EUR/USD moves higher to 1.2280 ( US Session Updates )

• The pair gathered extra traction on increasing USD-selling.
  USD plummets to fresh lows in the 90.20 region tracked by DXY.
  Rising US-China concerns revived the risk-off trade, hurting the buck.
  EUR/USD has found fresh buying interest and is now flirting with daily highs in the 1.2270/80 band.

EUR/USD bid on risk aversion

The selling pressure around the greenback is now intensifying after President Trump’s Advisor L.Kudlow stressed there is no timetable regarding US-China tarde negotiations, adding at the same time that the Chinese reaction to US measures has been so far unsatisfactory.

Kudlow’s comments triggered a bout of risk aversion that accelerated the inflows into the safe haven assets, particularly the Japanese Yen, motivating a quick drop in USD/JPY with the resulting USD sell off.

In addition, recent Non-farm payrolls seem to have given extra oxygen to the view of a more gradual interest rate path by the Federal Reserve in the next months (at least not as aggressive as previously estimated by market participants), all weighing down on the buck.

Despite the ongoing squeeze higher, spot keeps the bearish note intact this week, retreating for the second week in a row to levels last seen in late February. The down move motivates once again the 1.2200 handle and the 1.2165/55 band to emerge on the investors’ horizon.

EUR/USD levels to consider

At the moment, the pair is advancing 0.20% at 1.2266 and a break above 1.2312 (10-day sma) would target 1.22346 (high Apr.2) en route to 1.2478 (high Mar.27). On the other hand, immediate support aligns at 1.2216 (low Apr.6) seconded by 1.2206 (low Feb.9) and then 1.2165 (low Jan.18).

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AUD/USD FLATLINES IN TUESDAY’S ASIA SESSION AS CHINA DATA FAILS TO IMPRESS

The AUD/USD is flattening out in the Asia session, trading steadily near 0.7650 after a slew of data has left the Aussie on mixed footing ahead of the Reserve Bank of Australia’s (RBA) interest rate decision, due at 04:30 GMT.
China’s Caixin Services PMI came in unchanged at 52.9, with the Composite Output Index also remaining unchanged from the previous reading of 52.3, and Aussie bulls are struggling to continue finding reasons to bid up in Tuesday’s early action, especially after the Australian Current Account Balance surprised to the downside, printing at a worse-than-expected -10.5 billion compared to the expected -9.95 billion, but still better than the previous quarter’s -14 billion contraction.

Market sentiment is still remaining on-balance as the RBA has their latest rate statement at 04:30 GMT today, but with the central bank already widely expected to stand pat on interest rates well into 2019, t5raders will be focusing on the upcoming quarterly GDP figures that will be dropping on Wednesday.

AUD/USD levels to watch

FXStreet’s own Valeria Bednarik noted the AUD/USD’s recent bullish action, stating: “technically, the pair is trading at its highest in six weeks and around the 61.8% retracement of its latest daily decline, anticipating additional gains ahead particularly if bulls keep pushing through 0.7660. The 4 hours chartshows that the 20 SMA has accelerated north above the larger ones, also surpassing the 38.2% retracement of the mentioned decline at 0.7565, lately a comfort zone for the pair, while technical indicators are regaining the upside in overbought readings.”
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USD/JPY PRICE FORECAST – DOLLAR RALLIES ON THURSDAY
The US dollar rallied against the Japanese yen during the day on Thursday, showing signs of strength yet again. By pulling back towards the ¥110 level and bouncing the way we have, it signifies that perhaps we are ready to continue the uptrend and make a serious move towards major resistance above.

The US dollar initially pulled back against the Japanese yen during trading on Thursday, reaching towards the ¥110 level. This is obviously a large, round, psychologically significant figure, and an area that has been structurally important more than once. Because of this, it makes sense that we would bounce from there and as the US dollar strengthen after the ECB announcement and press conference, this had a bit of a knock on effect over here as well. Because of this, I think that the market will continue to grind higher, and that short-term pullbacks should be thought of as potential buying opportunities.

I think that ultimately this pair will continue to go higher based upon risk appetite anyway, and of course the interest rate differential that is so stark and contrasted between the United States and Japan. I do recognize that there is a lot of noise extending to the ¥112.50 level, so it’s possible that we may continue to see a lot of back-and-forth. Short-term buying on the dips probably remains the best way to play this market, as I think that the US dollar is getting ready to have a summer of strength again. By doing so, it’s very likely that the market will offer plenty of opportunities for those who are patient enough to wait for value in the greenback. Stick the short-term charts, they could lead the way but also be aware that this pair is typically volatile and very sensitive to risk overall.

