making the US dollar appreciate greatly.

The May trough at $1.035 is now firmly in view, a fall through which would open the way for parity to be in focus.

Minor resistance is seen at the 29 April-high at $1.0593 and more significant resistance between the 5 May-high and the 1 June low at $1.0642 to $1.0627. While the cross stays below it, downside pressure retains the upper hand.

EUR/USD chartSource: IT-Finance.com

EUR/GBP hovers above last week’s low at £0.8486

Last week EUR/GBP held around the £0.85 mark, having briefly dipped to £0.8486, before heading back up again as the European Central Bank (ECB) pointed at a July rate hike and announced the end of its asset purchase programme at the end of the month.

The cross is currently heading back up towards the £0.8587 to £0.8592 24 May and last week’s high, ahead of Thursday’s Bank of England (BoE) meeting in which a 25-bp rate hike to 1.25% is expected to be announced and as the Confederation of British Industry (CBI) today warns of an increasing UK recession risk.

Above £0.8592 beckons the £0.8618 May peak. Were it to be exceeded, the July and September 2021 highs at £0.8658 to £0.8669 would be targeted next.
Minor support below the three-month uptrend line, late May low and last week’s low at £0.8486 to £0.8582 comes in between the 200- and 55-day simple moving averages (SMA) as well as the 23 May low at £0.8446 to £0.8433.

EUR/GBP chartSource: IT-Finance.com

USD/JPY trades in 20-year highs

USD/JPY continues its upward trajectory and trades in 20-year highs on the back of last week’s stronger than expected US inflation data to 8.6% YoY and the Bank of Japan (BoJ) sticking to its dovish stance despite domestic inflationary pressures which highlight diverging US and Japanese monetary policies.

The BoJ’s Governor Kuroda believes that the bank must continue to support households by retaining an easy monetary policy and that the benefit of a weak Yen and the disadvantage of higher prices roughly cancel each other out.

The January 2002 high at ¥135.18 is currently being grappled with, a rise and daily chart close above which would put the June 1991 peak at ¥142.80 on the map. The practically uninterrupted June advance as the pair is so far not showing any signs of slowing down but were a minor retracement to below last Thursday’s low at ¥133.19 to take place, the May peak at ¥131.34 is expected to offer support.

USD/JPY chartSource: IT-Finance.com
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EUR/USD and GBP/USD rebounds stall, while USD/JPY recovers

For now EUR/USD and GBP/USD have moved higher, while USD/JPY has recouped some of its losses of the past two days.

EuroSource: Bloomberg
 
 Chris Beauchamp | Chief Market Analyst, London | Publication date: Friday 17 June 2022 

EUR/USD steady after three-day rebound

EUR/USD moved up from the lows of the week, and headed back towards $1.06. However, some of those gains appear to be slipping away. Additional upside would head towards $1.0637, and then on to the highs of May and June at $1.0727 and $1.0778.

A fresh weakening of the pair would bring the lows at $1.04 back into view, and additional losses from here would bring $1.0354. For now, it appears the dollar will weaken and allow the pair to push higher in the short term.

EUR/USD chartSource: ProRealTime

GBP/USD looks for additional upside

For GBP/USD, the post-Federal Reserve (Fed) dollar weakness, and slightly more hawkish talk from the Bank of England (BoE), appears to have given the pound space to rally against the dollar, bouncing from below $1.20.

Further gains would target $1.24, and then on towards $1.2589 and $1.2635. Having fallen to a lower low, the downtrend is firmly intact, so it would take a bounce above the late-May high that will help suggest that a reversal is in play.

Additional declines target $1.20, and then below this the March 2020 lows down towards $1.15 come into view.

GBP/USD chartSource: ProRealTime

USD/JPY heads higher again

After two days of losses the USD/JPY price has begun to rebound, and now the highs from this month at ¥135.60 are now upside targets.

For the time being, the price looks to be on a bullish move once again, and it would require a move back below ¥132.00 to put the bearish view in play.

Below this the 50-day simple moving average (SMA) at ¥129.55 is the next area of possible support, while below this the low of May at ¥126.78.

USD/JPY chartSource: ProRealTime
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EUR/USD moving higher, while GBP/USD bounce falters and USD/JPY holds at recent highs

The new week begins with the euro making headway against the dollar, but the pound’s bounce against the greenback is stalling. Meanwhile, against the yen the dollar looks set for further gains.

 

 Chris Beauchamp | Chief Market Analyst, London | Publication date: Monday 20 June 2022 

EUR/USD bounce still intact

EUR/USD has rallied off the lows of last week, moving back above $1.05, with a first target being $1.06 and then the 50-day Simple moving average (SMA) at $1.0628.

