While we haven't seen a meaningful reaction from AUDUSD, it is performing better than its major peers. It is losing 0.5% this month against the dollar index, which is strengthening over 1%.
The Aussie has not dipped below 0.66 for long since early May, making the 50-day moving average an active support line, and is steady above the 200-day average. Both curves are pointing upwards, emphasising the positive trend.
AUDUSD has been recording higher yearly lows for the past two years, marking increased buying interest on downturns.
The strength of the US Dollar this month is making it harder for the AUD to rise, hindered both by strengthening the denominator and by impacting the price of commodities and metals that Australia exports.
The Aussie has not dipped below 0.66 for long since early May, making the 50-day moving average an active support line, and is steady above the 200-day average. Both curves are pointing upwards, emphasising the positive trend.
AUDUSD has been recording higher yearly lows for the past two years, marking increased buying interest on downturns.
The strength of the US Dollar this month is making it harder for the AUD to rise, hindered both by strengthening the denominator and by impacting the price of commodities and metals that Australia exports.
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Potential buyers are probably better off waiting for AUDUSD to break above 0.67, where we saw a reversal last month. It would also break the sequence of lower local highs seen over the past three years and at an even higher level since 2011.
A reversal in the tone of monetary policy has the potential to feed AUDUSD buying, adding to the local positive picture. The ability to break the long-term downtrend could attract even more buyers, launching a rally.
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A reversal in the tone of monetary policy has the potential to feed AUDUSD buying, adding to the local positive picture. The ability to break the long-term downtrend could attract even more buyers, launching a rally.
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Jump in US manufacturing and consumer caution
US retail sales rose 0.1% in value for May, worse than the 0.3% rise expected after a 0.2% decline a month earlier. Total sales were 2.5% higher than a year earlier, lagging the 3.3% inflation over the same period.
In other words, there was a decline in consumption in real terms. At first glance, this is surprising given that wages are adding at a 4.0% y/y rate, and employment is growing steadily. However, adding to the equation the soaring cost of servicing credit card debt and a very low savings rate by historical standards, things start to look up.
We don't see a decline in consumption as we do in times of crisis, but a clear slowdown that may precede it.
US retail sales rose 0.1% in value for May, worse than the 0.3% rise expected after a 0.2% decline a month earlier. Total sales were 2.5% higher than a year earlier, lagging the 3.3% inflation over the same period.
In other words, there was a decline in consumption in real terms. At first glance, this is surprising given that wages are adding at a 4.0% y/y rate, and employment is growing steadily. However, adding to the equation the soaring cost of servicing credit card debt and a very low savings rate by historical standards, things start to look up.
We don't see a decline in consumption as we do in times of crisis, but a clear slowdown that may precede it.
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At the same time, gloomy thoughts about the US economy are tempered by an impressive 0.9% jump in industrial production for May. This is more than twice as strong as expected. The industrial production index rose to its highest level since October 2022 and is only 0.8% below its historical peak reached in September 2018.
In summary, today's package of statistics points to a consumer shift towards a savings model but also refutes the most pessimistic expectations of a recession with a strong gain in manufacturing. This combination of data favours extending current rate levels, providing no food for either hawks or doves.
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In summary, today's package of statistics points to a consumer shift towards a savings model but also refutes the most pessimistic expectations of a recession with a strong gain in manufacturing. This combination of data favours extending current rate levels, providing no food for either hawks or doves.
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#WaveAnalysis
#AUDUSD reversed from key support level 0.6580
Likely to rise to resistance level 0.6700
AUDUSD currency pair recently reversed up from the key support level 0.6580 (which has been reversing the price from the start of May) coinciding with the lower daily Bollinger Band.
The support level 0.6580 was further strengthened by the 38.2% Fibonacci correction of the previous upward impulse from April.
Given the strength of the support level 0.6580 and the strong USD sales, AUDUSD currency pair can be expected to rise further to the next resistance level 0.6700, which stopped the previous waves 2, iv and ii.
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#AUDUSD reversed from key support level 0.6580
Likely to rise to resistance level 0.6700
AUDUSD currency pair recently reversed up from the key support level 0.6580 (which has been reversing the price from the start of May) coinciding with the lower daily Bollinger Band.
The support level 0.6580 was further strengthened by the 38.2% Fibonacci correction of the previous upward impulse from April.
Given the strength of the support level 0.6580 and the strong USD sales, AUDUSD currency pair can be expected to rise further to the next resistance level 0.6700, which stopped the previous waves 2, iv and ii.
