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Daily Pivots: (S1) 1.0768; (P) 1.0835; (R1) 1.0870; More....

EUR/USD's steep decline today and strong break of 55 D EMA (now at 1.0810) indicates short term topping at 1.0915. more importantly, rebound from 1.0601 might have completed already, and EUR/USD is now is another falling leg of the corrective pattern from 1.1274. Intraday bias is back on the downside for 1.0601 support next. For now, risk will be mildly on the downside as long as 1.0915 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern, which might still be in progress. Break of 1.0601 will target 1.0447 support and possibly below. Nevertheless, on the upside, firm break of 1.1138 will argue that larger up trend from 0.9534 (2022 low) is ready to resume through 1.1274 high.

In holiday-thinned Asian trading today, Euro's sharp decline was the focal point. Investors' reaction to European Parliament election results was overwhelmingly negative. The far-right's significant gains have sparked concerns, driving the common currency through key support level against both Sterling, and a near term support again Dollar. This technical development suggests further downside risks for Euro, which may persist at least until the political uncertainties within the EU are resolved.

Dollar, on the other hand, managed to hold most of the gains achieved from last week's robust job data, although it has shown some struggle to extend its rally against commodity currencies today. The market's attention is now shifting towards the upcoming FOMC rate decision and the closely watched dot plot. However, the forthcoming May CPI data could be an even more significant market mover. Any indication that disinflation is stalling again could constrain Fed's ability and desire to ease monetary policy this year.

As of today, Australian Dollar leads as the strongest among commodity currencies, including the New Zealand Dollar and the Canadian Dollar, which are also showing strength. Japanese Yen and Swiss Franc trail behind Euro, marked as weaker performers. Dollar and British Pound hold middle ground in the currency rankings.

Technically, NZD/USD was rejected by 0.6215 resistance and fell sharply on Friday. But it's holding above 0.6086 support so far. The favored outlook is still that rise from 0.5870 is resuming rally from 0.5771. Firm break of 0.6215 resistance will strengthen this case, and target 0.6368 and above. However, firm break of 0.6086 will bring deeper fall back to 0.5870 instead. Such bearish development, if accompanied by decisive break of 0.6578 support in AUD/USD will affirm Dollar's overall strength.

In Asia, Nikkei rose 0.92%. Japan 10-year JGB yield is up 0.0611 at 1.034. Singapore Strait Times is down -0.23%. Hong Kong and China are on holiday.

Euro dives as eurosceptics gain in European Parliament Elections

Euro spiked sharply lower in thin Asian session today, breaking a crucial support level against Sterling. This decline was sparked by the results of European Parliament elections, where Eurosceptic nationalists made notable gains, although the Centre, liberal, and Socialist parties are still expected to hold a majority.

The election outcomes prompted a dramatic response from French President Emmanuel Macron, who called for a parliamentary election with the first round set for June 30. This move gives the far-right an opportunity to gain substantial political power, potentially weakening Macron's presidency three years ahead of its end. In Germany, Chancellor Olaf Scholz's Social Democrats experienced their worst electoral result ever, losing ground to both mainstream conservatives and the hard-right Alternative for Germany.

The announcement of snap elections in France introduces significant uncertainty for the EU, likely impacting economic and market confidence, particularly in France.

Technically, EUR/GBP's strong break of 0.8491 support confirms resumption of whole down trend from 0.9267 (2022 high) Outlook will stay bearish as long as 0.8529 resistance holds. Next target is 100% projection of 0.8764 to 0.8497 from 0.8643 at 0.8376.

As for EUR/CHF, sustained trading below 38.2% retracement of 0.9252 to 0.9928 at 0.9670 and 55W EMA (now at 0.9672) will raise the chance that whole rise from has completed at 0.9928 already. Deeper decline would be seen to 0.9563 support first. Further break there will strengthen this bearish case.

ECB's Holzmann cautions on risks of further rate cuts

ECB Governing Council member Robert Holzmann expressed concerns on Saturday about the risks of further reductions in ECB borrowing costs, particularly regarding their impact on the Euro exchange rate and inflation.

