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.
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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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#EconomicComment
The Ifo index fell from 89.3 to 88.6 instead of the expected increase to 89.4, making it the second month of contraction, albeit a very modest one. At this point, it is correct to speak of a halt in growth, but it is hardly justified to mark the beginning of a decline.
The fresh figures complemented last week's unexpected and sharp plunge in PMIs.
This potentially negative news did not prevent the single currency from recovering against its major peers on Monday, with EURUSD rising back above 1.0720. EURGBP has risen to 0.8470 and is actively closing the gap formed after the French election announcement.
EURJPY surpassed 171, above which it traded for a few minutes on 29 April and before that in September 1992.
The euro's movement against the news on Monday looks like a pullback after the excessive negativity ahead of the French elections and more like a technical rebound, which worked out about half of its potential, forming resistance at 0.8500 in EURGBP and around 1.0770 in EURUSD.
The Ifo index fell from 89.3 to 88.6 instead of the expected increase to 89.4, making it the second month of contraction, albeit a very modest one. At this point, it is correct to speak of a halt in growth, but it is hardly justified to mark the beginning of a decline.
The fresh figures complemented last week's unexpected and sharp plunge in PMIs.
This potentially negative news did not prevent the single currency from recovering against its major peers on Monday, with EURUSD rising back above 1.0720. EURGBP has risen to 0.8470 and is actively closing the gap formed after the French election announcement.
EURJPY surpassed 171, above which it traded for a few minutes on 29 April and before that in September 1992.
The euro's movement against the news on Monday looks like a pullback after the excessive negativity ahead of the French elections and more like a technical rebound, which worked out about half of its potential, forming resistance at 0.8500 in EURGBP and around 1.0770 in EURUSD.
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#WaveAnalysis
#EURJPY approaching strong resistance level 171.55
Likely to correct down from 171.55
EURJPY currency pair approaching the strong resistance level 171.55 (which stopped the previous sharp upward impulse wave 1 at the end of April, as you can see below).
The resistance level 171.55 is further strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 171.55 and the overbought reading on the daily Stochastic indicator, EURJPY currency pair can be expected to reverse down from the resistance level 171.55 – when it reaches it.
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#EURJPY approaching strong resistance level 171.55
Likely to correct down from 171.55
EURJPY currency pair approaching the strong resistance level 171.55 (which stopped the previous sharp upward impulse wave 1 at the end of April, as you can see below).
The resistance level 171.55 is further strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 171.55 and the overbought reading on the daily Stochastic indicator, EURJPY currency pair can be expected to reverse down from the resistance level 171.55 – when it reaches it.
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#WaveAnalysis #AMZN
Amazon reversed from key resistance level 188.50
Likely to fall to support level 181.00
Amazon recently reversed down from the key resistance level 188.50 (which has been steadily reversing the price from April, stopping earlier waves (3) and (5)).
The resistance level 188.50 was strengthened by the upper daily Bollinger Band – increasing the likelihood of further correction from the current levels.
Given the strength of resistance level 188.50 and the overbought daily Stochastic indicator, Amazon can be expected to correct down further to the next support level 181.00 (low of the previous correction (2)).
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Amazon reversed from key resistance level 188.50
Likely to fall to support level 181.00
Amazon recently reversed down from the key resistance level 188.50 (which has been steadily reversing the price from April, stopping earlier waves (3) and (5)).
The resistance level 188.50 was strengthened by the upper daily Bollinger Band – increasing the likelihood of further correction from the current levels.
Given the strength of resistance level 188.50 and the overbought daily Stochastic indicator, Amazon can be expected to correct down further to the next support level 181.00 (low of the previous correction (2)).
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#Crypto market fell to a total cap of $2.2 trillion at the end of Monday but managed to add over 2% to the lows, to $2.25 trillion, still down 0.5% over 24h.