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#WaveAnalysis
#CADCHF broke key support level 0.6465
Likely to fall to support level 0.6400
CADCHF currency pair under the bearish pressure after breaking the key support level 0.6465 (which started the impulse wave C in February).
The breakout of the support level 0.6465 accelerated the active impulse waves 3 and iii, which belong to the higher impulse wave (C) from August.
CADCHF currency pair can be expected to fall further to the next support level 0.6400, low of wave iv, and the target for the completion of the active impulse wave 3.
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#CADCHF broke key support level 0.6465
Likely to fall to support level 0.6400
CADCHF currency pair under the bearish pressure after breaking the key support level 0.6465 (which started the impulse wave C in February).
The breakout of the support level 0.6465 accelerated the active impulse waves 3 and iii, which belong to the higher impulse wave (C) from August.
CADCHF currency pair can be expected to fall further to the next support level 0.6400, low of wave iv, and the target for the completion of the active impulse wave 3.
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⚠️ SNB Rate Decision @7:30 GMT
No changes from 1.5% expected
📈📉Be ready for CHF volatility!
No changes from 1.5% expected
📈📉Be ready for CHF volatility!
#WaveAnalysis #UK100
– FTSE 100 index reversed from support level 8140.00
– Likely to rise to resistance level 8300.00
FTSE 100 index recently reversed up from the key support level 8140.00 (which has been reversing the price from the end of April), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 8140.00 completed the previous intermediate ABC correction (4).
Given the strength of the support level 8140.00, FTSE 100 index can be expected to rise further to the next resistance level 8300.00, which stopped the price at the start of June.
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– FTSE 100 index reversed from support level 8140.00
– Likely to rise to resistance level 8300.00
FTSE 100 index recently reversed up from the key support level 8140.00 (which has been reversing the price from the end of April), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 8140.00 completed the previous intermediate ABC correction (4).
Given the strength of the support level 8140.00, FTSE 100 index can be expected to rise further to the next resistance level 8300.00, which stopped the price at the start of June.
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#WaveAnalysis
– #USDCAD reversed from pivotal resistance level 1.3760
– Likely to fall to support level 1.3675
USDCAD currency pair under the bearish pressure after the price reversed down 3 times in a row from the pivotal resistance level 1.3760 (which has been reversing the price from the end of April).
Each of the last 3 downward reversals form the resistance level 1.3760 created the daily Japanese candlesticks reversal patterns Hammer.
Given the strength of the resistance level 1.3760, USDCAD currency pair can be expected to fall further to the next support level 1.3675.
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– #USDCAD reversed from pivotal resistance level 1.3760
– Likely to fall to support level 1.3675
USDCAD currency pair under the bearish pressure after the price reversed down 3 times in a row from the pivotal resistance level 1.3760 (which has been reversing the price from the end of April).
Each of the last 3 downward reversals form the resistance level 1.3760 created the daily Japanese candlesticks reversal patterns Hammer.
Given the strength of the resistance level 1.3760, USDCAD currency pair can be expected to fall further to the next support level 1.3675.
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The #crypto market added 1% in 24 hours to $2.4 trillion, supported by positive momentum in Bitcoin (+0.9%) and interest in Ethereum (+2%). Top altcoins are mostly adding except for falling Solana (-1.6%), but it too has been rising over the last hours. Toncoin is adding 4.9% over a day and 14% in 30 days, second only to Ethereum (+16%) in the top 20.
Technically, #Ethereum has already received its second support this month on the brief dip to the 50-day moving average. This looks like the market's commitment to the bullish trend that started last month. The news trigger for the rise was speculation about the likely start of trading in spot ETFs on the coin from July 2nd.
#Solana is probing support at the 200-day moving average. It managed to push back from this level to nearly $130. The focus now is on whether this rise will continue. This is the fourth time since March that the bulls have defended this area. But the very fact of constant returns to it speaks about the bears' persistence.
Technically, #Ethereum has already received its second support this month on the brief dip to the 50-day moving average. This looks like the market's commitment to the bullish trend that started last month. The news trigger for the rise was speculation about the likely start of trading in spot ETFs on the coin from July 2nd.
#Solana is probing support at the 200-day moving average. It managed to push back from this level to nearly $130. The focus now is on whether this rise will continue. This is the fourth time since March that the bulls have defended this area. But the very fact of constant returns to it speaks about the bears' persistence.
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#review
The SNB brought the CHF back to the downside by cutting the rate
The Swiss National Bank cut its key rate by 0.25 percentage points to 1.25%. The decision surprised markets, which, on average, expected no change after a similar move in March. The SNB also issued a warning that it is ready to intervene actively on FX if necessary.