Holzmann warned, "If the original assumption of three rate cuts were to materialize, and the Federal Reserve didn't respond, it would certainly have an impact on the exchange rate, and with it inflation."

Holzmann was the lone dissenter against ECB's rate cut last week but stated that the decision didn't yet make him concerned about inflation risks.

He explained that ECB officials' implicit commitment to a rate cut was a significant factor in last week's decision. "There was a review of the data and a discussion about it with different points of view," he said. "The council's opinion was that there was no other way, also because it had been announced that such a decision would be made in June."

Fed to stand pat, markets await new dot plot

FOMC meeting is the major focus of the week, and Fed is widely expected to keep interest rates unchanged at 5.25-5.50%. Market expectations are fluctuating around 50% chance for a rate cut in September. The upcoming economic projections and dot plot may hopefully provide clearer guidance.

Back in March, Fed's dot plot revealed a divided outlook among policymakers: ten anticipated up three rate cuts this year, while nine foresaw rates holding steady or increasing, including four who projected additional hikes. This division is expected to shift towards a more hawkish stance in the upcoming update.

Key questions include how many policymakers now foresee two or less cuts this year and whether any still consider further hikes necessary. A scenario where more policymakers lean towards two cuts while fewer envision hikes could be market neutral. .

For Dollar and broader markets, more significant movements might be spurred by the latest CPI and PPI data, rather than Fed's rate decision alone.

Simultaneously, BoJ is expected to keep its policy rates steady at 0-0.10%. A Bloomberg survey suggests a slight majority of economists predict BoJ might begin reducing its JPY 6T monthly bond purchases. Regarding interest rate hikes, about one-third expect an increase in July, with 41% looking to October, though signals for another rate hike remain premature.

In the UK, upcoming GDP and employment data will be crucial, especially as BoE Governor Andrew Bailey indicated that a June rate cut is not guaranteed. The MPC has been more divided than its counterparts globally, making this week's data particularly significant in shaping both market expectations and the MPC's forthcoming decisions.

Additionally, global economic indicators such as Eurozone Sentix investor confidence, Australian employment and NAB business confidence, along with China's CPI, are also on the radar and could impact market sentiment.

Here are some highlights for the week:

• Monday: Japan GDP final, current account, Eco Watcher sentiment; Swiss SECO consumer climate; Italy industrial production; Eurozone Sentix investor confidence.
• Tuesday: Australia NAB business confidence; UK employment; US NFIB small business index; Canada building permits.
• Wednesday: Japan PPI; China CPI, PPI; Germany CPI final; UK GDP, production, trade balance; US CPI, FOMC rate decision.
• Thursday: Japan BSI manufacturing; Australia employment; Swiss PPI; Eurozone industrial production; US PPI, jobless claims.
• Friday: New Zealand BNZ manufacturing; BoJ rate decision, tertiary industrial index; Eurozone trade balance; Canada manufacturing sales, wholesale sales; U of Michigan consumer sentiment.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0768; (P) 1.0835; (R1) 1.0870; More....

EUR/USD's steep decline today and strong break of 55 D EMA (now at 1.0810) indicates short term topping at 1.0915. more importantly, rebound from 1.0601 might have completed already, and EUR/USD is now is another falling leg of the corrective pattern from 1.1274. Intraday bias is back on the downside for 1.0601 support next. For now, risk will be mildly on the downside as long as 1.0915 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern, which might still be in progress. Break of 1.0601 will target 1.0447 support and possibly below. Nevertheless, on the upside, firm break of 1.1138 will argue that larger up trend from 0.9534 (2022 low) is ready to resume through 1.1274 high.

Economic Indicators Update

The sight of the 272K new nonfarm job additions and the fastening wages growth above 4% on a yearly basis smashed the dovish Federal Reserve (Fed) expectations on Friday, and sent the US 2-year yield from around 4.70% to 4.90% in a single move, the 10-year yield spiked to 4.45% and the US dollar index cleared the 100 and 200-DMA without hesitation and jumped over the 50-DMA this morning in Asia. We are back to the starting point where the Fed could hardly justify a rate cut when jobs data remains strong and inflation is not easing as fast as it should.