Above this, the price will move on to challenge $1.0637, followed by $1.0727 and then $1.0777. The broader downtrend is still firmly intact, but if the price can move back above this most recent lower high then hopes of a sustained bounce may develop.

A drop below $1.04 brings the lows of May and June at $1.0355 back into view as possible support.

EUR/USD chartSource: ProRealTime

GBP/USD recovery weakens

GBP/USD rebound around the Bank of England (BoE) decision last week fizzed out on Friday, with the price falling back from $1.2366. If it can recover this level and move on above the 50-day SMA (currently $1.2544) then perhaps a cautiously short-term bullish view may develop.

However, a longer-term bullish view would need the price to exceed the highs from late-May above $1.26, the most recent lower high.

This month’s low around $1.1945 marks a key area for the pair, having broadly held since October 2016, aside from the dip during the height of the Covid-19 panic.

GBP/USD chartSource: ProRealTime

USD/JPY holds firm at highs

USD/JPY rebounds on Friday as the price has stalled, but the recovery remains intact after some brief mid-week losses last week. Just as the downtrends are in place for EUR/USD and GBP/USD, the rally for this pair is still firmly intact.

For the moment, upside momentum looks set to prevail, and new highs in the uptrend seem the order of the day. A reversal back below ¥132.00 would put the 50-day SMA at ¥129.75 back into view.

USD/JPY chartSource: ProRealTime
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Dollar weakens, giving EUR/USD and AUD/USD space to rally, while EUR/GBP edges lower

A risk-on morning has seen the Aussie and euro make headway against the US dollar.

 

 

 Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 21 June 2022 

EUR/USD rebound stalls

EUR/USD dropped back from Friday’s highs yesterday, and was unable to make further progress towards $1.06. However, the bearish view has yet to be fully revived, since the gains of the past few days are still relatively intact.

For the time being, the price continues to hold above the $1.0354 level, as it did in early May, avoiding any new lower low.

Jerome Powell’s testimony this week could provide further direction, depending on his view of monetary policy. Additional upside from current levels would head towards $1.0637, $1.0727 and then $1.0777.

EUR/USD chartSource: ProRealTime

EUR/GBP keeps climbing

EUR/GBP has continued to climb over the past two months, as the cautious outlook from the Bank of England (BoE) contrasts with the move towards rate increases by the European Central Bank (ECB), and the expectation that the policy response will have to be stepped up.

Trendline support has continued to underpin the pair since mid April, helping to prevent additional downside several times in May and June. In addition, a series of higher highs and higher lows remains in place. The most recent spike carried the price towards 87p, the highest level since quarter one (Q1) 2021.

A break below 85.40 would likely put the price below trendline support and signal that a bigger near-term pullback is at hand. Further gains from the current level would head towards 85.95 and then 86.58.

EUR/GBP chartSource: ProRealTime

AUD/USD looks to move higher

AUD/USD dropped sharply on Friday, and then was unable to make much headway yesterday, remaining below $0.697. Even comments from the Reserve Bank of Australia (RBA) governor overnight relating to the expectation of further rate increases was unable to provide much of a bullish impetus for the pair.

Further gains above $0.697 would put $0.7007 into view, followed on by the highs last week around $0.705. From there the 50-day simple moving average (SMA) at $0.712 comes into view.

A break below rising trendline support from last week’s low, i.e. below $0.694, would mark a bearish move and put last week’s low at $0.685 back into play as possible support.

AUD/USD chartSource: ProRealTime
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Dollar strength lifts USD/JPY but hits EUR/USD and GBP/USD

The brief rebound in risk assets is faltering, and as a result the dollar is strengthening once again.

USD/JPYSource: Bloomberg
 
 Chris Beauchamp | Chief Market Analyst, London | Publication date: Wednesday 22 June 2022 

EUR/USD bounce runs out of steam

EUR/USD's gains have stalled, with the price now edging back below $1.05 as the recovery in risk appetite begins to weaken. Along with stocks, EUR/USD had made headway over the course of last week and into this week, but once again growth and inflation fears are coming into play.

This has the effect of strengthening the US dollar once again, and suggests that we could see EUR/USD roll over and head down once again with the low stochastic readings currently in evidence indicating the strength of the downtrend.

Fresh declines now target $1.04 once again, and then to last week’s low at $1.036. A more bullish view requires a recovery above the highs of the past week around $1.0585.