Even with the key rate cut, the Swiss Central Bank forecasts inflation of 1.4% in 2024 and 1.1% in 2025. This is well below the 2% target by a wide margin and 0.1 percentage point less than forecasted three months ago. This potentially opens the door to further policy easing in the coming months.
The SNB brought the CHF back to the downside by cutting the rate
The Swiss National Bank cut its key rate by 0.25 percentage points to 1.25%. The decision surprised markets, which, on average, expected no change after a similar move in March. The SNB also issued a warning that it is ready to intervene actively on FX if necessary.
Even with the key rate cut, the Swiss Central Bank forecasts inflation of 1.4% in 2024 and 1.1% in 2025. This is well below the 2% target by a wide margin and 0.1 percentage point less than forecasted three months ago. This potentially opens the door to further policy easing in the coming months.
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The strong franc was also likely a factor in favour of a softer tone on rates. USDCHF lost over 3.5% in the month to Wednesday, contrasting with the dollar's 1.5% rise against a basket of major currencies over the same period.
The CHF lost around 0.5% to major peers immediately after the rate decision. As was the case in March, it is worth being prepared that this is just the beginning of the move, as markets will smoothly implement the changes in quotes.
However, the franc is unlikely to weaken as much as it did after the March decline when it lost about 3.5% in three weeks. The ECB and the Bank of Canada have already started their policy easing, and the Fed is expected to make such a move in September.
In our view, #USDCHF has a high chance of returning above the 200-day moving average, heading towards 0.9020 (April-May support area). In turn, #EURCHF may return to the 0.9680-0.9700 area.
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The CHF lost around 0.5% to major peers immediately after the rate decision. As was the case in March, it is worth being prepared that this is just the beginning of the move, as markets will smoothly implement the changes in quotes.
However, the franc is unlikely to weaken as much as it did after the March decline when it lost about 3.5% in three weeks. The ECB and the Bank of Canada have already started their policy easing, and the Fed is expected to make such a move in September.
In our view, #USDCHF has a high chance of returning above the 200-day moving average, heading towards 0.9020 (April-May support area). In turn, #EURCHF may return to the 0.9680-0.9700 area.
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#WaveAnalysis
#CADJPY under bullish pressure
Likely to rise to resistance 117.00
CADJPY currency pair under the bullish pressure after the price broke above the key resistance level 115.40 (which stopped the previous impulse wave 1 at end of May).
The breakout of the resistance level 115.40 accelerated the active impulse waves 3 and (3).
Given the clear multi-month uptrend and the continuation of the bearish yen sentiment, CADJPY currency pair can be expected to rise further to the next resistance level 117.00.
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#CADJPY under bullish pressure
Likely to rise to resistance 117.00
CADJPY currency pair under the bullish pressure after the price broke above the key resistance level 115.40 (which stopped the previous impulse wave 1 at end of May).
The breakout of the resistance level 115.40 accelerated the active impulse waves 3 and (3).
Given the clear multi-month uptrend and the continuation of the bearish yen sentiment, CADJPY currency pair can be expected to rise further to the next resistance level 117.00.
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#WaveAnalysis
#USDJPY broke strong resistance level 157.65
Likely to rise to resistance level 160.00
USDJPY currency pair recently broke above the strong resistance level 157.65 (which has been steadily reversing the price from the end of April, as you can see below).
The breakout of the resistance level 157.65 continues the clear uptrend that can be seen on the daily and the weekly USDJPY charts.
USDJPY currency pair can be expected to rise further to the next resistance level 160.00, which stopped the previous impulse wave (1) at the end of April.
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#USDJPY broke strong resistance level 157.65
Likely to rise to resistance level 160.00
USDJPY currency pair recently broke above the strong resistance level 157.65 (which has been steadily reversing the price from the end of April, as you can see below).
The breakout of the resistance level 157.65 continues the clear uptrend that can be seen on the daily and the weekly USDJPY charts.
USDJPY currency pair can be expected to rise further to the next resistance level 160.00, which stopped the previous impulse wave (1) at the end of April.
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The crypto failed to get on a growth path, with its cap falling 1.5% to $2.35 trillion in the last 24 hours.
Cryptocurrencies have had their wings clipped by the sell-off in equity markets, reflecting a downturn in risk appetite in global finance. Due to the link to traditional finance, the largest coins came under pressure. Bitcoin lost 1.3%, Ethereum lost 1.9% and BNB lost 2.9%.
Meanwhile, TON added 1%, and TRON is up 0.6%.
#Bitcoin was actively rising to $66.4K on Thursday, where it reversed just as rapidly to the downside. Local resistance was the 50-day moving average, another important signal of a shift from bullish to bearish sentiment in the cryptocurrency market in addition to the two-week downward trend.
