. Daily Forex Analysis - USD Gains, EUR/USD Falls, GBP/USD Stalls.

Daily Forex Analysis – USD Gains, EUR/USD Falls, GBP/USD Stalls.

Daily Forex Analysis – USD Gains, EUR/USD Falls, GBP/USD Stalls.

26 Jun 2024

Introduction

EUR/USD falls below 1.0700 as USD gains strength, driven by hawkish Fed bets and EU political concerns. Meanwhile, GBP/USD’s recovery stalls near 1.2700 with investors eyeing US inflation data. USD/JPY holds near a two-month peak amid Fed-BoJ policy divergence, while USD/CHF rises above 0.8950 on expectations of delayed Fed rate cuts.

Markets In Focus Today – EUR/USD

EUR/USD extends losses below 1.0700 as USD stretches higher.

EUR/USD is extending losses in the European trading hours on Wednesday. The pair is weighed by persistent US Dollar strength even as risk sentiment improves. Hawkish Fed bets and EU political angst exert downward pressure on the pair ahead of mid-tier US data.The resurgence of buying interest in the US Dollar (USD) prompted the USD Index (DXY) to recover some of Monday’s retracement, exerting marked pressure on risk-sensitive assets and pushing EUR/USD back below the 1.0700 area on Tuesday.In the short term, the recent rate cut by the European Central Bank (ECB), in contrast with the Fed’s decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD in the short-term horizon. However, the Eurozone’s emerging economic recovery and perceived loss of momentum in US fundamentals are expected to reduce this disparity, which could lead to occasional support for the pair in the near term.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0728 | Negative Crossover | Bearish
  • MA 20 : 1.0754 | Negative Crossover | Bearish
  • MA 50 : 1.0778 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0719 | Negative Crossover | Bearish
  • MA 20 : 1.0776 | Negative Crossover | Bearish
  • MA 50 : 1.0773 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 40.7709 | Neutral Zone | Neutral

Stochastic   Oscillator : 19.0355 | Neutral Zone | Neutral

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 : 1.0720 | Take Profit : 1.0665 | Stop Loss : 1.0768

GBP/USD

Pound Sterling recovery stalls near 1.2700 with US inflation in focus.

The Pound Sterling trades sideways against the US Dollar as investors shift focus to the US core PCE inflation data for May.UK’s high wage inflation refrains BoE policymakers from committing to interest rate cuts.Uncertainty over the UK’s parliamentary elections will keep the Pound Sterling on tenterhooks.The Pound Sterling (GBP) exhibits a lackluster performance against the US Dollar (USD) in Wednesday’s London session. The recovery move in the GBP/USD pair from the more than five-week low of 1.2620 appears to have stalled near the round-level resistance of 1.2700. Investors shift focus towards the United States (US) core Personal Consumption Expenditures Price Index (PCE) data for May, which will be published on Friday. Investors will pay close attention to the US core PCE inflation data as it is the Federal Reserve’s (Fed) preferred inflation gauge. This data will provide fresh cues about when and how far interest rates will be reduced this year. Annually, the underlying inflation data is estimated to have softened to 2.6% in May from the prior release of 2.8%, with monthly figures growing at a slower pace of 0.1% from 0.2% in April.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2691 | Negative Crossover | Bearish
  • MA 20 : 1.2699 | Negative Crossover | Bearish
  • MA 50 : 1.2672 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2691 | Negative Crossover | Bearish
  • MA 20 : 1.2726 | Negative Crossover | Bearish
  • MA 50 : 1.2637 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 46.6039 | Neutral Zone | Neutral

Stochastic   Oscillator : 23.9888 | Sell Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.2656 | Take Profit : 1.2567 | Stop Loss : 1.2722

USD/JPY

USD/JPY consolidates near two-month top, remains below 160.00 amid risk of intervention.