Happily, suspense about what the Fed thinks about this won’t last long; the Fed will start its two-day policy meeting tomorrow and announce its latest decision on Wednesday, just after the CPI update for May due the same day. Price pressures in the US may have steadied and even slightly eased for the core figure in May. But the numbers are still hanging around the 3.4-3.5% levels, well above the Fed’s 2% target, and the last mile – easing from these levels to lower levels – proves to be harder than many thought. Therefore the Fed and its Chair Jerome Powell will probably ask for more patience and their quarterly dot plot will more likely than not show lesser rate cuts this year than they predicted in March. I believe that the median forecast on the dot plot will show one, or maximum two rates penciled in by the Fed members – down from 3 rate cuts that were still flashing back in March. And let me tell you one thing: two rate cuts would hint that the Fed officials are worried about a hard landing and a recession. To me, the best outcome for the mood would be a single rate cut.

All eyes on Apple

Equity markets’ reaction to Friday’s strong jobs data was contained. The S&P500 and Nasdaq closed last Friday slightly in the negative after having advanced to a fresh record. The GameStop frenzy probably came to an end last Friday, when fun couldn’t overweigh fundamentals anymore. While Roaring Kitty was on yet another mission to pump the market on livestream, GameStop decided to reveal its latest quarterly results earlier – and the results were unsurprisingly bad because it’s a non-profitable company. But they also happened to be worse than expected: the revealed a 29% drop in revenue and a quarterly loss of 12 cents of a dollar per share. So the GME shares finished the day 40% lower. I guess this is the end of this wave.

More seriously, if the major US indices could eke out weekly gains last week, it was mostly thanks to a decent rally in chip stocks that saw the Computex event in Taipei give them a platform to show off their new chips and talk about their future plans. This week, tech investors’ focus will be on Apple’s annual WWDC event, where it’s expected to reveal a roadmap regarding its own AI ambitions. Apple fell off the early AI race as it hasn’t come up with a solid AI plan while its tech competitors like Microsoft and Google have been racing relentlessly to get out the most efficient and impressive AI models to gain field. Interestingly, Apple’s stock price recovered a lot of its AI-related losses on hope that a partnership will eventually pop and make Apple devices appealing again. Happily, many investors don’t see Apple as a cutting-edge technology company but rather as a luxury brand that sells millions of hardware that could be home to any reasonably appreciated AI model. But everyone agrees that Apple should develop their AI offering fast, and this week’s WWDC is a line in the sand. Either Apple will come up with a satisfactory AI plan and see its share price pushed to a record, or the week will end with disappointment and Apple will give back the AI-hope related gains. What’s sure is: the world is watching.

Euro hammered

The post-jobs data rally in the US dollar pushed the USJDPY above the 157 level and the EURUSD off a cliff. The yen traders lack conviction that Friday’s Bank of Japan (BoJ) meeting could bring any hawkish shift after the latest growth numbers showed a contraction in the Q1. The BoJ could make minor adjustments to its JGB purchases to keep the yen’s weakness contained.

In Europe, the EURUSD got smashed from around 1.09 to 1.08 after Friday’s surprisingly strong US jobs data and got a further hit to 1.0735 at the weekly open, after the weekend’s European Parliament elections ended in tears for France’s Emmanuel Macron and Germany’s Olaf Scholz’s parties. The far-right Marine Le Pen secured 32% of the votes from the French, a shocker that pushed Macron to call a snap election in France to get things straight. As such, the French 10-year yield kicks off the week with a 2% advance, and the advance is similar elsewhere, as well. The EURUSD returns to the bearish consolidation after taking out the major 38.2% Fibonacci support on the April to June rally. The outlook turns negative, again. I believe that the impact of the political shenanigans will remain short-lived but a hawkish Fed outcome this Wednesday could prove to be harder to shake off.

