Central banks rattled the euro

#

A successful auction for French bonds worth a total of €10.5 billion has confirmed that the euro is not afraid of Frexit. The demand exceeded the supply by 2.41 times, which is comparable to previous primary debt issuances. However, the empty seat will always be filled. If not by politics, then central banks will help mount pressure and plunge the EUR/USD. Their focus on easing monetary policy has caused the major currency pair to suffer.

Typically, central banks act in unison, led by the Federal Reserve. But not this year. The Fed made it clear that it will only cut the rate once, at most twice. This is supported by the strong US economy. Other economies, however, appear weaker, forcing their central banks to get ahead of the Fed. Sweden, the eurozone, Denmark, and Canada have already eased their monetary policies. Switzerland has done so twice.

The Swiss National Bank's rate cut was a real surprise for financial markets, as was the lowered inflation forecast to 1%. The Bank of England voted to hold interest rates at 5.25%. In regards to a future rate cut, the BoE policy minutes said the decision had been "finely balanced". As a result, the futures market increased the probability of the BoE starting monetary easing in August from 32% to 50%. Derivatives estimate the scope of this expansion at 48 basis points compared to 43 basis points before the June MPC meeting.

Market expectations regarding central bank rates

analytics667427f90c9b6.jpg

The Swiss franc and the British pound weakened against the US dollar, reminding investors of the consequences of a slower pace set by the leader of the pack: a rising USD index. Despite the ongoing slowdown in the American economy, with inflation confidently heading towards the 2% target and the peak in Treasury bond yields behind us, the weakness of competing economies and the fact that other central banks are focused on rate cuts, these factors help the dollar maintain its position as the Forex market's favorite currency.

Moreover, the dollar is considered a safe-haven currency, and the upcoming presidential elections in the US will support high demand for reliable assets. About 32% of executives at large US companies said that the November vote would affect their investment decisions. This uncertainty may lead to delayed investments and worsen the global appetite for risk.

analytics667428173935e.jpg

Despite the success of France's bond sale, the euro is likely to remain under pressure until the first round of the National Assembly elections in France. The potential for any EUR/USD rally is limited. The pair may see some growth in July-August, but investors will eventually focus on Donald Trump. Politics will continue to unsettle the regional currency just as economic factors weigh down the US dollar.

Technically, the EUR/USD daily chart shows the formation of another inside bar, indicating uncertainty. It makes sense to increase short positions opened at levels 1.0845 and 1.074 if the pair falls below the 1.0725 mark. A firm break of the pivot level at 1.07 would justify short positions towards 1.06 and 1.05.

The material has been provided by InstaForex Company - www.instaforex.com #

Technical Analysis of Intraday Price Movement of EUR/USD Main Currency Pairs, Thursday June 20 2024.

#

analytics6673a701aae7f.jpg

If we look at the 4-hour chart of the main EUR/USD currency pair, then several interesting things can be seen, namely firstly there is the appearance of a Bearish 123 pattern followed by several Bearish Ross Hook (RH) then secondly this condition is also confirmed by the appearance of deviations between movements. Fiber price with the Stochastic Oscillator indicator and thirdly the price movement moves below the 100 MA which also has a downward slope which based on these three things gives an indication that in the near future EUR/USD will try to test the 1,0725 level. If this level is successfully broken, then 1,0668 will becomes the main target to be aimed at, even if the momentum and volatility are supportive, it is not impossible that level 1,0611 will be the next target to be aimed at, but please pay attention to level 1,0808, if this level is successfully broken above, then all the weakening scenarios that have been described will become invalid and automatically cancel itself.

(Disclaimer)

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for USD/JPY on June 20, 2024

#

USD/JPY

The dollar continues to consolidate against the yen, facing resistance at 158.24, set by the 76.4% Fibonacci level. A break above this level opens the target of 160.40. However, the main scenario suggests that the price will fall to the 61.8% Fibonacci level (157.00), consolidate below it, and drop further to 155.75.

analytics6673957dd3bb9.jpg

For this to happen, the market must broadly move away from risk, implying a decline in the U.S. stock market as well as other trading instruments. If the USD/JPY pair is waiting for this, it has about 3-4 days before the Kijun-sen line closely approaches the price. If the stock market decline drags on, the USD/JPY pair might gradually advance towards the indicated target.

analytics6673956eaa6ad.jpg

On the 4-hour chart, the signal line of the Marlin oscillator is moving sideways along the zero line. The price is consolidating above the indicator lines. The first sign of a potential bearish breakthrough is when the price overcomes the support of the Kijun-sen line (157.40).

The material has been provided by InstaForex Company - www.instaforex.com #

Outlook for EUR/USD on June 19. Is the correction complete?

