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Asian Equities traded higher on Tuesday approaching near two-year highs on Tuesday as USD strength helped exporters and traders are expecting Federal Reserve Chair Janet Yellen to make positive comments to support the Fed's projection for one more interest rate rise this year. Yellen is due to take part in a discussion on global economic issues at London's Royal Academy today. In addition, several of her Fed colleagues are due to speak later in the day.

U.S. durable goods data, released yesterday, was -1.1% which was worse than expected. As a result, this further adds to concerns about the strength of US economic growth after the recent rout in the oil market and indicators that inflation is not strengthening. Many traders are concerned that the Fed has an overly optimistic view of the economy as it sets its strategy for further interest-rate increases.

Overnight treasury yields dipped lower but USD remained relatively strong with USDJPY trading at 111.65 and briefly rose to a 1 month high of 112.071.

Following ECB President Draghi's defense of the easing in European Central Bank monetary policy EURUSD remained steady at 1.1200 close to an 11-day high set overnight of 1.12036

GBPUSD moved less than 0.1% higher to currently trade at 1.2735. If the current trend continues then GBPUSD will attain a fifth straight daily gain, which would be the longest winning streak since early December.

Oil appears to be on track for a fourth consecutive daily rise even with continued concerns around a persistent global over supply. WTI was trading at $43.65 a 0.2% gain from yesterday but is still likely to suffer a 10% loss for the month. Brent was holding steady trading around $46.25pb.

And finally, Gold – which saw an unprecedented spike in volume at around 9:00 BST yesterday which saw Gold fall 1.6% to $1,236.50 an ounce on Comex. It is strongly believed this was an “erroneous” trade or “fat finger” event where trading jumped to 1.8 million ounces of gold in just a minute! This equates to more than the gold reserves of Finland! Following the short lived dip Gold subsequently recovered trading at $1,251 this morning.

Markets will be paying attention to speeches from ECB President Draghi at 9:00 BST, BoE Governor Carney at 11:00 BST and Fed Chair Yellen at 18:00 BST all of which are likely to cause a certain degree of “knee jerk” reaction in the markets.

EURUSD hit 1.1219, a near two-week high, in yesterday's trading. Nevertheless, it failed a successful close above the 1.12 handle. After briefly rising above 1.12 in today's trading, it remains below this key level.

The RSI indicator has been hovering around neutral levels in previous days but has recently picked up a bit. It is currently above the 50 neutral-perceived level at 55, while it is positively sloped (albeit not steeply), suggesting there's positive short-term momentum for the pair.

On the upside, yesterday's high of 1.1219 could act as a barrier to up movements in price, while the 1.12 level seems to be also offering intra-day resistance. Above these two points, focus would shift to the seven-and-a-half-month high of 1.1295 from June 14, a potential important resistance mark.

Should the price decline, it could find support in the area around the 1.1150 level, a congested region in the recent past that might be of significance. Below this level, the June 20 one-month low of 1.1118 would be eyed as another support point.

Regarding the medium-term picture, it currently looks bullish with the pair recording a bullish (golden) cross in late May when the 50-day moving average (MA) moved above the 200-day one. In addition, the price is currently comfortably above both MAs. It should be noted though that the considerable divergence between the price and the 200-day MA could be a sign of an overextended rally.

Overall, the short-term bias is looking bullish at the moment, while the medium-term prospects are looking even more positive.

Daily Pivots: (S1) 1.0846; (P) 1.0867; (R1) 1.0893; More...

Intraday bias in EUR/CHF is neutral for the moment. While the correction might extend lower, downside should be contained by 1.0791/0872 support zone to bring rebound. Break of 1.0908 resistance will argue that the correction is completed. In such case, intraday bias is turned back to the upside for retesting 1.0986/0999 resistance zone.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Such correction could have completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0791 support holds.

EURUSD

The EURUSD was indecisive yesterday. The bias is neutral in nearest term. The pair has been consolidating between 1.1285 – 1.1118 range area in the last two weeks and we need a clear break from the range area to see clearer direction. Overall I still prefer a bullish scenario but need a clear break above 1.1285 to continue the bullish scenario targeting 1.1350 – 1.1425 area. On the downside, 1.1080 area remains a key support and good place to buy with tight stop loss as a clear break below that area would interrupt the bullish scenario testing 1.0900 and the major trend line support as you can see on my H4 chart below.