In focus today

Today, in the euro area, we receive the Sentix investor confidence indicator which will give us the first estimate of sentiment in June.

We expect little to no market reaction to the European Parliament elections this past weekend, despite its status as a significant political event. Historical data suggests that these elections typically have a minimal effect on markets, and we anticipate a similar scenario this time. For more details, see European Parliament election will not move markets, 14 May 2024

In the coming week, particular focus is on the US May CPI print and subsequent FOMC rate decision on Wednesday, where we expect the Fed to maintain the current level. On Friday, we will get a rate decision from the BoJ. While we expect no change in the policy rate, we do expect it to signal tapering of its bond purchases which have so far remained unchanged at JPY 6tn. a month.

Economic and market news

What happened over the weekend

In France, President Emmanuel Macron has called a snap domestic parliament vote with the first round set for June 30 and the second for July 7. This follows a disappointing result for his party in the European parliamentary elections, where Marine Le Pen's National Rally (RN) party won 32% of the votes against the 15% of Macron's Renaissance party. The RN would gain the power to control domestic policy if they win a majority in the upcoming domestic elections, while Macron would still direct foreign policy.

What happened Friday

In the US, May labour market data was profoundly hawkish, showing a labour market that is still tight - the opposite of what the Fed wants to see. Nonfarm payrolls increased 272k (cons.: +190k), average hourly earnings rose 0.4% m/m (prev.: 0.2%), and data showed that the labour force declined by 250k persons. The greenback gained (DXY +0.76%) and treasury yields rose (10Y +15bps) as markets returned to pricing in just a single December cut.

Euro area wage growth picked up by some 10-20bps in y/y terms in Q1 which was slightly to the high side compared to what the ECB expected. However, the current figures reflect in part a catch-up of previously lost purchasing power from wage agreements that are infrequently negotiated, and the forward-looking indicators show wage pressures that are elevated but also declining. Final GDP for Q1 gave the same signal as its 0.3% q/q growth was almost entirely driven by net exports while domestic pressure remained muted.

Market movements

Equities: Global equities ended lower on Friday, yet still higher for the week. The ECB meeting and the NFP data were the two major takeaways from last week, both supporting the prolonged bullish narrative in our opinion. Despite a significant increase in yields on Friday, it was intriguing to see the relative resistance in equities. Small cap stocks, which lost almost 3% against large-cap last week, suffered the most from this extended bullishness and yield lift. REITs were heavily sold off on Friday due to rising yields and stories about a challenging refinancing environment related to CRE. Cyclical growth, quality, and momentum led the rally once again.""Higher for longe"" for the right reason took VIX down to the low 12s, with the risk of breaking below this level if Wednesday's US CPI report and FOMC is benign. In the US on Friday, Dow fell by 0.2%, S&P 500 by 0.1%, Nasdaq by 0.2%, and Russell 2000 by 1.1%.

FI: The strong US labour market report sent yields sharply higher on Friday, particular led by the belly of the curve. The 272k new jobs was almost 100k better than consensus expectations. The 10y Bunds ended 7bp higher on the day at 2.62%. The knee-jerk reaction from the US, spilled over to the EUR, where markets at one point priced less than 31bp of additional cuts from the ECB by year end, albeit some of it was reversed. The ECB GC member'' comment on Friday was mainly cautioning against assuming a particular move on further rate cuts.

FX: USD rallied on Friday on the back of the stronger than expected US jobs report, while Scandies were among the biggest losers in G10. EUR/USD fell to 1.08, EUR/SEK jumped close to 11.40 and EUR/NOK rose towards 11.60.

Key Highlights

• EUR/USD started a fresh decline from the 1.0915 resistance.
• It traded below a key bullish trend line with support at 1.0810 on the 4-hour chart.
• GBP/USD rallied toward 1.2700 before the bears appeared.
• Gold prices dipped again and traded below $2,320.

EUR/USD Technical Analysis

The Euro started a decline after it failed near 1.0915 against the US Dollar. EUR/USD declined heavily below the 1.0880 and 1.0850 support levels.