#

Analysis of EUR/USD 5M

analytics667221443c097.jpg

EUR/USD continued to trade higher on Tuesday. The movement is completely corrective in nature. By the end of the day, the price reached the critical line, and it immediately bounced back. Therefore, the euro may fall as early as today. Yesterday, the European Union published the final estimate of its inflation report for May. The market did not react to the report, as the second estimate fully matched the first. Moreover, the rise to 2.6% currently holds no negative consequences for the European Central Bank. The central bank has already lowered its rate, and we may not see another rate cut again before September. Therefore, if the inflation rate does increase in the coming months, this will not reduce the likelihood of the ECB slowing down the monetary policy easing. The indicator will have enough time until September to return to the 2.3-2.4% range.

The German ZEW Economic Sentiment Index turned out to be worse than expected. However, we already warned our readers that this report is of secondary importance, so the market did not react to this report either. Overall, the euro maintains the prospect of a prolonged and strong decline. We don't see any reason for forming an upward trend in the euro.

Only one trading signal was generated on the 5-minute timeframe. During the U.S. session, the price bounced off the Kijun-sen line, and this signal could have been used for a short position. The correction may not be over yet, but the signal is strong and accurate.

COT report:

analytics6672214e55560.jpg

The latest COT report is dated June 11. The net position of non-commercial traders has remained bullish for a long time, and we're still dealing with the same situation. The bears' attempt to gain dominance failed miserably. The net position of non-commercial traders (red line) has been declining in recent months, while that of commercial traders (blue line) has been growing. But now we're seeing the opposite once again. This shows that buyers, not sellers, are currently gaining momentum again. This might be temporary since the downward trend is still valid.

We don't see any fundamental factors that can support the euro's strength in the long term, while technical analysis also suggests a continuation of the downtrend. Three descending trend lines on the weekly chart suggests that there's a good chance of further decline.

The red and blue lines are currently moving away from each other again, which indicates a build-up in long positions on the euro. During the last reporting week, the number of long positions for the non-commercial group decreased by 1,200, while the number of short positions increased by 23,000. Accordingly, the net position decreased by 14,200. We may witness the start of increasing bearish pressure. According to the COT reports, the euro has a lot of potential to fall.

Analysis of EUR/USD 1H

analytics66722158927d3.jpg

On the 1-hour chart, EUR/USD finally started to form a new downward trend, which is part of the global trend. As previously mentioned, we still expect the single currency to fall. At this time, the pair is going through a technical correction. We don't expect the euro to fall every day. Most likely, the downward movement will be gradual. This is the nature of EUR/USD trading.

On June 19, we highlight the following levels for trading: 1.0530, 1.0581, 1.0658-1.0669, 1.0757, 1.0797, 1.0836, 1.0889, 1.0935, 1.1006, 1.1092, as well as the Senkou Span B line (1.0818) and the Kijun-sen line (1.0760). The Ichimoku indicator lines can move during the day, so this should be taken into account when identifying trading signals. Don't forget to set a Stop Loss to breakeven if the price has moved in the intended direction by 15 pips. This will protect you against potential losses if the signal turns out to be false.

On Wednesday, there is nothing to highlight in the economic calendars of the euro area and the United States. EUR/USD may go through significantly low volatility throughout the day. The pair may continue to trade lower after bouncing off the critical line, but at most, it might show a movement of about 30 pips. However, perhaps the UK inflation report can push EUR/USD to become more active?

Description of the chart:

Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;

The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;

Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;

Yellow lines are trend lines, trend channels, and any other technical patterns;

Indicator 1 on the COT charts is the net position size for each category of traders;

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for GBP/USD on June 18, 2024

#

GBP/USD

Yesterday, the British pound edged higher as the dollar index was down 0.23%. The pound is currently in a neutral state between the MACD line (1.2638) and the target resistance at 1.2745.

analytics6670f5c485287.jpg

The Marlin oscillator, which is in bearish territory, is changing this neutral state towards a downward movement, prompting it to overcome the MACD line.

Tonight, the U.S. will release reports on retail sales and industrial production. Forecasts are optimistic, suggesting that the pound will solidify its decision to decline.

analytics6670f5d07df02.jpg

On the 4-hour chart, Marlin indicates a potential downturn without leaving the downtrend area. Overall, the progress over the last 14 candles happened beneath the balance and MACD indicator lines, indicating a downtrend. Even if the price reaches 1.2745, any form of rise will likely remain corrective in nature.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for USD/JPY on June 18, 2024

#

USD/JPY

The USD/JPY pair successfully tested the target range of 158.00/24 and is now retreating. The Marlin oscillator briefly stayed in the bullish territory but now it seems that it intends to return to the bearish territory. The nearest support level is strong at the 157.00 mark, as it closely aligns with the MACD indicator line. Once the price consolidates below this level, the yen could move towards 155.04 and 153.80.

analytics6670f4dbc024c.jpg

An alternative scenario suggests the pair rising to 160.40 after consolidating above 158.24.

