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Daily Forex Analysis – EUR/USD Falls, GBP and AUD Rise.

Daily Forex Analysis – EUR/USD Falls, GBP and AUD Rise.

08 Jul 2024

Introduction

EUR/USD weakens below 1.0850 amid political uncertainty in France following the leftist New Popular Front’s lead in exit polls. Meanwhile, the Pound Sterling strengthens on Keir Starmer’s victory, and the Japanese Yen and Australian Dollar show mixed performance due to economic factors.

Markets In Focus Today – EUR/USD

EUR/USD weakens below 1.0850 as the leftist New Popular Front leads exit poll in French election.

EUR/USD loses ground around 1.0830 in Monday’s early Asian session. Polls suggested the final round of the French parliamentary elections pointed to a hung parliament, weighing on the Euro. Employment growth in the United States slowed in June. The EUR/USD pair trades on a weaker note near 1.0830 on Monday during the early Asian trading hours. The political uncertainty in France after the second voting round of French parliamentary elections on Sunday exerts some selling pressure on the Euro (EUR). Later on Monday, the Eurozone Sentix Investor Confidence for July will be released. According to the Economist, exit polls indicated that the left-wing New Popular Front (NFP), led by Jean-Luc Mélenchon, seems to be on track to win the most seats in the second voting round of French parliamentary elections on Sunday. The NFP had secured at least 174 seats.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0780 | Positive Crossover | Bullish
  • MA 20 : 1.0770 | Positive Crossover | Bullish
  • MA 50 : 1.0777 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0757 | Positive Crossover | Bullish
  • MA 20 : 1.0745 | Positive Crossover | Bullish
  • MA 50 : 1.0786 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 60.6879 | Buy Zone | Bullish

Stochastic   Oscillator : 97.5333 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.0860 R2 : 1.0919
  • S1 : 1.0669 S2 : 1.0610

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0826 | Take Profit : 1.0882 | Stop Loss : 1.0792

GBP/USD

Pound Sterling holds gains on UK Starmer’s landslide victory and increased Fed rate-cut prospects.

The Pound Sterling remains firm against the US Dollar as expectations for Fed rate cuts in September grew further. Keir Starmer’s historic victory in UK parliamentary elections has brought political stability. This week, investors will focus on the UK monthly GDP for May and the US CPI for June. The Pound Sterling (GBP) exhibits a mixed performance against its major peers in Monday’s London session. The near-term outlook of the British currency remains firm as Keir Starmer-led Labour Party gained an outright majority against Rishi Sunak-led Conservative Party in the United Kingdom’s (UK) parliamentary elections. The victory of the Labour Party with an absolute majority has brought political stability to the economy, which has resulted in a sheer strength in UK financial markets. Uncertainty over the Bank of England’s (BoE) interest-rate outlook remains high even though the annual headline inflation has returned to the desired rate of 2%. Financial markets currently see a 50% chance that the BoE will begin reducing interest rates from the August meeting.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2736 | Positive Crossover | Bullish
  • MA 20 : 1.2716 | Positive Crossover | Bullish
  • MA 50 : 1.2685 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2705 | Positive Crossover | Bullish
  • MA 20 : 1.2707 | Positive Crossover | Bullish
  • MA 50 : 1.2678 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 64.6252 | Buy Zone | Bullish

Stochastic   Oscillator : 95.4072 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2800 R2 : 1.2859
  • S1 : 1.2611 S2 : 1.2552

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2786 | Take Profit : 1.2857 | Stop Loss : 1.2747

USD/JPY

Japanese Yen loses ground as US Dollar appreciates due to risk-off mood.

The Japanese Yen loses its daily gains as the US Dollar appreciates due to improved risk aversion. Japan’s Current Account surplus increased to Â¥2,849.9 billion ($17.78 billion) in May, extending its growth streak to the 15th month. Friday’s employment data prompt speculation that the Fed could initiate rate cuts sooner. The Japanese Yen (JPY) breaks its two-day winning streak on Monday. The USD/JPY pair recovers its daily losses as the US Dollar (USD) gains ground due to risk-off sentiment. The Bank of Japan (BOJ) has maintained its economic assessment for 5 of Japan’s 9 regions in its latest ‘Sakura Report’. The assessment for 2 regions was raised, while it was lowered for another 2 regions in the report released on Monday. Regarding price trends, the BOJ noted that many regions report wage hikes spreading among smaller firms.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 160.6597 | Positive Crossover | Bullish
  • MA 20 : 159.7104 | Positive Crossover | Bullish
  • MA 50 : 157.5898 | Positive Crossover | Bullish

Simple :

  • MA 10 : 160.9272 | Positive Crossover | Bullish
  • MA 20 : 159.4519 | Positive Crossover | Bullish
  • MA 50 : 157.3173 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 66.8488 | Buy Zone | Bullish

Stochastic   Oscillator : 78.2801 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 161.4606 R2 : 163.0491
  • S1 : 156.3181 S2 : 154.7296

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 160.36 | Take Profit : 161.81 | Stop Loss : 159.42

AUD/USD

Australian Dollar extends gains as high inflation prompts RBA to delay rate cuts.

The Australian Dollar appreciates due to the hawkish sentiment surrounding the RBA. Australia’s May inflation has sparked warnings that the RBA might raise the cash rate to 4.6% in September. The US Dollar may struggle as slowing US employment growth could lead the Fed to reduce rates sooner. The Australian Dollar (AUD) appreciates despite improved risk aversion on Monday. The AUD receives support as persistent high inflation, stronger Retail Sales, and Services PMI prompt the Reserve Bank of Australia (RBA) to delay potential rate cuts. However, the renewed demand for the US Dollar (USD) puts pressure on the AUD/USD pair. The RBA’s June Meeting Minutes indicated that policymakers emphasized the need to stay alert to upside inflation risks. The policymakers noted that a significant rise in prices might necessitate substantially higher interest rates. Although rates were steady in June, May’s CPI, which surprisingly increased to 4.0% from the previous 3.6%, prompted warnings that the RBA might raise the cash rate to 4.6% in September.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6697 | Positive Crossover | Bullish
  • MA 20 : 0.6674 | Positive Crossover | Bullish
  • MA 50 : 0.6638 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6685 | Positive Crossover | Bullish
  • MA 20 : 0.6662 | Positive Crossover | Bullish
  • MA 50 : 0.6639 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 65.2928 | Buy Zone | Bullish

Stochastic   Oscillator : 92.5338 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6698 R2 : 0.6728
  • S1 : 0.6600 S2 : 0.6570

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6713 | Take Profit : 0.6760 | Stop Loss : 0.6687

Elsewhere In The Forex Market

USD/CAD down 0.05% to 1.3634, The NZD/USD down 0.17% to 0.6135. The EUR/GBP down 0.03% at 0.8456. EUR/AUD up 0.18% at 1.6088. AUD/NZD up 0.02% at 1.0985, The USD/CNY up 0.01% at 7.2697, AUD/SEK down 0.04% at 7.0696, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) Eurogroup Meetings at 06:00. (AUD) NAB Business Confidence (Jun) Previous –3 at 21:30.