USD/JPY continues to draw some support from the divergent Fed-BoJ policy stance. Fears that authorities will intervene to support the JPY cap the upside for the major.Traders also seem reluctant ahead of the crucial US PCE Price Index data on Friday.The USD/JPY pair oscillates in a narrow trading range during the Asian session on Wednesday and is currently placed around the 159.70-159.75 region, or just below a nearly two-month peak touched earlier this week. The upside, meanwhile, remains capped amid fears that Japanese authorities or the Bank of Japan (BoJ) might intervene in the markets to prop up the domestic currency. In fact, Japan’s Vice Finance Minister Masato Kanda reiterated that the government is prepared to take appropriate action if excessive currency fluctuations have a negative impact on the national economy. Kanda’s comments, however, had minimal impact on the Japanese Yen (JPY) in the wake of the BoJ’s reluctance to provide a detailed plan for the reduction of bond purchases. This marks a big divergence in comparison to the Federal Reserve’s (Fed) hawkish stance and suggests that the path of least resistance for the USD/JPY pair is to the upside.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 158.7563 | Positive Crossover | Bullish
  • MA 20 : 157.9132 | Positive Crossover | Bullish
  • MA 50 : 156.2285 | Positive Crossover | Bullish

Simple :

  • MA 10 : 158.5634 | Positive Crossover | Bullish
  • MA 20 : 157.4842 | Positive Crossover | Bullish
  • MA 50 : 156.4041 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 69.1507 | Buy Zone | Bullish

Stochastic   Oscillator : 95.3922 | 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 : 158.72 | Take Profit : 159.98 | Stop Loss : 157.96

USD/CHF

USD/CHF moves above 0.8950 due to expectations of delaying Fed rate cuts.

USD/CHF appreciates as the Fed may delay rate cuts to bring inflation under control.CME FedWatch Tool indicates a decrease to 67.7% odds of a Fed rate cut in September, down from 68.5% the previous day.The Swiss Franc may limit its downside as political and geopolitical uncertainty has driven safe-haven flows.USD/CHF continues to gain ground for the second consecutive day, trading around 0.8960 during the early European session on Wednesday. This upside could be attributed to the higher US Dollar (USD) due to heightened expectations of delaying interest rate cuts by the Federal Reserve (Fed). According to the CME FedWatch Tool, investors are pricing in 67.7% odds of a Fed rate cut in September, compared to 68.5% a day earlier. Reuters cited Fed Governor Michelle Bowman repeating her view on Tuesday that holding the policy rate steady for some time will likely be enough to bring inflation under control. Meanwhile, Fed Governor Lisa Cook said it would be appropriate to cut interest rates “at some point” given significant progress on inflation and a gradual cooling of the labor market, though she remained vague about the timing of the easing.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.8928 | Positive Crossover | Bullish
  • MA 20 : 0.8949 | Positive Crossover | Bullish
  • MA 50 : 0.8983 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.8908 | Positive Crossover | Bullish
  • MA 20 : 0.8932 | Positive Crossover | Bullish
  • MA 50 : 0.9035 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 49.7677 | Buy Zone | Bullish

Stochastic   Oscillator : 70.7982 | Buy Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.8976 | Take Profit : 0.9068 | Stop Loss : 0.8920

Elsewhere In The Forex Market

USD/CAD up 0.09% to 1.3671, The AUD/USD up 0.46% to 0.6678. The EUR/GBP down 0.05% at 0.8441. EUR/AUD down 0.64% at 1.6014. AUD/NZD up 0.65% at 1.0931, The USD/CNY up 0.06% at 7.2666, AUD/SEK up 0.51% at 7.0197, at the time of writing.

Key Economic Events & Data Release Today:

(CAD) Wholesale Sales (MoM) (May) Previous 0.2% at 08:30. (USD) Building Permits Forecast 1.386M, Previous 1.440M at 08:30. (USD) New Home Sales (May) Forecast 336K, Previous 634K at 10:00. (JPY) Retail Sales (YoY) (May) Forecast 2.0%, Previous 2.4%