EUR/USD chartSource: ProRealTime

GBP/USD teeters on edge of fresh declines

It is a similar story with GBP/USD. The pound rallied against the dollar last week, but the gains have stalled and now the price has slipped back from yesterday’s highs. Once again the greenback appears to be in the ascendant.

A resumption of the downward move targets last week’s low at $1.194, which was the lowest level since March 2020. From here the 2020 lows around $1.1435 come into play.

Buyers will want to see the price rally above $1.235 to reverse the bearish view.

GBP/USD chartSource: ProRealTime

USD/JPY hits fresh multi-decade high

The lack of any intervention from the Bank of Japan (BoJ) has emboldened the dollar bulls and pushed the USD/JPY to a new 24-year high.

Once again bullish momentum has asserted itself, and we look for the pair to make further upside headway, backed by high stochastic readings that indicate the strength of the move higher.

At present there is little sign of a reversal, and the bulls look to be firmly in charge. The 1998 high at ¥146.75 is the next big level to watch.

USD/JPY chartSource: ProRealTime
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USD/JPY comes off near 24-year highs while EUR/USD and EUR/GBP capped

USD/JPY looks short-term toppish while EUR/USD and EUR/GBP flirt with resistance

 

 Axel Rudolph | Market Analyst, London | Publication date: Thursday 23 June 2022 

EUR/USD trades close to resistance

EUR/USD gradual rise from its current June low at $1.036 has once more run out of steam below the 55-day simple moving average (SMA) at $1.0633 despite the Federal Reserve (Fed) Chair Jerome Powell mentioning the possibility of a recession in the US in his testimony to Congress on Wednesday.

Wednesday’s intraday high at $1.0605 was only marginally made above the $1.0601 mid-June high but as long as Wednesday’s low at $1.047 underpins, another attempt to break through the minor $1.0601 to $1.0633 resistance zone is likely to ensue. If so, the four-month downtrend line at $1.069 would be in focus.

Potential slips below Wednesday’s low at $1.047 would engage the 17 June low at $1.0445. Below it major support remains to be seen at the $1.036 to $1.035 May and current June lows. Failure at $1.035 could lead to a slide towards parity taking place.

EUR/USD chartSource: IT-Finance.com

EUR/GBP continues its gradual advance

EUR/GBP is trying to overcome its £0.8618 May high as the UK is experiencing 40-year high inflation at 9.1% Year-on-Year (YoY), the country’s largest rail strike in 30-years and is plagued by recession fears.

Should a daily chart close above £0.8618 unfold, a continued gradual rise may take the cross all the way to its one-year high at £0.8721, made marginally below the 200-week SMA at £0.8723.

Slips should find support between the late May and early June highs at £0.8592 to £0.8587 with further minor support coming in at the 21 June low at £0.8569. Only currently unexpected failure at £0.8569 would lead to the three-month uptrend line at £0.8543 being back in play.

EUR/GBP chartSource: IT-Finance.com

USD/JPY comes off near 24-year highs

USD/JPY is seen coming off its ¥136.71 near 24-year high as the US dollar is taking a breather amid comments from Fed Chair Jerome Powell evoking the possibility of a US recession in his testimony before Congress on Wednesday and as the Japanese yen is benefitting from weaker oil prices, given that Japan is a big net importer of the commodity.

The technical picture is also interesting in that negative divergence can be spotted on the daily 9-period Relative Strength Index (RSI) which made a lower low and thus did not confirm the higher high seen on the daily USD/JPY chart. Such divergence in most instances leads to at least a short-term countertrend move with the cross expected to slip back towards its one-month support line at ¥133.25.

While the mid-June low at ¥131.50 holds, however, the medium-term uptrend remains intact. A rise and daily chart close above this week’s multi-decade high at ¥136.71 would engage the minor psychological ¥140.0 barrier and then the June 1991 peak at ¥142.80.

USD/JPY chartSource: IT-Finance.com
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USD/JPY continues to slide while EUR/USD and EUR/GBP are capped

USD/JPY looks short-term toppish while EUR/USD and EUR/GBP are capped by resistance.

PoundSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Friday 24 June 2022 

EUR/USD continues to be side-lined below resistance

EUR/USD continues to hover below the 55-day simple moving average (SMA) at $1.0627 despite the Federal Reserve (Fed) Chair, Jerome Powell, in a testimony to Congress mentioning the possibility of a recession in the US and that his commitment to bringing down price increases is ‘unconditional’.

Wednesday’s intraday high at $1.0605 was only marginally made above the $1.0601 mid-June high but as long as Wednesday’s low at $1.047 underpins, another attempt to break through the minor $1.0601 to $1.0627 resistance zone is likely to unfold. If so, the four-month downtrend line at $1.0681 would be eyed.