The bearish potential is becoming more evident on the 4-hour chart. The Marlin oscillator has entered the negative territory and is pulling the price towards the 157.00 level, just below the 61.8% Fibonacci retracement level.

analytics6670f5023ddf7.jpg

The MACD line is above this level on the same chart, which to some extent facilitates its breakthrough after passing the MACD line. Nevertheless, it is still a strong support, as the price needs a strong reason to breach this mark. Perhaps, it will be a stock market crash, which could once again form a suitable pattern. We await further progress.

The material has been provided by InstaForex Company - www.instaforex.com #

The euro also led last week's decline against the US dollar

#

The euro also led last week's decline against the US dollar

The euro fell due to several factors that collectively exert significant pressure on it. First, the European Central Bank was expected to start its rate-cutting cycle earlier than the Federal Reserve. Before last week, the first Fed rate cut was expected to take place in November. By then, the ECB might have already lowered its rate twice, which would naturally lead to a change in the yield spread in favor of the dollar.

This factor played a key role last week, but after the release of U.S. data indicating a decrease in producer prices, the market is now anticipating two Fed rate cuts this year, the first of which is expected in September. Therefore, the factor of changing the yield spread in favor of the dollar has already been accounted for and will no longer impact the euro exchange rate.

The second reason is more serious and is political in nature. In France, Macron's party, Renaissance, suffered a crushing defeat to Le Pen's party, National Rally (RN), and Macron's approval rating is at its lowest since 2018. Macron announced early elections, with the first round set to take place on June 30. A victory for Le Pen's party could overturn Macron's reforms and lead to increased tension within the EU. Growing uncertainty reduced the demand for risk, European stocks are falling behind the market, and pressure on the euro has increased.

Another important factor is the slower-than-expected pace of economic recovery in the Eurozone. In April, industrial production decreased by 0.1% against a forecasted growth of 0.2%, and the annual index slowed from -1.2% to -3%. The Eurozone economy's weakness mounts pressure on the ECB to begin adjusting monetary policy, increasing the chances of an earlier start to the rate-cutting cycle.

analytics6670028e9f046.jpg

The Eurozone Consumer Price Index for May will be published on Tuesday. No changes are expected, with the forecast suggesting that the index will remain at the same level of 2.6%. A deviation from the forecast to a lower value will increase pressure on the euro, while a higher value will allow the euro to recover some of last week's losses.

The CFTC report showed a change in the demand dynamics for the euro after six weeks of improvement, with the net long position decreasing from $9.2 billion to $5.6 billion during the reporting week. While the bullish bias remains intact, the price has sharply fallen below the long-term average, highlighting the strength of the bearish momentum.

analytics6670029800bd1.jpg

EUR/USD has fallen to the support level of 1.0690/0700 but failed to stay below it. The pair failed to reach 1.0650/60. However, given the strength of the bearish momentum, the price could still make an attempt to reach 1.0650/60, although there are no grounds for a deeper decline at the moment. We expect the situation to become clearer after the release of the Eurozone CPI report on Tuesday. For now, we advise you to sell on the rise with the goal of breaking below 1.0650. Take note that this is only a short-term scenario. Since the market has returned to the idea of two Fed cuts this year, it is unlikely for the euro to show a drastic decline.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast of AUD/USD pair on June 17, 2024

#

AUD/USD:

On Friday, the Australian dollar broke below the support level of 0.6627 and the daily balance indicator line. Now, the target of 0.6570, the support line of MACD, is within reach. A consolidation below this level opens the path to the target level of 0.6467 (the May 1 low). The Marlin oscillator is declining within its downward channel.analytics666fa5f4e8503.jpg

On the four-hour scale, the price consolidated below the balance and MACD indicator lines, and the signal line of the Marlin oscillator remains in the downward territory. The short-term trend is decreasing, so we are watching the price at the 0.6570 level.

analytics666fa6024e309.jpg

Data from China, published this morning, showed a decline in industrial production from 6.7% year-over-year to 5.6% year-over-year and a decrease in fixed asset investment growth from 4.2% year-over-year to 4.0% year-over-year. Asian stock indices are significantly falling (Nikkei 225 -1.92%, China A50 -0.73%, S&P/ASX200 -0.22%), dragging the Australian dollar down.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for USD/JPY on June 14, 2024

#

USD/JPY

The USD/JPY pair withstood serious pressure. The bears were unable to push the price below the support level of 155.75. Now, the price has risen above the 61.8% Fibonacci level (157.00), aiming for the target of 158.00/24. The Marlin oscillator has moved into positive territory, aiding the price in reaching this target.

analytics666bb1bc18ed0.jpg

Consolidating above this range opens the prospect of rising to the target level of 160.40, very close to the April 29 peak, or even higher—to the upper boundary of the global channel, coinciding with the 110.0% Fibonacci level at 161.00. The stock market, which set two records this week (the S&P 500), is also supporting the dollar in its battle against the yen.

analytics666bb1c93878d.jpg

On the 4-hour chart, after rising above 157.00, the price edged back, found the support of the indicator lines strong enough, rebounded from it, and settled above 157.00 with the intention of rising further. This is also indicated by the Marlin oscillator, which has rebounded upward from the zero line.