Looking at the 4-hour chart, the pair settled below the 1.0820 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). Besides, it traded below a key bullish trend line with support at 1.0810.

The pair is now trading below the 1.0800 level. Immediate support is near the 1.0750 level. The next major support is near the 1.0720 zone.

A downside break and close below the 1.0720 support zone could open the doors for a larger decline. In the stated case, the pair could decline toward the 1.0650 level.

On the upside, immediate resistance is near the 1.0800 zone. The first major resistance is near the 1.0820 level. A clear move above the 1.0820 resistance might send it toward the 1.0850 level. Any more gains might call for a move toward the 1.0880 level in the near term.

Looking at gold, the bears stepped again and they were able to push the price below the key support at $2,320.

Economic Releases

• Euro Zone Sentix Investor Confidence for June 2024 - Forecast -2.0, versus -3.6 previous.

Euro spiked sharply lower in thin Asian session today, breaking a crucial support level against Sterling. This decline was sparked by the results of European Parliament elections, where Eurosceptic nationalists made notable gains, although the Centre, liberal, and Socialist parties are still expected to hold a majority.

The election outcomes prompted a dramatic response from French President Emmanuel Macron, who called for a parliamentary election with the first round set for June 30. This move gives the far-right an opportunity to gain substantial political power, potentially weakening Macron's presidency three years ahead of its end. In Germany, Chancellor Olaf Scholz's Social Democrats experienced their worst electoral result ever, losing ground to both mainstream conservatives and the hard-right Alternative for Germany.

The announcement of snap elections in France introduces significant uncertainty for the EU, likely impacting economic and market confidence, particularly in France.

Technically, EUR/GBP's strong break of 0.8491 support confirms resumption of whole down trend from 0.9267 (2022 high) Outlook will stay bearish as long as 0.8529 resistance holds. Next target is 100% projection of 0.8764 to 0.8497 from 0.8643 at 0.8376.

As for EUR/CHF, sustained trading below 38.2% retracement of 0.9252 to 0.9928 at 0.9670 and 55W EMA (now at 0.9672) will raise the chance that whole rise from has completed at 0.9928 already. Deeper decline would be seen to 0.9563 support first. Further break there will strengthen this bearish case.

ECB Governing Council member Robert Holzmann expressed concerns on Saturday about the risks of further reductions in ECB borrowing costs, particularly regarding their impact on the Euro exchange rate and inflation.

Holzmann warned, "If the original assumption of three rate cuts were to materialize, and the Federal Reserve didn't respond, it would certainly have an impact on the exchange rate, and with it inflation."

Holzmann was the lone dissenter against ECB's rate cut last week but stated that the decision didn't yet make him concerned about inflation risks.

He explained that ECB officials' implicit commitment to a rate cut was a significant factor in last week's decision. "There was a review of the data and a discussion about it with different points of view," he said. "The council's opinion was that there was no other way, also because it had been announced that such a decision would be made in June."

• GBPUSD reversed from resistance level 1.2800
• Likely to fall to support level 1.2675

GBPUSD currency pair recently reversed down from the key resistance level 1.2800 (which has been repeatedly reversing the price from December) standing near the upper daily Bollinger Band.

The downward reversal from the resistance level 1.2800 stopped the previous intermediate ABC correction (2).

Given the strength of the resistance level 1.2800, strongly bullish USD sentiment, and the overbought daily Stochastic, GBPUSD currency pair be expected to fall further to the next support level 1.2675, which stopped the previous waves ii and iv.

EUR/USD: Who Controls the Financial Market

It is clear that interest rates rule the markets, not only in terms of actual changes but also regarding expectations about the timing and magnitude of future changes. From spring 2022 to mid-2023, the focus was on raising rates; now, the expectation has shifted towards their reduction. Traders are still uncertain about the Federal Reserve's decisions and timing, leading them to scrutinize macroeconomic statistics primarily for their impact on the likelihood of monetary policy easing by the regulator.