Potential slips below Wednesday’s low at $1.047 could lead to the 17 June low at $1.0445 being revisited. Below it major support continues to sit at the $1.036 to $1.035 May and current June lows. Failure at $1.035 would bring parity to the fore.

EUR/USD chartSource: IT-Finance.com

EUR/GBP formed a minor top at £0.8641

EUR/GBP briefly overcame its £0.8618 May high and rose to £0.8641 on Thursday before coming off again as the UK is plagued by 40-year high inflation amid the country’s largest ongoing rail strike in 30 years.

Below the 21 June low at £0.8569, the three-month uptrend line can be spotted at £0.8548 and represents an immediate downside target.

Resistance above the £0.8618 to £0.8641 zone can only be seen at the currency pair’s one-year high at £0.8721 and the 200-week SMA at £0.8723.

EUR/GBP chartSource: IT-Finance.com

USD/JPY comes further off its near 24-year high

USD/JPY is continuing to come off its ¥136.71 near 24-year high as the US dollar is depreciating slightly and the Japanese yen is benefitting from weaker oil prices, given that Japan is a big net importer, and as the core consumer price index in Japan increased to 2.1% in May year-on-year and thus exceeds the Bank of Japan’s (BoJ) target for the second month in a row.

Negative divergence on the daily 9-period relative strength index (RSI) - which made a lower low and thus did not confirm the higher high seen on the daily USD/JPY chart earlier this week - led to the current minor countertrend move with the cross approaching its one-month support line at ¥133.60.

While the mid-June low at ¥131.50 holds, however, the medium-term uptrend remains valid.

Only a currently unexpected rise and daily chart close above this week’s multi-decade high at ¥136.71 would engage the minor psychological ¥140.00 barrier and then the June 1991 peak at ¥142.80.

USD/JPY chartSource: IT-Finance.com
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USD/JPY side-lined, EUR/USD and EUR/GBP approach minor resistance

USD/JPY nears minor support while EUR/USD and EUR/GBP rise towards resistance.

USD/JPYSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Monday 27 June 2022 

EUR/USD rises towards minor resistance

EUR/USD continues to gradually advance towards the 55-day simple moving average (SMA) at $1.0621 as fears of higher and faster US rate hikes ease after last week’s University of Michigan US longer-term consumer inflation expectations settled back from a 14-year high.

The mid-June and last Wednesday’s high at $1.0601 to $1.0605 represent immediate upside targets ahead of the 55-day SMA, a rise above which would engage the four-month downtrend line at $1.067.

A bullish bias should remain in play while the cross stays above last week’s $1.047 low. Only potential slips below Wednesday’s low at $1.047 could lead to the 17 June low at $1.0445 being revisited. Below it major support continues to sit at the $1.036 to $1.035 May and current June lows.

EUR/USD chartSource: IT-Finance.com

EUR/GBP still range trades below last week’s high at £0.8641

EUR/GBP continues to sideways trade below its £0.8618 May and £0.8641 last Thursday highs as the UK is plagued by 40-year high inflation and this weekend ended its largest ongoing rail strike in 30-years.

While the £0.8618 to £0.8641 resistance zone caps, Friday’s low and the three-month uptrend line at £0.8562 to £0.8552 remain in view.

Resistance above the £0.8618 to £0.8641 area can only be seen at the currency pair’s one-year mid-June high and the 200-week SMA at £0.8721.

EUR/GBP chartSource: IT-Finance.com

Further consolidation below USD/JPY near 24-year high is at hand

USD/JPY still comes off its ¥136.71 near 24-year high, made last week, as the US dollar continues to depreciate slightly and the Japanese yen is benefitting from weaker oil prices, given that Japan is a big net importer, and as inflation in Japan remains above the Bank of Japan’s (BoJ) target rate for a second month in a row.

Negative divergence on the daily 9-period relative strength index (RSI) - which formed a lower low and thus did not confirm the higher high seen on the daily USD/JPY chart last week - led to the current minor countertrend move with the cross approaching its one-month support line at ¥134.02.

While the mid-June low at ¥131.50 holds, however, the medium-term uptrend remains intact. Minor resistance can be spotted at the 14 June high at ¥135.60. Only a currently unexpected rise and daily chart close above last week’s multi-decade high at ¥136.71 would engage the minor psychological ¥140.00 barrier and then the June 1991 peak at ¥142.80.

USD/JPY chartSource: IT-Finance.com
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EUR/USD, EUR/GBP and GBP/JPY are all pointing higher

EUR/USD and EUR/GBP near minor resistance while GBP/JPY resumes its ascent.

