. Daily Forex Analysis - EUR/USD, GBP/USD Fall as USD Strengthens.

Daily Forex Analysis – EUR/USD, GBP/USD Fall as USD Strengthens.

Daily Forex Analysis – EUR/USD, GBP/USD Fall as USD Strengthens.

17 Jun 2024

Introduction

The Euro and British Pound are struggling against the US Dollar. Investors are worried about a potential financial crisis in France and the Federal Reserve’s hawkish stance on interest rates. The USD Index is near its highest level since May, buoyed by the Fed’s projection of only one rate cut this year. The Bank of Japan’s dovish policy is weakening the Yen, while the Australian Dollar is pressured by a firmer USD and concerns about China’s economy. This week’s key data point is the US Retail Sales for May.

Markets In Focus Today – EUR/USD

EUR/USD grinds between firms Fed rate-cut hopes and Officials’ hawkish remarks.

EUR/USD trades around 1.0700, and remains on the back foot amid French elections uncertainty.Investors worry the French economy will face a financial crisis if the far right forms a new government.The US Dollar will dance to the tunes of the US Retail Sales data.EUR/USD trades in a tight range near the crucial support of 1.0700 in Monday’s European session. The major currency pair has been under pressure as potential risks of the financial crisis in France amid firm speculation that Marine Le Pen’s far-right National Rally (RN) will form a new government, which will have an adverse impact on the nation’s fiscal situation, that has dampened Euro’s appeal.On the monetary policy front, European Central Bank (ECB) policymakers have been reluctant to provide an interest rate-cut trajectory as they remain concerned over the stubborn wage growth outlook, which could revamp price pressures again.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0771 | Negative Crossover | Bearish
  • MA 20 : 1.0793 | Negative Crossover | Bearish
  • MA 50 : 1.0797 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0791 | Negative Crossover | Bearish
  • MA 20 : 1.0817 | Negative Crossover | Bearish
  • MA 50 : 1.0770 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 40.3400 | Neutral Zone | Neutral

Stochastic   Oscillator : 13.8101 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 1.0890 R2 : 1.0948
  • S1 : 1.0703 S2 : 1.0645

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.0721 | Take Profit : 1.0664 | Stop Loss : 1.0760

GBP/USD

GBP/USD hangs near its lowest level since early May, seems vulnerable below 1.2700.

GBP/USD is seen consolidating its recent losses to over a one-month low touched on Friday. The Fed’s hawkish outlook continues to underpin the USD and exerts pressure on the major.The divergent Fed-BoE policy expectations could lend some support and limit deeper losses.The GBP/USD pair struggles to capitalize on Friday’s modest bounce from the vicinity of mid-1.2600s or a nearly one-month low and oscillates in a narrow band on the first trading day of a new week. Spot prices now seem to have found acceptance below the 1.2700 round-figure mark and could decline further amid a bullish sentiment surrounding the US Dollar (USD). In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, stands tall near its highest level since early May touched on Friday in the wake of the Federal Reserve’s (Fed) hawkish surprise last week. In the so-called “dot plot”, policymakers projected only one interest rate cut in 2024 as compared to three in March. This remains supportive of elevated US Treasury bond yields and acts as a tailwind for the buck, validating the negative outlook for the GBP/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2729 | Negative Crossover | Bearish
  • MA 20 : 1.2717 | Negative Crossover | Bearish
  • MA 50 : 1.2669 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2745 | Negative Crossover | Bearish
  • MA 20 : 1.2741 | Negative Crossover | Bearish
  • MA 50 : 1.2612 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 46.7823 | Neutral Zone | Neutral

Stochastic   Oscillator : 21.4706 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 1.2798 R2 : 1.2882
  • S1 : 1.2527 S2 : 1.2443

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Limit Sell : 1.2706 | Take Profit : 1.2606 | Stop Loss : 1.2778

USD/JPY

USD/JPY extends upside near 157.50 as BoJ remains cautious on policy.