At the beginning of last week, the dollar was under pressure due to weak data on business activity (PMI) in the US manufacturing sector. On Monday, 3 June, the Institute for Supply Management (ISM) reported that manufacturing activity in the country decreased in May from 49.2 to 48.7 points (forecast 49.6). As the index remained in contraction territory (below 50), there was renewed speculation among traders and investors about a possible Fed rate cut in September.

The US currency received some support from business activity data in the services sector. This time, the PMI was 53.8 points, higher than both the previous value of 49.4 and the forecast of 50.8, which slightly pleased the dollar bulls.

Thursday, 6 June, was relatively calm. The European Central Bank's Governing Council lowered the interest rate by 25 basis points (bps) to 4.25%, as expected. This step fully aligned with forecasts and was already factored into EUR/USD  quotes. Notably, the ECB had not lowered rates since 2019, began raising them in July 2022, and kept them unchanged at the same level during the last five meetings. Since September 2023, inflation in the Eurozone has decreased by more than 2.5%, allowing the regulator to take this step for the first time in a long while.

The ECB's statement following the meeting indicated that despite the rate cut, its monetary policy remains restrictive. The regulator forecasts that inflation will likely remain above the 2.0% target this year and next. Therefore, interest rates will remain at restrictive levels as long as necessary to achieve the inflation goal. The ECB raised its forecast for inflation, now expecting CPI to average 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026м.

As mentioned, the ECB's current decision was fully anticipated by the market, as predicted by all 82 economists surveyed by Reuters at the end of May. The more intriguing aspect is what will happen next. More than two-thirds of Reuters respondents (55 out of 82) believe that the ECB's Governing Council will cut the rate twice more this year – in September and December. This figure has increased compared to the April survey, where just over half of the economists made such a prediction.

A local triumph for the dollar bulls occurred on Friday, 7 June, when the US Department of Labour report was released. The number of new jobs in the non-farm sector (NFP) was 272K in May, compared to the expected 185K. This result was significantly higher than the revised April figure of 165K. The data also showed a more substantial than expected increase in the average hourly earnings, an inflationary indicator, which grew by 0.4%, double the previous value of 0.2% and one and a half times higher than the forecast of 0.3%. The only slight negative was the unemployment rate, which unexpectedly rose from 3.9% to 4.0%. However, overall, this data benefited the dollar, and the EUR/USD pair, having bounced off the upper boundary of the 3.5-week sideways channel at 1.0900, ended the five-day period at its lower boundary of 1.0800.

Regarding the analysts' forecast for the near future, as of the evening of 7 June, it is quite vague: 40% of experts voted for the pair's growth, and an equal number (40%) for its fall, with the remaining 20% maintaining neutrality. Technical analysis also provides no clear guidance. Among trend indicators on D1, 25% are green and 75% are red. Among oscillators, 25% are green, 15% neutral-grey, and 60% red, though a third of them signal the pair is oversold. The nearest support levels are 1.0785, then 1.0725-1.0740, 1.0665-1.0680, and 1.0600-1.0620. Resistance zones are at 1.0865-1.0895, then 1.0925-1.0940, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

The upcoming week also promises to be quite interesting. The key day will be Wednesday, 12 June. On this day, consumer inflation (CPI) data for Germany and the United States will be released, followed by the FOMC (Federal Open Market Committee) meeting of the US Fed. It is expected that the regulator will keep the key interest rate unchanged at 5.50%. Therefore, market participants will be more focused on the FOMC's Economic Projections Summary and the subsequent press conference by the Fed leadership. The next day, Thursday, 13 June, will see the release of US Producer Price Index (PPI) data and initial jobless claims numbers. At the end of the week, on Friday, 14 June, the Fed's Monetary Policy Report will be available for review.

USD/JPY: Finance Minister Responds to Questions

A week ago, we wrote that Japanese financial authorities had not confirmed whether they conducted intensive yen purchases on 29 April and 1 May to support its exchange rate. Bloomberg estimated that around ¥9.4 trillion ($60 billion) might have been spent on these currency interventions, setting a new monthly record for such financial operations. We questioned the long-term or even medium-term effectiveness of this expenditure.