GBPUSD

The GBPUSD was indecisive yesterday. The bias is neutral in nearest term. Immediate resistance is seen around 1.2759 (yesterday’s high). A clear break above that area could trigger further bullish pressure testing 1.2815 which remains a good place to sell with a tight stop loss as a clear break and daily close above that area would expose 1.3000 – 1.3050 region. Immediate support is seen around 1.2705. A clear break below that area could trigger further bearish pressure testing 1.2675 but key support remains at 1.2635 which need to be clearly broken to the downside to continue the double top bearish scenario targeting 1.2500 region. Overall I remain neutral.

USDJPY

The USDJPY had a bullish momentum yesterday topped at 111.94 and hit 112.07 earlier today in Asian session. The bias is bullish in nearest term testing 113.00 area. Immediate support is seen around 111.60. A clear break below that area could lead price to neutral zone in nearest term testing 111.15 area but as long as stay above 110.65 price is still in a bullish phase after broke above the trend line resistance as you can see on my H4 chart below. Overall I remain neutral.

USDCHF

The USDCHF had a bullish momentum yesterday topped at 0.9738. The bias is bullish in nearest term testing 0.9765 – 0.9815 area which remains a good place to sell with a tight stop loss. Immediate support is seen around 0.9695. A clear break below that area could lead price to neutral zone in nearest term testing 0.9650 area. On the upside, a clear break above 0.9815 would end the bearish outlook testing 0.9900 or higher.

The US dollar was trading mixed yesterday, and there was some weakness as the latest durable goods orders data showed a 1.1% decline, which was more than expected. Core durable goods orders rose 0.1%, slower than the estimated 0.4% increase. The decline in the headline durable goods orders was the biggest drop in nearly 9-months.

Gold prices posted a sharp decline yesterday, falling to intraday lows of $1235.99 before stabilizing. The decline in gold prices was attributed to an erroneous sell order which pushed gold prices lower.

The economic calendar today is packed with speeches from various central bank officials. This includes ECB President Mario Draghi, BoE Governor, Mark Carney and later in the day, FOMC members Harker and Kashkari along with the Fed Chair Janet Yellen are expected to speak.

EURUSD intraday analysis

EURUSD (1.1180): The EURUSD was rather muted with price action staying firmly above the 1.1129 support level. The strong intraday consolidation seen above this level and 1.1200 is indicative of a possible breakout in the near term. Above 1.1200, further gains could be expected, but the risk of rising past 1.1200 could signal a move towards the support level at 1.1129, followed by a decline to 1.1018. EURUSD is currently carving out the head and shoulders pattern with the neckline support at 1.1129 that will be key. The current gains in prices could form the right shoulder following which we could expect some strong declines.

GBPUSD intraday analysis

GBPUSD (1.2726): The British pound closed with a doji candlestick pattern yesterday following the strong rally off the 1.2600 support level. Resistance is seen at 1.2800 - 1.2780 which could be tested in the near term. Failure to break past this resistance level could put GBPUSD back on track for near-term losses. On the 4-hour chart, if we expect to see a rally in prices, then GBPUSD could be seen pushing lower near 1.2800. The evolving inverse head and shoulders pattern here suggests some near-term upside in prices. Watch for a reversal near 1.2688 after establishing resistance at 1.2800. This would mark the right shoulder in GBPUSD with the minimum upside target coming in at 1.3200 at the very least.

USDJPY intraday analysis

USDJPY (111.88): The USDJPY managed to break past the resistance level at 111.61 by yesterday's close. However, the price action is not very convincing at this resistance level, and this could probably result in some near-term declines. On the 4-hour chart, USDJPY is trading within the resistance zone of 112.00 - 111.70 following the bullish break out from the flag pattern. Near-term declines could be held at 111.70, but a break down below this level could invalidate the bull flag pattern. The next lower support is seen at 110.70.