USD/JPY gains traction around 157.50 on Monday, up 0.08% on the day. BoJ kept short-term rate target unchanged and could reduce its purchases of JGBs after the next monetary policy meeting.The USD/JPY pair extends the rally near 157.50 during the early Asian session on Monday. The hawkish stance from the US Federal Reserve (Fed) provides some support to the pair. Meanwhile, the Japanese Yen (JPY) loses ground as the Bank of Japan (BoJ) decided to keep its interest rate at 0% at the conclusion of its June policy meeting on Friday. The Fed held interest rates steady at their current range of 5.25% to 5.5% at the latest policy meeting last week, as widely expected by consensus. Furthermore, it revised its outlook for rate cuts to just one in 2024. Fed Chair Jerome Powell said during the press conference that the central bank does not yet have the confidence to cut rates and he needs more convincing evidence that inflation was moving to the 2% target. On Sunday, Minneapolis Fed President Neel Kashkari noted that it is a “reasonable prediction” that the Fed will wait until December to cut interest rates, adding that the Fed is in a very good position to get more data before making any decisions.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 156.9059 | Positive Crossover | Bullish
  • MA 20 : 156.5713 | Positive Crossover | Bullish
  • MA 50 : 155.2826 | Positive Crossover | Bullish

Simple :

  • MA 10 : 156.5820 | Positive Crossover | Bullish
  • MA 20 : 156.7138 | Positive Crossover | Bullish
  • MA 50 : 155.6183 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 58.9509 | Buy Zone | Bullish

Stochastic   Oscillator : 78.2659 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 158.0528 R2 : 159.4982
  • S1 : 153.3732 S2 : 151.9278

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 157.33 | Take Profit : 158.96 | Stop Loss : 156.50

AUD/USD

Australian Dollar faces some selling pressure amid firmer US Dollar, mixed China’s economic data.

The Australian Dollar extends decline on the firmer US Dollar in Monday’s early European session.The hawkish tone of the Fed and challenges in China’s economic recovery weigh on AUD/USD.The RBA interest rate decision on Tuesday will be in the spotlight, with no change in rate expected.The Australian Dollar (AUD) extends downside for the third consecutive day on Monday on the back of the stronger US Dollar (USD) broadly. The Greenback remains well-supported by the expectation that US interest rates will stay higher for longer, with the median projection from Federal Reserve (Fed) officials calling for one interest rate cut this year. Furthermore, the latest mixed Chinese economic data and some challenges in China’s economic operations might exert some selling pressure on the Aussie as China accounts for one-third of Australian exports. Investors will closely watch the Reserve Bank of Australia (RBA) interest rate decision on Tuesday, along with the Governor Michele Bullock press conference. The hawkish hold from the RBA could boost the AUD and cap the downside for AUD/USD in the near term. On the US docket, the Retail Sales for May will be released, which is expected to improve to 0.3% from 0% in April.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6626 | Negative Crossover | Bearish
  • MA 20 : 0.6626 | Negative Crossover | Bearish
  • MA 50 : 0.6603 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6628 | Negative Crossover | Bearish
  • MA 20 : 0.6634 | Negative Crossover | Bearish
  • MA 50 : 0.6582 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 47.6217 | Neutral Zone | Neutral

Stochastic   Oscillator : 32.1373 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.6706 R2 : 0.6764
  • S1 : 0.6515 S2 : 0.6457

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Stop Sell : 0.6599 | Take Profit : 0.6563 | Stop Loss : 0.6631

Elsewhere In The Forex Market

NZD/USD down 0.35% to 0.6120, The USD/CAD up 0.07% to 1.3743. The EUR/GBP up 0.18% at 0.8452. EUR/AUD up 0.24% at 1.6219. AUD/NZD up 0.17% at 1.0789, The USD/CNY up 0.01% at 7.2556, AUD/SEK up 0.11% at 6.9593, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) ECB President Lagarde Speaks at 05:00.