The technical picture in #Bitcoin is almost perfect. The low price of $58.2K coincided with the lower boundary of the descending range, was as close to the 200-day MA as possible, and almost duplicated the impulsive lows of early May. On the daily charts on Monday, BTC closed in the oversold RSI area, and today, it is already trying to get out of it. All this looks like a tempting signal to buy this dip. However, it may well turn out to be a bull trap, although we give less priority to such a scenario.
Bitcoin's share of the total crypto market cap is near 54%. Since March, there has been an acceleration in the decline of the share of "other" coins, as buyers' interest has focused on the leading coins. Such dynamics are typical signs of the first half of the 4-year cycle in Bitcoin.
The technical picture in #Bitcoin is almost perfect. The low price of $58.2K coincided with the lower boundary of the descending range, was as close to the 200-day MA as possible, and almost duplicated the impulsive lows of early May. On the daily charts on Monday, BTC closed in the oversold RSI area, and today, it is already trying to get out of it. All this looks like a tempting signal to buy this dip. However, it may well turn out to be a bull trap, although we give less priority to such a scenario.
Bitcoin's share of the total crypto market cap is near 54%. Since March, there has been an acceleration in the decline of the share of "other" coins, as buyers' interest has focused on the leading coins. Such dynamics are typical signs of the first half of the 4-year cycle in Bitcoin.
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#Review
Shares of #Nvidia, the world's most traded, most popular, and most valuable company, have been under corrective pressure for a while. From last Thursday's peak at $140.48, the price has lost 16% to $117.86 in just three trading days.
Investors are taking abundant profits in one of their favourite securities, which has seen a three-fold increase in price since the beginning of 2024 and a ten-fold increase since the beginning of 2023. The amplitude of the company's growth and capitalisation is so significant that it influences the direction of the Nasdaq100 index and the entire US market.
Nvidia’s 6.7% drop on Monday provided the worst day for the Nasdaq100 since April. For now, we're seeing more signs of a quarterly portfolio shakeout but not a global downside reversal.
The heavy selling in the Nasdaq100 index has come with the index touching territory above 20,000, taking 3% away from it already.
Shares of #Nvidia, the world's most traded, most popular, and most valuable company, have been under corrective pressure for a while. From last Thursday's peak at $140.48, the price has lost 16% to $117.86 in just three trading days.
Investors are taking abundant profits in one of their favourite securities, which has seen a three-fold increase in price since the beginning of 2024 and a ten-fold increase since the beginning of 2023. The amplitude of the company's growth and capitalisation is so significant that it influences the direction of the Nasdaq100 index and the entire US market.
Nvidia’s 6.7% drop on Monday provided the worst day for the Nasdaq100 since April. For now, we're seeing more signs of a quarterly portfolio shakeout but not a global downside reversal.
The heavy selling in the Nasdaq100 index has come with the index touching territory above 20,000, taking 3% away from it already.
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However, the Dow Jones index has been adding all this time, aiming for a third attempt to storm 40,000, a major milestone. This looks like an attempt to change the buying focus but not to dump risk.
Talk of a reversal to a bear market is too premature and has little validity. For now, a pullback to the lower boundary of the upside range, which has been in place since late 2022, looks like a working scenario. Now, it passes through 18,000, but in a month, it will approach the area of 18,400-18,500. This is where the highs are centred, and growth temporarily stalled in March. In addition, the 50-day MA will be close by.
In turn, Nvidia, the market's Pied Piper, may roll back to the $95-100 area before it can find a new wave of demand. But in this case, we shouldn't be surprised if sellers further weigh down the stock under pressure from competitors and overly inflated investor expectations at the start of the year.
Only a dip below this area would activate a scenario of a deeper dive to 17,000 or below.
Talk of a reversal to a bear market is too premature and has little validity. For now, a pullback to the lower boundary of the upside range, which has been in place since late 2022, looks like a working scenario. Now, it passes through 18,000, but in a month, it will approach the area of 18,400-18,500. This is where the highs are centred, and growth temporarily stalled in March. In addition, the 50-day MA will be close by.