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MARKET MORNING BRIEFING: POUND COULD BE BEARISH TOWARDS 1.30 IN THE MEDIUM TERM
STOCKS

Overall global equity indices look bearish for the coming sessions.

Dow (25090.48, -0.34%) has come off in line with our expectations and could test support near 25000. Watch price action there as a break below 25000 would be bearish for the medium term. But if 25000 holds, we could see a bounce from there towards 25500 again.

Dax (13010.55, -0.74%) did not see follow through buying above 13100 and came off from the close of 13107 seen on Thursday. Failure to see immediate rise above 13100 would be indicative of medium term bearishness towards 12800 or even lower.

Fall in Dollar Yen to 110.38 has prevented a rise above 22800 in Nikkei (22662.68, -0.83%) bringing it sharply down to current levels of 22660. While the fall sustains, a test of 22400-22200 looks possible.

Shanghai (3021.90, -0.73%) is almost stable at current levels and needs to dip below 3000 to indicate medium term bearishness. We would watch closely the price movement in the 3000-3050 region as there is lack of clarity on further course of direction just now.

Nifty (10817.70, +0.089%) needs to see an immediate break above 10850 to move up in the coming sessions towards 10950. While immediate daily resistance holds at 10850, there is some scope of a fall towards 10650 on the downside.

COMMODITIES

Commodities look weak too. Gold could come off in the medium term while the Crude prices could find some support below current levels in the next few sessions.

Brent (72.62) and WTI (63.80) have fallen sharply in the last couple of sessions. WTI looks bearish towards 62 on the weekly candle charts while the weekly line charts looks strongly bearish with a possibility to test 60 or even lower. Brent may test weekly support of 71-70 before bouncing back from there.

Gold (1279.80) has broken first support at 1280 and while it sustains to move lower and breaks below 1275, we may see chances of 1260-1250 opening up on the downside for Gold in the medium term.

Silver (16.49) has also fallen sharply and could head towards 16.25-16.00 in the near term. View is bearish.

Copper (3.13) has come off further from levels near 3.20 and could test immediate support near 3.10. Failure to bounce back from 3.10 would lead to a full retracement of the rise from 3.00 to 3.30 in the longer run.

FOREX

Euro (1.1585): The ECB’s plan of keeping key rates constant till 2019 summers made the Euro fall from 1.185 to a low near 1.155. Support at 1.155 is holding for now. Euro could test levels near 1.165 this week, while above 1.155-1.150.

Dollar Index (94.89): The ECB policy-induced Euro fall and a strong US Retail Sales data release led to rise in Dollar strength last week. This week could see a downmove in the Index towards 94.3-94.2, while it stays below resistance near 95.5.

Dollar Yen (110.44): Dollar Yen tested a high near 110.9 on Friday, thereby testing resistance on daily candles and daily line chart. In this week, it could test higher resistance near 111.5 on 3 day candles, which is a crucial long term resistance level and is likely to hold.

Euro Yen (127.93): Euro Yen continues to trade near horizontal support on weekly line chart. Targets of 111.5 and 1.165 on Dollar Yen and Euro respectively implies levels near 129.8-130.0 for the Euro Yen, which corresponds to a test of resistance on daily candles. While below 130.5, Euro Yen is looking bearish in the medium term.

Pound (1.3264): Pound could be bearish towards 1.30 in the medium term. However in this week, there are equal chances of it moving up to test resistance on daily candles near 1.335-1.340 or moving down towards 1.315.

INTEREST RATES

Last week, US Fed had hiked rates by 25 bps. Although the rate hike was expected, the language in the policy statement turned out to bemore hawkish than expected. The likelihood of 2 more rate hikes this year has increased beyond 50% for the first time this year. This hawkishness was seen in a rise in the US 10 Year yield towards 2.97%.

The US 10 Year yield (2.91%) seems to be breaking support on medium term chart. If this break happens, our earlier forecast of medium term bearishness towards 2.60%-2.55% might come into play.

US 10 – 2 Year yield Spread (0.367%) has broken long term support near 0.4% against our expectation. If this break persists, it could be negative for the US economy.

Last week, the ECB came out with a mixed policy. The end of quantitative easing was expected by the markets – however that was overpowered by its dovish stance on interest rates, which led to a fall in the German 10 Year yield towards 0.4%.. On medium term chart, the German 10 Year yield looks bearish towards 0.3%; but for that, it would have to break support on short term chart near 0.4%
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EUR/USD: PUTS IN DEMAND AHEAD OF DRAGHI’S SPEECH
The EUR/USD one-month 25 delta risk reversals fell to -1.05 today – the lowest level since May 30, indicating a rising implied volatility premium (rising demand) for the EUR puts (sell EUR). The risk reversals gauge stood at -0.23 on June 7.