 

 Axel Rudolph | Market Analyst, London | Publication date: Tuesday 28 June 2022 

EUR/USD stalls amid weak German Gfk Consumer Climate

EUR/USD so far remains capped by the 55-day simple moving average (SMA) at $1.0617 after the European Central Banks’s (ECB) annual forum on Monday evening in Sintra, Portugal, and as the German GfK Consumer Climate comes in at -27.4 versus an expected -27.5 and weaker than its previous month’s revised -26.2. Monday’s high and the 55-day SMA at $1.0615 to $1.0617 remain in sight, a rise above which would target the four-month downtrend line at $1.0665.

An immediate bullish bias should remain in play while the cross stays above its one-month uptrend line at $1.0544 and, more importantly, last week’s $1.047 low. Only potential slips below last Wednesday’s low at $1.047 could lead to the 17 June low at $1.0445 being revisited. Below it major support continues to sit at the $1.036 to $1.035 May and current June lows.

EUR/USD chartSource: IT-Finance.com

EUR/GBP nears last week’s high at £0.8641

EUR/GBP once more flirts with its £0.8618 May high while targeting its £0.8641 high from last Thursday as the UK is bracing for further strikes in several sectors, including barristers, doctors, and airport staff, following last week’s largest ongoing rail strike in 30-years.

Resistance above last week’s high at £0.8641 comes in at the currency pair’s one-year mid-June high and the 200-week SMA at £0.8721. Friday’s low and the three-month uptrend line at £0.8562 to £0.8558 should continue to offer support.

EUR/GBP chartSource: IT-Finance.com

GBP/JPY is expected to continue its advance towards the ¥170 region

The sell-off in the GBP/JPY from its April peak at ¥168.43 seems to have ended at its mid-June low at ¥160.00 with renewed upside having been seen since, as the Bank of England (BoE) is expected to continue raising interest rates and the Bank of Japan (BoJ) sticks to its ultra-easy monetary policy despite rising inflation.

From a technical point of view, a fourth Elliott Wave seems to have been completed at the recent ¥160.00 low, with a final fifth Elliott wave to the upside being in the making. It should take the cross to above its April and current June highs at ¥168.43 to ¥168.73 towards the ¥170.00 zone and above. On the way up, resistance comes in at last week’s high at ¥167.91 while last week’s low at ¥164.66 offers immediate support.

GBP/JPY chartSource: IT-Finance.com
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Dollar strength pressures EUR/USD and GBP/USD but lifts USD/JPY

Risk-off sentiment has returned, and this has resulted in gains for the dollar at the expense of the euro, sterling and yen.

 

 Chris Beauchamp | Chief Market Analyst, London | Publication date: Wednesday 29 June 2022 

EUR/USD

EUR/USD returned to the 50-day simple moving average (SMA) this week ($1.0588), having rallied modestly from the lows of June, along with most risk assets. However, it looks like the hiatus from risk-off sentiment has come to an end once again, and a fresh move lower is in store.

Further declines from here will bring $1.0384 and then $1.035 into view, as the pair heads back to retest recent lows seen over the past two months.

A revival back above the 50-day SMA and then above $1.06 would be needed to suggest a resumption of the bounce, which then targets $1.0637 and higher.

EUR/USD chartSource: ProRealTime

GBP/USD struggles in early trading

For GBP/USD as well it looks like a new drop is at hand, as the dollar strengthens again and the concerns about inflation and growth begin to build.

The downtrend here looks to be in the process of reasserting itself, which suggests a resumption of the move back to $1.20 and lower. Below this there is not much evidence of support until the March 2020 lows of $1.15.

Buyers will need to step in soon and push the price back above $1.2366 if they are to avoid this scenario, although a bounce back above $1.263 would be needed if it is to push on to create a higher high.

GBP/USD chartSource: ProRealTime

USD/JPY holds near highs

USD/JPY has returned to the highs of last week, with the uptrend here just as firmly in place as the downtrends are for EUR/USD and GBP/USD.

Now that the 2002 highs have been breached, the next step would be ¥146.75, the highs from 1998. Horizontal and trendline support come into view around ¥135.00, which may help support the price in the end of any drop in coming days.

Below this the price would head towards the 50-day SMA at ¥131.00.

USD/JPY chartSource: ProRealTime
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USD/JPY ascent paused while EUR/USD and EUR/GBP slip

USD/JPY consolidates near 24-year high while EUR/USD and EUR/GBP tumble.

