#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.
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#EconomicComment
#GBPUSD fell on Friday to 1.2640, its lowest in 5 weeks. A streak of soft data contributed to the decline, raising chances for rate cuts soon.
This week, data on the brakes on the inflation rate to 2% y/y, the Bank of England's target, were released. Earlier, industrial production was reported to have fallen by 0.9% m/m and 0.4% y/y, continuing almost two years of stagnation.
However, contrasting with these figures, the Flash PMI Friday exceeded expectations and marked an acceleration in growth, with the index rising from 51.2 to 51.4.
This positivity was more than offset by a peck on the nose in the services sector. Contrary to the expected rise from 52.9 to 53.2, the PMI index collapsed to 51.2, the lowest since November.
The reading reinforced the divergence in UK and US indicators, providing a fundamental reason for the pound's decline against the dollar. The BoE should have a higher degree of readiness to support the economy in contrast to the Fed's wait-and-see approach.
#GBPUSD fell on Friday to 1.2640, its lowest in 5 weeks. A streak of soft data contributed to the decline, raising chances for rate cuts soon.
This week, data on the brakes on the inflation rate to 2% y/y, the Bank of England's target, were released. Earlier, industrial production was reported to have fallen by 0.9% m/m and 0.4% y/y, continuing almost two years of stagnation.
However, contrasting with these figures, the Flash PMI Friday exceeded expectations and marked an acceleration in growth, with the index rising from 51.2 to 51.4.
This positivity was more than offset by a peck on the nose in the services sector. Contrary to the expected rise from 52.9 to 53.2, the PMI index collapsed to 51.2, the lowest since November.
The reading reinforced the divergence in UK and US indicators, providing a fundamental reason for the pound's decline against the dollar. The BoE should have a higher degree of readiness to support the economy in contrast to the Fed's wait-and-see approach.
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Along with the rest of the crypto market, Bitcoin is pulling back further into the area of last month's lows, pushing the total cap back 3.6% in 24 hours to $2.26 trillion.
Particularly worrying is the rather organised nature of the retreat on all fronts, which reflects the global decline in traction in risk assets.
#Bitcoin looks better than many major peers, losing 3.3% on the day to $62.2K. We still don't see technically important support levels up to the $60K area, but beyond that, it may not be so easy for the bears. In addition to the psychologically significant round level, the 61.8% Fibonacci retracement level is centred in this area. The next sensitive area is near $58K where there are 200-day MA and lower boundary of the downward range since March.
Ethereum is holding up better than many altcoins, and it is just starting to test the $3300 pivot area. That said, Solana and Litecoin have been at lows since late February, and Cardano has pulled back into the prolonged consolidation area of November.
Particularly worrying is the rather organised nature of the retreat on all fronts, which reflects the global decline in traction in risk assets.
#Bitcoin looks better than many major peers, losing 3.3% on the day to $62.2K. We still don't see technically important support levels up to the $60K area, but beyond that, it may not be so easy for the bears. In addition to the psychologically significant round level, the 61.8% Fibonacci retracement level is centred in this area. The next sensitive area is near $58K where there are 200-day MA and lower boundary of the downward range since March.
Ethereum is holding up better than many altcoins, and it is just starting to test the $3300 pivot area. That said, Solana and Litecoin have been at lows since late February, and Cardano has pulled back into the prolonged consolidation area of November.
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#Review
American apathy supports Oil
The price of crude Oil rose steadily in the previous fortnight and is starting the new week with a positive trend. This rise emphasises the importance of the 200-week moving average, below which the price has not fallen for a long time for more than three years.
The OPEC+ meeting in early June rattled the bulls' nerves, briefly pushing the price below this line, but this once again attracted buyers. The 200-week average acts as a long-term trend indicator, marking the average price level over nearly four years—about half of the traditional business cycle. Regular touches of this line raise the question that the world economy is walking on the edge of recession but avoiding it for now.
However, this curve is pointing upwards, having risen 17% since the start of 2023 to $76.2 in #WTI and $80 in #Brent. These are the highest values since 2016, but far from the $100s that were in Oil's previous bull cycle, which ended in 2014.
American apathy supports Oil
The price of crude Oil rose steadily in the previous fortnight and is starting the new week with a positive trend. This rise emphasises the importance of the 200-week moving average, below which the price has not fallen for a long time for more than three years.
The OPEC+ meeting in early June rattled the bulls' nerves, briefly pushing the price below this line, but this once again attracted buyers. The 200-week average acts as a long-term trend indicator, marking the average price level over nearly four years—about half of the traditional business cycle. Regular touches of this line raise the question that the world economy is walking on the edge of recession but avoiding it for now.
However, this curve is pointing upwards, having risen 17% since the start of 2023 to $76.2 in #WTI and $80 in #Brent. These are the highest values since 2016, but far from the $100s that were in Oil's previous bull cycle, which ended in 2014.
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The apathy of US oil producers has characterised this bull cycle.
We continue to get data on falling drilling activity from Baker Hughes and stagnant production. According to the latest data, 485 oil rigs were active last week and 588 total (minus 3 and 2 for the week, respectively). These are the lowest values in two and a half years.
A separate report from the Department of Energy shows continued smooth replenishment of the strategic fuel reserve (the highest in 14 months). Commercial stocks are almost in line with last year's levels after rising since the start of the year.
Production levels have returned to 13.2 million BPD in the previous two weeks after 13 weeks of declines to 13.1 million.
We continue to get data on falling drilling activity from Baker Hughes and stagnant production. According to the latest data, 485 oil rigs were active last week and 588 total (minus 3 and 2 for the week, respectively). These are the lowest values in two and a half years.
A separate report from the Department of Energy shows continued smooth replenishment of the strategic fuel reserve (the highest in 14 months). Commercial stocks are almost in line with last year's levels after rising since the start of the year.
Production levels have returned to 13.2 million BPD in the previous two weeks after 13 weeks of declines to 13.1 million.
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Simply put, US oil producers are satisfied with the status quo and seek to balance production at current prices. This neutral American stance is complemented by the actively bullish stance of OPEC+ countries, which are keen to keep a net deficit in the market, at least in words. At the same time, a downturn in demand in Europe and weakness in China are balancing the situation.
Perhaps only tech analysis will help to wade through the geopolitical twists and turns in Oil. For more than two years, the price has been forming a global triangle with local highs of $120, $94, and $86, and lows of $65, $70, and $75.
Now, the price is closer to the previous high, but only its overcoming can signal the final choice of direction. Until then, Oil is within a declining volatility trend with a preferred mean reversion tactic.
📣Trade responsibly with FxPro
Perhaps only tech analysis will help to wade through the geopolitical twists and turns in Oil. For more than two years, the price has been forming a global triangle with local highs of $120, $94, and $86, and lows of $65, $70, and $75.
Now, the price is closer to the previous high, but only its overcoming can signal the final choice of direction. Until then, Oil is within a declining volatility trend with a preferred mean reversion tactic.
📣Trade responsibly with FxPro
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