It seems that Japan's Finance Minister, Shunichi Suzuki, read our review, as he hastened to provide answers to the questions posed. In his statement, he first confirmed that (quote): "the decline in Japan's foreign reserves at the end of May partially reflects currency interventions." This suggests that yen purchases indeed took place. Additionally, the minister noted, "the effectiveness of such interventions should be considered," indicating his doubts about their feasibility.

Suzuki refrained from commenting on the size of the intervention funds but mentioned that while there is no limit on funds for currency interventions, their use would be limited.

As previously mentioned, besides interventions (and the fear of them), another way to support the national currency is through tightening the monetary policy of the Bank of Japan (BoJ). Early last week, yen received support from rumours that the BoJ is considering reducing the volume of its quantitative easing (QE) programme. Such a decision could decrease demand for Japanese government bonds (JGBs), increase their yields (which inversely correlates with prices), and positively impact the yen's exchange rate. The Bank of Japan is expected to discuss reducing bond purchases at its meeting next Friday, 14 June.

On Tuesday, 4 June, BoJ Deputy Governor Ryozo Himino confirmed concerns that a weak yen could negatively impact the economy and cause inflation to rise. According to him, a low national currency rate increases the cost of imported goods and reduces consumption, as people delay purchases due to high prices. However, Ryozo Himino stated that the Bank of Japan would prefer inflation driven by wage growth, as this would lead to increased household spending and consumption.

The yen received another blow from the dollar after the publication of US labour market data on 7 June. The USD/JPY pair surged as wage growth in the US sharply contrasted with the 25th consecutive month of declining wages in Japan in April.

As the saying goes, hope dies last. Investors remain hopeful that the regulator will actively combat the yen's depreciation, creating long-term factors for USD/JPY to decline. For now, it ended the week at 156.74.

The median forecast of analysts for the near term is as follows: 75% voted for the pair's decline and yen strengthening ahead of the BoJ meeting, while the remaining 25% took a neutral stance. None favoured the pair's upward movement. Technical analysis, however, presents a different picture: 100% of trend indicators on D1 are green. Among oscillators, 35% are green, 55% neutral-grey, and only 10% red. The nearest support level is around 156.00-156.25, followed by zones and levels at 155.45, 154.50-154.70, 153.10-153.60, 151.85-152.35, 150.80-151.00, 149.70-150.00, 148.40, and 147.30-147.60, with 146.50 being the furthest. The closest resistance is in the zone of 157.05-157.15, then 157.70-158.00, 158.60, and 160.00-160.20.

Noteworthy events in the coming week include Monday, 10 June, when Japan's Q1 2024 GDP data will be released, and, of course, Friday, 14 June, when the Bank of Japan's Governing Council will make decisions on future monetary policy. However, like the Fed, the yen interest rate is likely to remain unchanged.

CRYPTOCURRENCIES: What Drives and Will Drive Bitcoin Upwards

The launch of spot bitcoin ETFs in January caused an explosive price increase for the leading cryptocurrency. On 12 March, inflows into these funds reached $1 billion, and by 13 March, BTC/USD set a new all-time high, rising to $73,743. Then came a lull, followed by a post-halving correction, and finally, growth resumed in May. Early last week, net inflows into BTC-ETFs amounted to $887 million, the second largest in these funds' history. As a result, BTC/USD broke the $70,000 level and recorded a local high at $71,922.

Young whales (holding over 1,000 BTC) demonstrated noticeable accumulation, adding $1 billion daily to their wallets. CryptoQuant's head, Ki Young Ju, notes that their current behaviour resembles 2020. At that time, consolidation around $10,000 lasted about six months, after which the price increased 2.5 times in three months. Key representatives of these young whales include major institutional investors from the US, who accounted for a third of all capital inflows into spot BTC-ETFs in Q1 (about $4 billion) from companies with over $100 million in assets under management.