#Litecoin has failed in its attempt to get back above $75 and has been trading around lows since early March. So far, the market has been ruthless on older altcoins, favouring new promising projects or heavyweights like Bitcoin and Ethereum benefiting from actual or potential ETF launches.
Cryptocurrencies have had their wings clipped by the sell-off in equity markets, reflecting a downturn in risk appetite in global finance. Due to the link to traditional finance, the largest coins came under pressure. Bitcoin lost 1.3%, Ethereum lost 1.9% and BNB lost 2.9%.
Meanwhile, TON added 1%, and TRON is up 0.6%.
#Bitcoin was actively rising to $66.4K on Thursday, where it reversed just as rapidly to the downside. Local resistance was the 50-day moving average, another important signal of a shift from bullish to bearish sentiment in the cryptocurrency market in addition to the two-week downward trend.
#Litecoin has failed in its attempt to get back above $75 and has been trading around lows since early March. So far, the market has been ruthless on older altcoins, favouring new promising projects or heavyweights like Bitcoin and Ethereum benefiting from actual or potential ETF launches.
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#Review
Downside PMI Surprise Brought the Euro Closer to the Critical Zone
The European session on Friday started with a new wave of euro selling, which was supported by weak preliminary PMIs.
According to June estimates, the strengthening of economic activity in the eurozone, which has been gaining momentum since October, is at risk of reversing. The composite index fell from 52.2 to 50.8, contrasting unpleasantly with the expected rise to 52.5. The services sector slipped for a second month, causing the index to fall from 53.2 to 52.6 instead of the expected rise to 53.5.
The jump in manufacturing activity last month also looks like a positive anomaly, as the index fell to 45.6 from 47.3 a month earlier, close to April’s reading of 45.6.
PMI values below 50 indicate a contraction in activity by last month, and the euro region’s industry has been below this waterline since July 2022. The services sector is more buoyant and only recorded a contraction between August 2023 and February 2024.
Downside PMI Surprise Brought the Euro Closer to the Critical Zone
The European session on Friday started with a new wave of euro selling, which was supported by weak preliminary PMIs.
According to June estimates, the strengthening of economic activity in the eurozone, which has been gaining momentum since October, is at risk of reversing. The composite index fell from 52.2 to 50.8, contrasting unpleasantly with the expected rise to 52.5. The services sector slipped for a second month, causing the index to fall from 53.2 to 52.6 instead of the expected rise to 53.5.
The jump in manufacturing activity last month also looks like a positive anomaly, as the index fell to 45.6 from 47.3 a month earlier, close to April’s reading of 45.6.
PMI values below 50 indicate a contraction in activity by last month, and the euro region’s industry has been below this waterline since July 2022. The services sector is more buoyant and only recorded a contraction between August 2023 and February 2024.
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The downward trend reversal strengthens the case for monetary easing, and the ECB took the first step on this path earlier in June with a rate cut.
The Eurozone PMI has established itself as a reliable leading indicator of economic activity, and the latest data shows serious risks of a slowdown.
This is bad news for the European currency. #EURUSD slipped below 1.0700, almost duplicating last Friday’s lows just below 1.0670.
If comparable data from the U.S. does not present similar unpleasant surprises, EURUSD may approach 1.06 without many obstacles, returning to the lows of April.
The Eurozone PMI has established itself as a reliable leading indicator of economic activity, and the latest data shows serious risks of a slowdown.
This is bad news for the European currency. #EURUSD slipped below 1.0700, almost duplicating last Friday’s lows just below 1.0670.
If comparable data from the U.S. does not present similar unpleasant surprises, EURUSD may approach 1.06 without many obstacles, returning to the lows of April.
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A pullback to 1.06 or even 1.05 would test the single currency’s support boundaries. A failure below would signal a fundamental change of attitude towards the euro, which would open the way below parity with a downside potential of 0.85.
This negative scenario is possible if Europe’s current economic cracks cannot be quickly mended by responding positively to monetary easing.
This is a possible scenario given the increased debt burden in the major economies, which reduces the effectiveness and space for stimulus. However, things could still unfold positively for Europe if we see a revival in the wake of the ECB’s key rate cut in June.
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This negative scenario is possible if Europe’s current economic cracks cannot be quickly mended by responding positively to monetary easing.
This is a possible scenario given the increased debt burden in the major economies, which reduces the effectiveness and space for stimulus. However, things could still unfold positively for Europe if we see a revival in the wake of the ECB’s key rate cut in June.
📣Trade responsibly with FxPro
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