The material has been provided by InstaForex Company - www.instaforex.com #

Outlook for EUR/USD on June 14. Restoring justice to the dollar

#

Analysis of EUR/USD 5M

analytics666b96786b448.jpg

EUR/USD faced strong negative pressure on Thursday. The logic behind the pair's movements was quite ambiguous. On one hand, the market was selling the dollar on Wednesday, even though there were more reasons to buy it. Therefore, it was consistent for the pair to show a subsequent downward movement. On the other hand, the U.S. Producer Price Index was just published, showing a sharper slowdown than expected. The market tends to use formal reasons to sell the U.S. currency. However, traders considered the fact that the 0.1% slowdown in U.S. inflation in May does not influence the prospects of a Federal Reserve rate cut. Thus, the dollar strengthened throughout the day. The question is, what happens next?

Sinec the price approached its two recent lows (and did so quite sharply), we believe that a rebound with a 40-50 pip rise will follow. Then, logically and according to the current fundamental background, a new wave of decline should come next, and the price should be able to overcome the area of 1.0718-1.0733. This will help with the progress of the downward trend.

Two trading signals were formed on Thursday, and they mirrored each other. The price bounced twice from the area of 1.0797-1.0811. The first time, there was no downward movement, but the second time, the pair was down about 45 pips, overcoming the level of 1.0757 along the way. Thus, traders could have earned about 45 pips on a short position. The trade could be closed manually in the evening. We expect the pair to fall further over the next few weeks.

COT report:

analytics666b96803d1ce.jpg

The latest COT report is dated June 4. The net position of non-commercial traders has remained bullish for a long time, and we're still dealing with the same situation. The bears' attempt to gain dominance failed spectacularly. The net position of non-commercial traders (red line) has been decreasing in recent months, while that of commercial traders (blue line) has been increasing. However, we are now observing the opposite trend again. This indicates that buyers, not sellers, are gaining momentum once again. This might be a temporary phenomenon since the downward trend is still relevant.

We don't see any fundamental factors that can support the euro's strength in the long term, while technical analysis also suggests a continuation of the downtrend. Three descending trend lines on the weekly chart suggests that there's a good chance of further decline.

Currently, the red and blue lines are diverging again, which indicates that long positions for the euro have increased. During the last reporting week, the number of long positions for the non-commercial group increased by 4,300, while the number of short positions decreased by 6,000. Accordingly, the net position increased by 10,300. Nonetheless, the European Central Bank's decision to lower rates and strong US Nonfarm Payrolls may initiate a new wave of decline for the euro.

Analysis of EUR/USD 1H

analytics666b96880bbef.jpg

On the 1-hour chart, the EUR/USD pair finally has a real chance to form a new downward trend. Yesterday, the market rectified the situation in favor of the dollar. We expect the euro to fall. The price failed to consolidate above the Senkou Span B line, which significantly increases the likelihood of a sustained decline. The only thing that might happen before the start of a new wave of decline is an upward pullback. After leaving the ascending channel and following a two-month rise in the euro, we insist that the single currency fall.

On June 14, we highlight the following levels for trading: 1.0530, 1.0581, 1.0658-1.0669, 1.0757, 1.0797, 1.0836, 1.0889, 1.0935, 1.1006, 1.1092, as well as the Senkou Span B (1.0852) and Kijun-sen (1.0811) lines. The Ichimoku indicator lines can move during the day, so this should be taken into account when identifying trading signals. Don't forget to set a Stop Loss to breakeven if the price has moved in the intended direction by 15 pips. This will protect you against potential losses if the signal turns out to be false.

On Friday, European Central Bank President Christine Lagarde will deliver a speech, and the U.S. docket will feature the University of Michigan Consumer Sentiment Index. We do not expect any important information from Lagarde since the ECB meeting recently took place and the market has already received all the necessary information. The Consumer Sentiment Index is not a highly crucial report, but if the actual value deviates significantly from the forecast, the market may show a notable reaction.

Description of the chart:

Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;

The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;

Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;

Yellow lines are trend lines, trend channels, and any other technical patterns;

Indicator 1 on the COT charts is the net position size for each category of traders;

The material has been provided by InstaForex Company - www.instaforex.com #