The options market data indicates the investors are likely hedging/seeking downside protection against a deeper sell-off in the EUR/USD pair. As of writing, the spot is trading at 1.1642.

The common currency could revisit post-ECB low of 1.1543 and could possibly break below the recent low of 1.1510 on escalating US-China trade tensions and political uncertainty in Germany.  Also, bears may hit the market with fresh offers if the ECB President Mario Draghi reiterates dovish end the central bank’s QE program. The central bank chief will deliver introductory speech ECB Forum on central banking today.
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USD/CAD TRADES NEAR YEARLY HIGHS ABOVE MID-1.32S AS WTI STAYS BELOW $65
Earlier today, boosted by a combination of a weaker loonie and a stronger greenback, the USD/CAD pair reached its highest level in a year at 1.3290. As of writing, the pair was trading at 1.3265, adding 0.5% on the day.

Ahead of the critical OPEC summit in Vienna at the end of this week, the barrel of West Texas Intermediate dropped below the $65 mark. Commenting on expectations from the OPEC meeting, Kuwait’s oil minister said that there were no specific scenarios for raising or lowering the production ceiling and added that they will be discussing production levels rather than price. At the moment, the barrel of WTI is losing a little over $1, or 1.6%, on the day at $64.65.

In the meantime, the greenback continues to outperform its rivals as the quiet macroeconomic calendar allows investors to price the diverging monetary policies between the Fed and the rest of the major central banks. Nonetheless, the US Dollar Index encountered a resistance just ahead of the 95 mark earlier in the session and has been moving sideways since. Near 94.70, the DXY stays on track to end the day more than 0.3% higher.

Technical outlook

The RSI indicator on the daily chart stays above the 70 mark, suggesting that the pair may need to make a technical correction before extending higher. On the upside, resistances could be seen at 1.3290 (daily high), 1.3340 (Jun. 21, 2017, high) and 1.3400 (psychological level). On the downside, supports align at 1.3200 (daily low/psychological level), 1.3115 (Jun. 15 low) and 1.3020 (20-DMA).
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BITCOIN AND ETHEREUM PRICE FORECAST – BTC PRICES FALL
The prices have become very volatile over the weekend.
The BTC prices have been very volatile during the weekend as the situation begins to get tense for the bulls who are clearly on the backfoot over this period. The region around $6600 served to be a resistance once again and we have seen the prices fall below the $600 region over the weekend. But what should encourage the bulls for the short term is the fact that the prices have since managed to rebound pretty quickly over the last few hours and it is now back above the $6000 region as of this writing. This shows the amount if buying that is available in the $5800 region which should now serve as strong support for the short term.
BTC Prices Fall Below $6000 Briefly
It has indeed been tough times for the BTC bulls as the prices continue to fall despite the growing size and depth of the market. The incoming regulations and the larger investors seem to have had a negative impact on the prices so far though we continue to believe that this would be the case for the short term and that in the medium term, this would only add value to the market and push the prices higher in a slow and steady manner. But it is important for the weaker traders to hold on and it remains to be seen how long they would be able to do so as the prices continue to remain weak and continue to fall during the short term.
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MARKET MORNING BRIEFING: GOLD HAS COME OFF INSTEAD OF TRYING TO MOVE UP TOWARDS 1280
STOCKS

Dow (24252.80, -1.33%) and Dax (12270.33, -2.46%) both came off sharply yesterday. Dow may test immediate daily support near 24000 from where a corrective bounce back to 24750-25000 is possible. A break below 24000, if seen could take the index down to 23200 as seen on the 3-day candles.

Dax is likely to test weekly trend support near 12100 which if holds could push the index back to higher levels. A break below 12100, if seen would be vulnerable for a fall towards 11800.

Nikkei (22221.33, -0.52%) seems to be gradually coming down from 22800 levels and looks bearish towards 21800-21400 levels on the 3-day candles. There is enough room on the downside just now and if the 22800 level holds strong, near to medium term is likely to be bearish.

Shanghai (2846.62, -0.44%) opened with a gap down today and has lost immediate hopes of any corrective upmove towards 2950. The current fall seems very sharp and may take the index further down towards 2750.