USD/JPYSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Thursday 30 June 2022 

EUR/USD slips as June draws to a close

EUR/USD's failure along the 55-day simple moving average (SMA), now at $1.0601, has led to a sharp sell-off, taking the cross back towards its $1.036 to $1.035 May and current June lows as the Federal Reserve (Fed) Chair Jerome Powell reiterated the need to combat inflation even if it meant risking “some pain.”

Powell also stated during the European Central Bank’s (ECB) annual conference that the US economy remains in good shape and is well positioned to withstand tighter monetary policy, although there is a risk it will slow down.

Immediate EUR/USD resistance can be spotted at the 22-June low at $1.0469 today and further minor resistance at yesterday’s $1.0535 high. While the next higher late June high at $1.0615 caps, the long-term downtrend remains intact with a fall through the $1.036 to $1.035 zone remaining on the agenda. If it were to occur, a descent towards parity cannot be ruled out.

EUR/USD chartSource: IT-Finance.com

EUR/GBP comes off this week’s high at £0.8661

EUR/GBP continues to trade below its £0.8618 May and £0.8661 Wednesday highs as the UK is plagued by 40-year high inflation, last week’s largest ongoing rail strike in 30 years, barristers striking and rail, tube, bus and airport workers as well as doctors planning to strike over the summer.

While the £0.8618 to £0.8641 resistance zone caps, the three-month uptrend line at £0.857 and Friday’s low at £0.8562 remain in focus.

Resistance above £0.8661 can only be seen at the currency pair’s one-year mid-June high and the 200-week SMA at £0.8721.

EUR/GBP chartSource: IT-Finance.com

USD/JPY trades near its 24-year high

USD/JPY consolidates below its ¥137.00 near 24-year high, made yesterday, as the US dollar depreciates slightly and the Japanese yen is benefitting from weaker oil prices which are heading for their first monthly drop since November, given that Japan is a big net importer.

Negative divergence on the daily nine period relative strength index (RSI), which formed a lower low and thus did not confirm the higher high seen on the daily USD/JPY chart yesterday, may lead to at least a minor countertrend move with the cross perhaps soon approaching its one-month support line at ¥135.07.

While the mid-June low at ¥131.50 holds, though, the medium-term uptrend remains intact. Minor resistance above this week’s high at ¥137.00 comes in along the minor psychological ¥140.00 mark with further resistance sitting at the June 1991 peak at ¥142.80.

USD/JPY chartSource: IT-Finance.com
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EUR/USD and EUR/GBP stabilise while GBP/JPY slips

EUR/USD and EUR/GBP recover from Thursday’s drops while GBP/JPY tumbles.

GBPSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Friday 01 July 2022 

EUR/USD holds above key support zone

EUR/USD managed to break its fall slightly above the $1.036 to $1.035 May and current June lows by dropping to $1.0383 yesterday before recovering as the European Central Bank (ECB) kicks off its rebalancing programme to prevent financial fragmentation among euro zone countries.

Minor resistance at the April low at $1.0471 is expected to be retested. Above it there is no resistance to speak of until the 55-day simple moving average (SMA) and mid- to late June highs at $1.0595 to $1.0615. While it caps, overall downside pressure should be maintained.

Failure at $1.035 may lead to a slide towards parity being seen.

EUR/USD chartSource: IT-Finance.com

EUR/GBP is seen heading back up again

EUR/GBP is seen heading back up towards its £0.8618 May high, following yesterday’s Hammer formation on the daily candlestick chart which was formed as the UK’s trade performance dropped to its lowest level since the beginning of the year, with imports surging while exports dwindled.

Above £0.8618 lurks Wednesday’s £0.8661 high while minor support can be spotted between the late May and early June highs at £0.8592 to £0.8588 with more significant support being found between the 24-June low, three-month support line and yesterday’s low at £0.8562 to £0.8551.

Resistance above £0.8661 can only be seen at the currency pair’s one-year mid-June high and the 200-week SMA at £0.8721.

EUR/GBP chartSource: IT-Finance.com

GBP/JPY rapidly declines again

The sell-off in GBP/JPY from its 24-June high at ¥167.91 is accelerating despite Japan business sentiment slipping further in the second quarter (Q2). The Tankan Manufacturing Index dropped to nine in Q2 versus an expected 13 and 14 in the previous quarter, hit by the war in Ukraine, China’s Covid-19 lockdowns, supply disruptions and rising input costs.

The cross is seen sliding towards its two-month support line at ¥161.95 with minor resistance being found at the 23-June low at ¥164.66. Further up sits the 17-June high at ¥166.22.

