. Daily Forex Analysis - Euro and Pound Strengthen Against USD

Daily Forex Analysis – Euro and Pound Strengthen Against USD.

Daily Forex Analysis – Euro and Pound Strengthen Against USD.

05 Jun 2024

Introduction

The European and British currencies gain ground against the US Dollar on expectations of an interest rate cut by the Federal Reserve. The Euro climbs on subdued USD demand, while the Pound benefits from expectations the Bank of England will hold rates steady. The USD/CHF weakens, and the AUD rises after hawkish comments from the RBA Governor.

Markets In Focus Today – EUR/USD

EUR/USD ticks higher amid subdued USD demand, remains below 1.0900 mark.

EUR/USD attracts fresh buyers on Wednesday amid a modest USD downtick.Fed rate cut bets keep the US bond yields depressed and undermine the buck.Wednesday’s US data might provide some impetus ahead of the ECB on Thursday.The EUR/USD pair builds on the overnight bounce from the 1.0860-1.0855 region and ticks higher during the Asian session on Wednesday amid subdued US Dollar (USD) price action. Spot prices currently trade just below the 1.0900 mark and remain well within the striking distance of the highest level since March 21 touched on Tuesday. The incoming softer US macro data pointed to signs of a cooling economy and cemented bets for an imminent interest rate cut by the Federal Reserve (Fed) later this year. The expectations keep the US Treasury bond yields depressed and undermine the USD, which, in turn, is seen lending some support to the EUR/USD pair. The upside, however, seems limited as traders might prefer to wait on the sidelines ahead of the crucial European Central Bank (ECB) monetary policy meeting on Thursday.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0857 | Positive Crossover | Bullish
  • MA 20 : 1.0835 | Positive Crossover | Bullish
  • MA 50 : 1.0809 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0851 | Positive Crossover | Bullish
  • MA 20 : 1.0841 | Positive Crossover | Bullish
  • MA 50 : 1.0776 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 58.6382 | Buy Zone | Bullish

Stochastic   Oscillator : 78.8600 | Buy Zone | Negative

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 : 1.0842 | Take Profit : 1.0913 | Stop Loss : 1.0800

GBP/USD

GBP/USD Price Remains close to over two-month peak, bullish potential intact.

GBP/USD attracts fresh buying on Wednesday amid the underlying USD bearish tone.Divergent Fed-BoE policy expectations turn out to be another factor lending support.The technical setup favors bullish traders and supports prospects for additional gains.The GBP/USD pair trades with a mild positive bias around the 1.2775-1.2780 area during the Asian session on Wednesday and remains well within the striking distance of its highest level since March 14 touched the previous day. The US Dollar (USD) struggles to capitalize on the overnight bounce from over a two-month low in the wake of rising bets for an imminent interest rate cut by the Federal Reserve (Fed) later this year. Furthermore, expectations that the Bank of England (BoE) might keep interest rates at their current level for a little bit longer continue to underpin the British Pound (GBP) and act as a tailwind for the GBP/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2744 | Positive Crossover | Bullish
  • MA 20 : 1.2699 | Positive Crossover | Bullish
  • MA 50 : 1.2644 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2749 | Positive Crossover | Bullish
  • MA 20 : 1.2693 | Positive Crossover | Bullish
  • MA 50 : 1.2593 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.6508 | Buy Zone | Bullish

Stochastic   Oscillator : 81.5404 | Buy Zone | Negative

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 : 1.2745 | Take Profit : 1.2815 | Stop Loss : 1.2706

USD/CHF

USD/CHF seems vulnerable near 0.8900 ahead of US Services PMI.

The USD/CHF pair finds temporary support near 0.8900 in Wednesday’s Asian session. The outlook of the Swiss Franc asset appears to be vulnerable as the recovery move in the US Dollar (USD) seems stalling amid growing speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. Going forward, investors shift focus to the US ADP Employment Change and the ISM Services PMI data for May, which will be published at 12:15 and 14:00 GMT. On the Swiss front, the Swiss Franc has strength amid expectations that the Swiss National Bank (SNB) could intervene in currency markets to support the Swiss Franc. Swiss exports have become more competitive in global markets due to weak currency, which could deepen fears of upside risks to inflation.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.9012 | Negative Crossover | Bearish
  • MA 20 : 0.9047 | Negative Crossover | Bearish
  • MA 50 : 0.9035 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.9048 | Negative Crossover | Bearish
  • MA 20 : 0.9063 | Negative Crossover | Bearish
  • MA 50 : 0.9079 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 32.5520 | Sell Zone | Bearish

Stochastic   Oscillator : 7.56 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.9167 R2 : 0.9223
  • S1 : 0.8987 S2 : 0.8931

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 0.8961 | Take Profit : 0.8865 | Stop Loss : 0.9039

AUD/USD

Australian Dollar appreciates due to hawkish comment from RBA Governor Bullock.

The Australian Dollar appreciates as RBA Governor Michele Bullock stated to increase rates if the CPI does not return to the target range.Australia’s GDP grew 0.1% QoQ in the first quarter, falling short of the expected 0.2% reading.Caixin China Services PMI came in at 54.0 in May, marking the 17th consecutive month of expansion in services activity.The US Dollar could rebound due to the higher US Treasury yields.The Australian Dollar (AUD) gains ground as the Reserve Bank of Australia (RBA) Governor Michele Bullock stated on Wednesday that the central bank is prepared to increase interest rates if the Consumer Price Index (CPI) does not return to the target range of 1%-3%, as reported by NCA NewsWire. The upside of the Aussie Dollar could be limited due to the lower-than-expected Gross Domestic Product data, which grew 0.1% QoQ in the first quarter, against the expected 0.2% reading. On an annual basis, the economy grew 1.1%, slightly below the expected 1.2%. The AUD/USD pair received pressure as the Judo Bank Purchasing Managers Index (PMI) came in at 52.5, lower than the expected reading of 53.1 for May.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6648 | Positive Crossover | Bullish
  • MA 20 : 0.6632 | Positive Crossover | Bullish
  • MA 50 : 0.6597 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6642 | Positive Crossover | Bullish
  • MA 20 : 0.6644 | Positive Crossover | Bullish
  • MA 50 : 0.6570 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 55.4567 | Buy Zone | Bullish

Stochastic   Oscillator : 60.2521 | Buy Zone | Neutral

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 : 0.6632 | Take Profit : 0.6707 | Stop Loss : 0.6593

Elsewhere In The Forex Market

NZD/USD up 0.2% to 0.6189, The USD/JPY up 0.66% to 155.91. The EUR/GBP down 0.05% at 0.8514. EUR/AUD down 0.11% at 1.6338. AUD/NZD down 0.09% at 1.0756, The USD/CNY up 0.09% at 7.2451, AUD/SEK up 0.05% at 6.9345, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) GDP (QoQ) (Q1) Forecast 0.2%, Previous 0.2% at 07:00. (GBP) Composite PMI (May) Forecast 52.8 Previous 54.1 at 14:00. (GBP) Service PMI (May) Forecast 52.9, Previous 55.0 at 14:00. (USD) ADP Nonfarm Employment Change (May) Forecast 173K, Previous 192K at 17:45. (CAD) BoC Interest Rate Decision Forecast 4.75%, Previous 5.00% at 19:15. (USD) ISM Non-Manufacturing PMI (May) Forecast 51.0, Previous 49.4 at 19:30. (CAD) BoC Press Conference at 20:00.