. Daily Forex Analysis - EUR/USD is up, GBP/USD steady

Daily Forex Analysis – EUR/USD is up, GBP/USD steady

Daily Forex Analysis – EUR/USD is up, GBP/USD steady

03 Jun 2024

Introduction

EUR/USD edges higher above 1.0850 ahead of US ISM PMI data. Cooler US PCE inflation and better-than-expected Eurozone HICP inflation support the pair. Focus shifts to the US ISM Manufacturing PMI for May and the ECB interest rate decision on Wednesday. GBP/USD consolidates around mid-1.2700s, supported by a softer USD and delayed BoE rate cut bets. Japanese Yen weakens due to interest rate differential, while the Australian Dollar remains flat ahead of ISM PMI.

Markets In Focus Today – EUR/USD

EUR/USD edges higher above 1.0850 ahead of US ISM PMI data.

The EUR/USD pair extends the upside around 1.0850 on Monday during the early Asian session. The cooler US PCE inflation data and the better-than-expected Eurozone HICP inflation data provide some support for the major pair. The US ISM Manufacturing PMI for May will take center stage on Monday ahead of the European Central Bank interest rate decision on Wednesday. The Commerce Department’s Bureau of Economic Analysis revealed on Friday that US inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose 0.3% on a monthly basis, as expected in April. On an annual basis, the PCE figure held steady at 2.7% YoY in April, matching March’s increase and coming in line with the estimation. The hotter-than-expected inflation in the Eurozone might not stop the ECB from cutting interest rates this week, but it may signal a halt in July and slower rate reductions in the coming months.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0837 | Positive Crossover | Bullish
  • MA 20 : 1.0821 | Positive Crossover | Bullish
  • MA 50 : 1.0801 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0838 | Positive Crossover | Bullish
  • MA 20 : 1.0826 | Positive Crossover | Bullish
  • MA 50 : 1.0773 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 57.0516 | Buy Zone | Bullish

Stochastic   Oscillator : 60.14 | Buy Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0830 | Take Profit : 1.0894 | Stop Loss : 1.0797

GBP/USD

GBP/USD consolidates around mid-1.2700s, downside seems cushioned amid softer USD.

GBP/USD draws support from a softer USD and bets for a delayed BoE rate cut. The UK political uncertainty keeps a lid on any meaningful upside for the GBP. The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow band, around mid-1.2700s during the Asian session. The downside, meanwhile, remains cushioned in the wake of a modest US Dollar (USD) weakness, weighed down by signs of easing inflationary pressures in the United States (US). The British Pound (GBP), on the other hand, draws support from expectations that more persistent price pressures in the United Kingdom (UK) might force the Bank of England (BoE) to keep interest rates at their current level for a little bit longer. That said, the uncertainty ahead of the UK general election on July 4 is holding back the GBP bulls from placing aggressive bets and capping the upside for the GBP/USD pair. Traders now look to the release of the Manufacturing PMIs from the UK and the US for some impetus ahead of the US ISM Manufacturing PMI.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2718 | Positive Crossover | Bullish
  • MA 20 : 1.2676 | Positive Crossover | Bullish
  • MA 50 : 1.2630 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2730 | Positive Crossover | Bullish
  • MA 20 : 1.2662 | Positive Crossover | Bullish
  • MA 50 : 1.2586 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 60.7845 | Buy Zone | Bullish

Stochastic   Oscillator : 30.08 | Sell Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2697 | Take Profit : 1.2782 | Stop Loss : 1.2650

USD/JPY

Japanese Yen depreciates as interest rate differential continues to exert pressure.

The Japanese Yen weakened as Minister Yoshitaka Shindo expressed the goal for the primary balance to achieve surplus territory by 2025. The Jibun Bank Manufacturing PMI rose to 50.4 in May, indicating the first expansion since May 2023. The US Dollar depreciated as Fed officials suggested no further interest rate hikes. The Japanese Yen (JPY) depreciates, with Japanese Economy Minister Yoshitaka Shindo announcing on Monday that the government will “continue efforts for primary balance to reach within surplus territory in FY 2025.” Japan’s Tokyo Consumer Price Index (CPI), released on Friday, rose to 2.2% year-over-year in May, up from April’s 1.8% rise. If nationwide inflation in Japan were to decline, it would likely deter the Bank of Japan (BoJ) from raising interest rates. The substantial interest rate differential between Japan and other countries continues to exert pressure on the Japanese Yen, supporting the USD/JPY pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 156.8728 | Positive Crossover | Bullish
  • MA 20 : 156.3240 | Positive Crossover | Bullish
  • MA 50 : 154.6472 | Positive Crossover | Bullish

Simple :

  • MA 10 : 156.9560 | Positive Crossover | Bullish
  • MA 20 : 156.2669 | Positive Crossover | Bullish
  • MA 50 : 154.6239 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 59.7353 | Buy Zone | Bullish

Stochastic   Oscillator : 84.9119 | Buy Zone | Positive

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 : 156.55 | Take Profit : 157.95 | Stop Loss : 155.83

AUD/USD

Australian Dollar remains flat, while US Dollar improves ahead of ISM PMI.

The Australian Dollar (AUD) stays steady as investors turn cautious ahead of the ISM Manufacturing PMI release on Monday. During the early hours of the Asian session, AUD received support as the minimum wage increased by 3.75% in Australia, aligning with market estimates that ranged from 3.5% to 4.0%. Additionally, the AUD/USD pair strengthened as the US Personal Consumption Expenditure (PCE) data, the Federal Reserve’s preferred measure of inflation, showed that price pressures eased in April. Moreover, Australia’s monthly inflation rate also accelerated to 3.6%, increasing the likelihood that the Reserve Bank of Australia (RBA) might need to raise interest rates again. The Australian Dollar also benefited from the Caixin Manufacturing Purchasing Managers Index (PMI) in China, which posted a higher-than-expected reading for May.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6637 | Positive Crossover | Bullish
  • MA 20 : 0.6623 | Positive Crossover | Bullish
  • MA 50 : 0.6590 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6635 | Positive Crossover | Bullish
  • MA 20 : 0.6635 | Positive Crossover | Bullish
  • MA 50 : 0.6564 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 54.1003 | Buy Zone | Bullish

Stochastic   Oscillator : 63.51 | Buy Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6628 | Take Profit : 0.6707 | Stop Loss : 0.6586

Elsewhere In The Forex Market

USD/CAD up 0.17% to 1.3650, The NZD/USD down 0.12% to 0.6136. The EUR/GBP up 0.16% at 0.8523. EUR/AUD up 0.22% at 1.6340. AUD/NZD down 0.11% at 1.0819, The USD/CNY up 0.06% at 7.2452, AUD/SEK down 0.33% at 6.9822, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) Caixin Manufacturing PMI (May) Forecast 51.6, Previous 51.4 at 07:15. (EUR) Spanish Manufacturing PMI (May) Forecast 52.5, Previous 52.2 at 12:45. (EUR) German Manufacturing PMI (May) Forecast 45.4, Previous 42.5 at 13:25. (USD) Manufacturing PMI (May) Forecast 50.9, Previous 49.4 at 19:15. (USD) ISM Manufacturing PMI (May) Forecast 49.8, Previous 49.2at 19:30.