In turn, Nvidia, the market's Pied Piper, may roll back to the $95-100 area before it can find a new wave of demand. But in this case, we shouldn't be surprised if sellers further weigh down the stock under pressure from competitors and overly inflated investor expectations at the start of the year.
Only a dip below this area would activate a scenario of a deeper dive to 17,000 or below.
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#WaveAnalysis
#GBPCHF reversed from support level 1.1220
Likely to rise to resistance level 1.1450
GBPCHF currency pair continues to rise after the earlier upward reversal from the pivotal support level 1.1220 (which stopped the two previous corrections iv and B).
The upward reversal from the support level 1.1220 created the daily Japanese candlesticks reversal pattern Morning Star Doji.
Given the predominant daily uptrend and the continuation of the bearish Swiss franc sentiment across the FX markets, GBPCHF currency pair can be expected to rise further to the next resistance level 1.1450 (top of the previous wave B).
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#GBPCHF reversed from support level 1.1220
Likely to rise to resistance level 1.1450
GBPCHF currency pair continues to rise after the earlier upward reversal from the pivotal support level 1.1220 (which stopped the two previous corrections iv and B).
The upward reversal from the support level 1.1220 created the daily Japanese candlesticks reversal pattern Morning Star Doji.
Given the predominant daily uptrend and the continuation of the bearish Swiss franc sentiment across the FX markets, GBPCHF currency pair can be expected to rise further to the next resistance level 1.1450 (top of the previous wave B).
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#WaveAnalysis
#USDCAD reversed from key support level 1.3620
Likely to rise to resistance level 1.3700
USDCAD currency pair today reversed up with the long-legged Doji from the key support level 1.3620 (which has been steadily reversing the price from the start of May, as you can see below).
The support level 1.3620 was strengthened by the intersecting lower daily Bollinger Band.
Given the strength of the support level 1.3620 and the clear daily uptrend, USDCAD currency pair can be expected to rise further to the next resistance level 1.3700.
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#USDCAD reversed from key support level 1.3620
Likely to rise to resistance level 1.3700
USDCAD currency pair today reversed up with the long-legged Doji from the key support level 1.3620 (which has been steadily reversing the price from the start of May, as you can see below).
The support level 1.3620 was strengthened by the intersecting lower daily Bollinger Band.
Given the strength of the support level 1.3620 and the clear daily uptrend, USDCAD currency pair can be expected to rise further to the next resistance level 1.3700.
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#Crypto market cap added 1.2%, recovering to $2.28 trillion.
On 25 June, the Crypto Fear and Greed Index fell into "fear" territory at 30 points, the lowest since September 2023. On 26 June, the index recovered to 46. Both in September and now, the price and index's sudden drop out of a range has attracted buyers, laying the groundwork for gains after a prolonged slide.
However, the recovery momentum paused Wednesday morning, raising the question of whether we'll see a renewed selloff. Such a turn of events risks breaking the multi-month bullish view on Bitcoin and the entire crypto market.
However, the base case scenario now remains the development of a rebound and the long-term bull trend.
Despite the correction, derivatives market indicators suggest a steady bullish sentiment towards bitcoin ahead of the expiration of weekly, monthly and quarterly positions on 28 June, The Block reported.
According to analysts at QCP Capital, the options market is not expecting increased volatility in July.
On 25 June, the Crypto Fear and Greed Index fell into "fear" territory at 30 points, the lowest since September 2023. On 26 June, the index recovered to 46. Both in September and now, the price and index's sudden drop out of a range has attracted buyers, laying the groundwork for gains after a prolonged slide.
However, the recovery momentum paused Wednesday morning, raising the question of whether we'll see a renewed selloff. Such a turn of events risks breaking the multi-month bullish view on Bitcoin and the entire crypto market.
However, the base case scenario now remains the development of a rebound and the long-term bull trend.
Despite the correction, derivatives market indicators suggest a steady bullish sentiment towards bitcoin ahead of the expiration of weekly, monthly and quarterly positions on 28 June, The Block reported.
According to analysts at QCP Capital, the options market is not expecting increased volatility in July.
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