Sensex (35470.35, -0.61%) and Nifty (10762.45, -0.55%) is likely in the last leg of the narrow range-trade and may break out on either side within the next 2-sessions. A break on either side would determine the direction for movements at least the next one week.
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USD/JPY FUNDAMENTAL DAILY FORECAST – LINGERING TRADE WAR CONCERNS WEIGHING ON DOLLAR/YEN
The Dollar/Yen is edging lower in early Asian trade on Tuesday, hitting its lowest level since June 11 in the process. If the downside momentum continues then look for investors to challenge the June 8 bottom at 109.179. A move through this level could trigger an acceleration to the downside with the next major targets coming in at 108.114 and 107.998.

At 0347 GMT, the USD/JPY is trading 109.483, down 0.281 or -0.26%.

The catalyst behind the price action was an escalation of the trade war between the United States and its trade partners – China and the European Union. This caused investors to dump higher risk assets and move their money into the safe-haven Japanese Yen.

Holding traders in suspense at this time is last week’s threat by President Trump to impose a 10-percent tariff on $200 million in Chinese goods and China’s threat of retaliation. Additionally, Trump also raised the possibility of slapping a 20 percent charge on European cars.
U.S. stock investors were on edge Monday after a report in Sunday’s Wall Street Journal that said President Trump plans to bar several Chinese companies from making investment in U.S. technology. The WSJ went on to say that the Trump administration wants to block additional technology exports to China. Trump is expected to make the announcement later this week.

The news drove all the major U.S. stock indexes sharply lower early Monday especially the NASDAQ Composite that was drilled lower by a steep drop in technology stocks.
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USD/JPY FUNDAMENTAL DAILY FORECAST – HAWKISH FED INTEREST RATE OUTLOOK UNDERPINNING PRICES

On Thursday, concerns over the deteriorating trade relationship between the U.S. and its trading partners in China and the European Union will continue to be the biggest influence on the price action. Traders should also continue to monitor the direction of U.S. Treasury yields and investor appetite for risk.
The Dollar/Yen is trading slightly higher on Thursday after recovering from earlier weakness. The Forex pair is trading inside yesterday’s range which indicates investor indecision and impending volatility. It also means there hasn’t been a follow-through to the upside following Wednesday’s 0.23% gain.
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MARKET MORNING BRIEFING: DOLLAR INDEX COULD PROBABLY SEE A DIP TO 95.00-94.75 LEVELS

STOCKS

Worries of trade tariff between US and its major trading partners seems to be taking the stocks lower. Imposition of 20% tariffs on EU vehicles as stated by Trump took down the automobile stocks on the Dax this week, while the EU posed retailitory tariffs of about 25% on $3.3bln of US goods in response to the US tariffs on EU steel and aluminium imports.

Dax (12177.23, -1.39%) looks bearish in the near term towards 11800.

Dow (24216.05, +0.41%) bounced a bit from levels just above 24000. While the daily trend support holds, there could be some upmove in Dow towards 24750. Else failure to remains above 24000 may take it lower to 23600 next week.

22000 is an important levels for Nikkei (22194.21, -0.34%). In case it breaks lower, it could be vulnerable to fall towards 21500 over the next couple of weeks. Watch price action near 22000.

Shanghai (2813.61, +0.96%) is likely to break below 2800 and head towards 2750 next week. The index looks bullish with some possibility of a bounce towards 2850.

Nifty (10589.10, -0.77%) finally broke below our expected 10650 levels and while the index trades lower, it could target 10400 in the near term. The index is bearish for the coming week.
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BITCOIN CASH, LITECOIN AND RIPPLE DAILY ANALYSIS

The majors consolidated Friday’s gains on Saturday, but the sea of red returned in the early hours of the day to test investor resolve ahead of Monday, the majors needing to reverse the morning’s gains to go into the week on a high note.
Bitcoin Consolidates
Bitcoin Cash gained 4.35% on Saturday, following Friday’s 9.08% recovery, to end the day at $747.7, taking Bitcoin Cash into positive territory for the week, up 0.08%.

Friday’s late rally continued into the early hours of Saturday, with Bitcoin Cash breaking through the day’s first major resistance level at $756.37 to a morning high $787.4, before easing back to $750 levels through the morning.

An afternoon pullback saw Bitcoin Cash fall to an intraday low $722.3, holding above the first major support level at $717.53, before recovering late in the day to consolidate Friday’s gains with interest.

At the time of writing, Bitcoin Cash was down 2.69% to $727.8, with the late Saturday recovery reversing in the early hours, Bitcoin Cash pulling back from a start of the day $753.2 high to a morning low $727.7, the morning’s moves leaving major support and resistance levels untested.

For the day ahead a move back through $752.47 would support a run at the day’s first major resistance level at $782.63, though following two consecutive days’ of gains, some profit taking would be expected going into Monday, the extended bearish trend still intact in spite of the recent gains.
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