From a technical point of view a fourth Elliott Wave seems to be in the making with its low coming in at ¥160.00 with a final fifth Elliott wave to the upside to eventually be seen. It should take the cross to above its April and current June highs at ¥168.43 to ¥168.73 towards the ¥170.00 zone and above. On the way up, resistance comes in at the 21-June high at ¥167.91.

GBP/JPY chartSource: IT-Finance.com
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EUR/USD and GBP/JPY stabilise while EUR/GBP slips

EUR/USD and GBP/JPY recover from last week’s falls while EUR/GBP tops out.

Dollar and euroSource: Bloomberg
 
 Axel Rudolph | Market Analyst, London | Publication date: Monday 04 July 2022 

EUR/USD so far remains above key support zone

Last week EUR/USD managed to break its fall slightly above the $1.036 to $1.0350 May and June lows by dropping to $1.0366 before recovering as the European Central Bank (ECB) began its rebalancing programme to prevent financial fragmentation among euro zone countries.

The publication of a much weaker than expected German Trade Balance at -€1 billion in May versus an expected €1.2 billion and €3.5 billion in April, the first trade deficit since German reunification in 1991, doesn’t seem to have impacted the cross earlier today as the US is celebrating Independence Day.

Minor resistance remains to be seen at the April low at $1.0471. Above it, there is no resistance to speak of until the 55-day simple moving average (SMA) and mid- to late June highs at $1.0588 to $1.0615. While it caps, overall downside pressure should remain in play.

Failure at $1.035 may lead to a slide towards parity taking shape.

EUR/USD chartSource: IT-Finance.com

EUR/GBP formed another interim top

EUR/GBP is trading back below its £0.8618 May high, following Friday’s brief foray to £0.8678, only to then rapidly come off again as Spain’s jobless rate falls to its lowest number since 2008 and German trade balance for May showed its first deficit since German reunification.

Minor support between the late May and early June highs at £0.8592 to £0.8588 is thus back in the frame with more significant support being found between the 24 June low, three-month support line and last week’s low at £0.8562 to £0.8551.

Resistance above £0.8678 can only be seen at the currency pair’s one-year mid-June high and the 200-week SMA at £0.8721.

EUR/GBP chartSource: IT-Finance.com

GBP/JPY expected to recover further from last week’s low at ¥161.58

The sell-off in the GBP/JPY last week took it to ¥161.58 before stabilising on Friday.

The cross is trying to reverse its last couple of weeks’ descent and rise back towards the 23 June low at ¥164.66 as rising oil prices weigh on the Japanese yen since Japan is a large energy importer and as the British pound reverses some of its recent losses.

Above ¥164.66 the two-month resistance line can be seen at ¥166.16 and the 17 June high at ¥166.22.

Below last week’s low at ¥161.58, sits the June trough at ¥160.00.

From a technical point of view, a fourth Elliott Wave seems to be in the making with its low coming in at the ¥160.00 June low with a final fifth Elliott wave to the upside to eventually be seen. It should take the cross to above its April and current June highs at ¥168.43 to ¥168.73 towards the ¥170.00 zone and above.

On the way up, resistance comes in at the 21 June high at ¥167.91.