Sunrise Market Commentary

• Rates: More of the same or surprise from Yellen?
  Today's wildcard is Fed chairwoman Yellen's speech. Will she holds on to the FOMC's communication line from the June statement, downplaying the recent setback in eco data, if she touches on monetary policy? We think so given the low amount of eco data published since. That should prevent more US Treasuries gains ahead of key eco data (PCE on Friday).
• Currencies: Dollar ‘resilient' despite disappointing US data
  The dollar easily reversed an intraday setback after poor US durable orders. However, EUR/USD and USD/JPY are still locked in tight ranges. The focus for USD trading is on US consumer confidence and on a speech of Fed's Yellen today. If Yellen confirms the Fed normalization path, it should protect the USD downside, but sustained USD gains need better data

The Sunrise Headlines

• US equities closed flat (S&P/Dow) to lower (NASDAQ). Asian markets follow WS and trade mixed. Brent oil tries to move further up, but little headway is made overnight.($/barrel).
• Brazilian president Temer is charged with corruption by the chief prosecutor. This unprecedented development may put the president on trial, if 2/3 of the chamber of deputies approve to proceed.
• The US Supreme Court cleared much of President Trump's travel ban to take effect this week and agreed to hear arguments in the fall, giving the president at least partial vindication for his claims of closing the nation's borders.
• Barnier, the EU chief negotiator, rejected May's offer to protect work and residency rights for its citizens living in Britain and asks Britain go further.
• The US Senate's health care bill would increase the number of uninsured Americans by 22 million by 2026, the Congressional Budget Office said. The report came as Republicans released a slightly revised version of the legislation.
• China's industrial profits rose 16.7% in May from a year earlier as global demand improved, helping to fill companies' order books.
• With little data on the eco-calendar, investors will focus on Yellen, Carney and the ECB's forum for policy clues. We also have Italy, Germany and US selling bonds today and June US consumer and Richmond manufacturing confidence coming out.

Currencies: Dollar Still Awaiting A Trigger For A Directional Move

Will Yellen help the dollar?

On Monday, the dollar initially profited from positive risk sentiment. The US currency temporary reversed the intraday gains on disappointing US durable orders, but showed resilience afterwardst. Especially USD/JPY erased the post data weakness amid talk of new carry trades funded in yen. The pair closed the session at 111.86 (from 111.28). EUR/USD finished the day at 1.1182.

This morning, Asian equities trade narrowly mixed. USD/JPY trades in the high 111 area, but a test of the 112.13 resistance didn't occur yet. EUR/USD hovers in the high 1.11 area. Yesterday's comments from ECB's Draghi defending the low rate policy maybe prevented further euro gains. Basically, the recent sideways trading persists. Commodity currencies like the CAD, the AUD and the kiwi dollar remain well bid. The latter continues its recent outperformance despite a smaller May trade surplus.

US Consumer confidence and Yellen in focus

In the US, consumer confidence (Conference board) and the Richmond Fed manufacturing index will be published. Consumer confidence is expected to ease slightly, but another negative surprise may add to lingering uncertainty on the Fed rate hike path. That should be USD negative. However, the dollar easily resisted a poor durable goods report yesterday. The market might be cautious to place big bets ahead of a speech of Fed's Yellen in London (CET 19.00). If she addresses monetary policy, we expect her to confirm to Fed communication after the June FOMC decision. This might help to protect the downside of the dollar, but we don't expect a big USD rebound. For that the happen, US data have to improve. Headlines from the ECB forum in Portugal are a wildcard. In a daily perspective, we expect EUR/USD trading to remain technical in nature ahead of Yellen. We also keep an eye at the USD/JPY price action. We are a bid surprised by recent ‘relative dollar strength' even as core yields stay low. For now, we remain cautious on further USD/JPY-gains as long as US eco data remain mediocre and as long as the dollar receives no additional interest rate support

Technical picture: USD still confined to tight ranges

Early May, EUR/USD failed to break below the 1.0821/1.0778 support (gap). Poor US data and US political upheaval propelled EUR/USD north of the 1.1023 range top. The pair tested the 1.1300 area going into the FOMC decision, but the test was rejected. The Trump top/correction top at 1.1300/1.1366 proved to be a solid resistance. USD sentiment will have to become really negative to clear this hurdle. EUR/USD 1.1110 is a first minor support. A return below 1.1023 would indicate that the upside momentum has eased.

The USD/JPY rally ran into resistance in early May. A mini sell-off mid-May made the short-term picture negative, driving the pair further down in the 108.13/114.37 range. The post-Fed USD rebound pushed the pair beyond a first minor resistance at 110.81. A break beyond the 112.13 correction top would improve the ST-picture. The day-to-day sentiment improved of late, but we remain cautious to forecast a U-turn.

EUR/USD: test of 1.1300/66 resistance rejected, but correction is modest. First support at 1.1110 holds

EUR/GBP

EUR/GBP locked near 0.88

Yesterday, the conservative party reached a deal with the DUP of Northern Ireland to support the minority government of PM May. The deal applies for the life of the current parliament (till 2022).Amongst others, it contains £1bln extra funding for northern Ireland. Sterling gained temporary a few ticks after the announcement, but the reaction was negligible. EUR/GBP closed the session at 0.8789. Cable finished the day at 1.2723.

Today, the CBI retail data will be published. A modest decline is expected. The CBI data are interesting but have rarely a lasting impact on GBP-trading. Even so, we look for the market reaction in case of better than expected data as the debate on a rate hike in the BoE intensifies. BoE governor Carney will give a press conference after the publication of the Financial stability report. This is not the forum for an in extenso debate on monetary policy, but the BoE governor can make some sidesteps. If anything, his assessment might be slightly negative for sterling. Headlines from the Brexit negotiations remain a wildcard. The EU apparently holds a rather tough stance which is a tentative sterling negative.

From a technical point of view, EUR/GBP extensively tested the 0.8854 area (2017 top), but a real break didn't occur. The BoE debate on a rate hike caused some volatility recently. In the end, the 0.8854/66 resistance remains within reach. A break would open the way to the 0.90 area. A return below the 0.8655 correction low would indicate easing pressure on sterling. Such a break lower will be difficult. A EUR/GBP buy-on-dips approach remains favoured

EUR/GBP: sterling rebounds temporary on BoE comments, but the 0.8854/66 resistance stays within reach

Download entire Sunrise Market Commentary

Daily Pivots: (S1) 0.7564; (P) 0.7581; (R1) 0.7603; More....

Intraday bias in AUD/USD remains neutral at this point. With 0.7523 intact, further rise is expected. Break of 0.7635 will extend the rise from 0.7328 to 0.7748 resistance and above. At this point, there is no clear sign of range breakout yet. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. Meanwhile, break of 0.7523 will argue that rebound from 0.7328 is possibly completed. In that case, intraday bias will be turned back to the downside for 0.7370 support.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8116) and above.

Daily Pivots: (S1) 1.3216; (P) 1.3243; (R1) 1.3273; More....

USD/CAD's consolidation from 1.3614 is still unfolding and intraday bias stays neutral. In case of another recovery, upside should be limited by 1.3387 support turned resistance to bring fall resumption. As noted before, corrective rise from 1.2460 has completed at 1.3793 already. Below 1.3164 will extend the decline from 1.3793 to 1.2968 cluster support, 61.8% retracement of 1.2460 to 1.3793 at 1.2969. However, firm break of 1.3387 will dampen our view and turn focus back to 1.3537 resistance next.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and has completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should now indicate the start of the third leg while further break of 1.2968 should confirm. In that case, USD/CAD should decline through 1.2460 support to 50% retracement of 0.9406 to 1.4869 at 1.2048.

Daily Pivots: (S1) 1.1162; (P) 1.1190 (R1) 1.1210; More....

Intraday bias in EUR/USD remains neutral for the moment as it's still bounded in range of 1.1109/1295. With 1.1109 support intact, there is no indication of reversal yet. Decisive break of 1.1298 key resistance will carry larger bullish implication and target 1.1615 resistance next. On the downside, break of 1.1109 support will indicate short term topping and rejection from 1.1298. In such case, intraday bias will be turned to the downside for 1.0838 support.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0941). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

6 positions were entered last week with total loss of 115 points and the positions are listed below.
 

16 Jun : GBP/USD - Short at 1.2750, exited at 1.2810 (- 60 points)
20 Jun : GBP/JPY - Long at 141.50, exited at 141.55 (+ 5 points)
21 Jun : AUD/USD - Long at 0.7595,
21 Jun : EUR/JPY - Long at 123.80,
22 Jun : GBP/USD - Short at 1.2675, exited at 1.2735 (- 60 points)
23 Jun : USD/CAD - Short at 1.3295,
 

|                 AUD          EUR/JPY           EUR/GBP         CAD          GBP         GBPJPY
Jan             - 15             -275                - 35            -120
Feb           + 140            -17                  - 40             +11
Mar            - 20            +115                +132           - 19
Apr             + 30                                  - 40           +120                              + 45
May                             - 55                  +100          - 60                -65            -60         
Jun            + 1                                      + 10          +20             -120           +205
Jul            
Aug          
Sep              
Oct           
Nov         
Dec                                                                                                                                               
Y-T-D        + 136           - 232               +127            +298             -185            +190