GBP/JPY chartSource: IT-Finance.com
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    • Why do you not just show me what I'm allowed to trade? How do people plan investments when you need to trade something to find out you can't? 'instrument not tax wrapper enabled' is a pain. Is it all short EFTs? I can trade 'leveraged shares 3x Tesla ETP GBp' but not the short version of it. I can't use a service like that, it's dumb considering how easy it would be to code in an option to filter out what I can not trade. 
    • Euro Q3 2022 Technical Forecast: EUR/USD Carves Out Bullish Reversal Pattern, But Caution is Warranted Jul 3, 2022 | DailyFX Diego Colman, Market Analyst EURO PRICE ACTION IN BOTTOMING-OUT PHASE? The euro continued to lose ground against the U.S. dollar in the second quarter, extending the relentless decline that began just over a year ago. There are several factors behind the recent sell-off, but the most important have been the divergence in monetary policy between the Fed and the ECB, the fallout from the Ukraine war and negative market sentiment. In the past three months, EUR/USD marked a new multi-year low near 1.0350, a key technical zone that has acted as support on several occasions in late 2016 and early 2017, as shown in the weekly chart below. The pair probed this floor twice during Q2, first in May and then in June, although the bears were unable to create a lower low on the second test amid weakening downside pressure, a sign that prices may have bottomed out around those levels. Although the long-horizon bias remains bearish, there are some indications that the worst may be over in terms of losses for the common currency, at least in the near-term, creating an attractive set-up for traders who like to play "trend reversal" strategies. EUR/USD WEEKLY CHART Chart created using TradingView DOUBLE BOTTOM PATTERN IN PLAY FOR EUR/USD Zooming in on the daily chart, it appears that EUR/USD is carving out a double bottom, a bullish reversal technical formation that tends to develop near the nadir of a well-established downtrend while the overall market is volatile. The double bottom, which develops in the shape of a letter “W”, is composed of two consecutive and similar troughs, divided by an intermediate peak, the pattern’s neckline, where prices, after rallying off the first valley, encountered resistance before pivoting lower on its way to set the second low. In our case, the neckline sits near 1.0760/1.0785. Heading into the third quarter, the double bottom is nearing completion and confirmation, with EUR/USD advancing towards the neckline, a major resistance, the break of which could give a solid bullish signal. We are not there yet, but 1.0760/1.0785 can be considered the line in the sand, so to speak. Focusing on the outlook, if EUR/USD manages to punch through the neckline decisively on higher-than-usual volume, the upside momentum could strengthen, setting the stage for the pair to challenge trendline resistance near 1.1100, followed by 1.1195, the 38.2% Fibonacci retracement of the 2018/2022 decline. Many things will have to go right for this scenario to play out, but the bullish case should not be dismissed despite the pessimism towards the euro. On the flip side, if the euro stalls, resumes its descent and revisits the 2022 lows, the double bottom pattern would be invalidated, especially if prices breach the floor in question and make a new low. In the event of a sustained drop below 1.0350, all bets are off. There is no significant technical support underneath this area, so EUR/USD could be on its way to parity if 1.0350 is violated. EUR/USD DAILY CHART Chart created using TradingView
    • Euro Q3 2022 Forecast: Euro May Fall Anew as Debt Crisis Fears Dilute ECB Rate Hikes Jul 2, 2022 | DailyFX Ilya Spivak, Head Strategist, APAC The Euro has steadily depreciated against a basket of major currencies since Dec. 2020. Tellingly, that turning point coincided with topping gold prices and the start of a creep higher in Fed rate hike expectations. The US central bank had signaled it was done adding to Covid-inspired stimulus measures. Not surprisingly, the overt start of the Fed’s tightening effort in June 2021 marked the beginning of the deepest drop along this bearish trajectory. The markets reckoned the ultra-dovish ECB would not be as quick to follow the US lead as many other top central banks, pushing yield spreads against the Euro. EURO DOWNTREND STALLS AS ECB RATE HIKE BETS SURGE (WEEKLY CHART) Source: TradingView Then, in the second quarter of 2022, European officials finally signaled a readiness to act as regional CPI inflation roared to record highs. It would go on to hit an eye-watering rate of 8.1 percent in May. The Euro found a floor and began to inch upward as rate hike expectations began to be absorbed into prices. EURO DEBT CRISIS FEARS RETURN AS THE ECB PREPARES TO FIGHT RECORD-HIGH INFLATION Speculation culminated on June 9, as the ECB formally announced incoming interest rate hikes. The central bank previously said it would end bond purchases – a form of non-standard stimulus – in July. Less than a week later, an emergency meeting was scrambled and a mandate given to create a new tool against ‘fragmentation.’ That stopped the Euro’s ascent in its tracks. ECB tightening expectations revived worries about high levels of debt in some Eurozone economies. The spread between Italian and benchmark German 10-year government bond yields widened sharply to a two-year high of 242 basis points (bps) after June’s policy meeting. Managing ‘fragmentation’ – that is, diverging lending rates across Eurozone states – now seems like it will necessarily keep ECB tightening modest relative to global peers. That puts the single currency at an acute disadvantage, suggesting the downtrend is due to resume. FISCAL REFORM COULD UNCHAIN THE ECB, BUT IT’S PROBABLY NOT COMING SOON The kind of structural reforms needed to untie the ECB’s hands – creating a joint “Euro-bond” or finally slashing debt levels in southern Europe – seems distant at best, if only because the critical Franco-German push needed for progress is a tall order. Berlin and Paris are likely to be focused on other priorities. The war in Ukraine and its implications for regional geopolitical and economic stability – most pressingly, the challenge it poses for securing energy supply at a reasonable cost without reliance on Russia – are clearly front-of-mind. Disruption of trade with a key market in China amid that country’s Covid-driven lockdowns is another worry. A hamstrung administration in the Eurozone’s number-two economy complicates fiscal matters further. French President Emanuel Macron managed to win another term in office, but his coalition lost its majority in the legislature. This means that the fragile government will struggle to get anything big done in the next five years.
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