Besides BTC-ETFs, the recent growth was significantly influenced by April's halving. The Hash Ribbons indicator is giving an "optimal signal" to buy digital gold in the coming weeks, indicating a resumption of the asset's rally, according to Capriole Investments founder Charles Edwards. The metric shows miner capitulation that began two weeks ago. This period occurs when the 30-day moving average of the hash rate falls below the 60-day rate.

According to Edwards, miner capitulation happens roughly once a year, typically due to operational halts, bankruptcies, takeovers, or, as in this case, halving. The halving of the block reward makes equipment unprofitable, leading to its shutdown and hash rate decline. The last miner capitulation was in September 2023, when bitcoin traded around $25,000.

In the event of a new growth impulse, Edwards predicts the next medium-term target will be $100,000. However, he warns that summer traditionally sees a lull in financial markets, so the upward impulse might be delayed.

Wall Street legend and Factor LLC head Peter Brandt highlights the "remarkable symmetry" of market cycles, with halving halving the weeks between the bottom and the peak. If Brandt's model is correct, BTC should reach a peak between $130,000-160,000 by September next year.

Venture investor Chamath Palihapitiya offers a much more optimistic forecast. Analysing bitcoin's post-halving dynamics, he notes the cryptocurrency achieved its greatest growth 12-18 months after the event. Palihapitiya predicts that if the growth trajectory after the third halving is repeated, bitcoin's price could reach $500,000 by October 2025. Using the average figures of the last two cycles, the target is $1.14 million.

For the coming weeks, analyst Rekt Capital believes digital gold will need to confidently overcome the $72,000-$73,000 resistance zone to enter a "parabolic growth phase." Popular cryptocurrency expert Ali Martinez forecasts BTC will likely test the $79,600 price range. AI PricePredictions suggests that bitcoin could not only firmly establish above the critical $70,000 mark but also continue growing, reaching $75,245 by the end of June. This prediction is based on technical analysis indicators like the Relative Strength Index (RSI), Bollinger Bands (BB), and Moving Average Convergence Divergence (MACD).

Two catalysts could drive the upcoming growth of the crypto market: the launch of spot exchange-traded funds based on Ethereum after SEC approval of S-1 applications, and the US presidential elections. According to Bloomberg exchange analyst James Seyffart, the SEC might approve the applications by mid-June, although it could take "weeks or months." JPMorgan experts believe the SEC's decision on ETH-ETFs was politically motivated ahead of the US presidential elections. These elections themselves are the second catalyst for a bull rally.

A recent Harris Poll survey, sponsored by BTC-ETF issuer Grayscale, found that geopolitical tensions and inflation are prompting more American voters to consider bitcoin. The survey, which included over 1,700 potential US voters, revealed that 77% believe presidential candidates should at least have some understanding of cryptocurrencies. Additionally, 47% plan to include cryptocurrencies in their investment portfolios, up from 40% last year. Notably, 9% of elderly voters reported increased interest in bitcoin and other crypto assets following BTC-ETF approval. According to NYDIG, the total cryptocurrency community in the US currently numbers over 46 million citizens, or 22% of the adult population.

Evaluating this situation, Wences Casares, Argentine entrepreneur and CEO of venture company Xapo, believes the US could be one of the first to adopt a dual currency system. In this case, the dollar would be used for transactions with everyday goods and services, while cryptocurrency would be a store of value.

At the time of writing, the evening of Friday, 7 June, BTC/USD trades at $69,220. The total crypto market capitalisation stands at $2.54 trillion ($2.53 trillion a week ago). The Crypto Fear & Greed Index rose from 73 to 77 points over the week, moving from the Greed zone to the Extreme Greed zone.

In conclusion, the forecast for the next potential candidate for a spot ETF launch in the US after bitcoin and Ethereum. Galaxy Digital CEO Mike Novogratz believes it will be Solana, which showed impressive results over the past year. At the end of 2023, SOL was around $21 but exceeded $200 by March 2024, showing nearly tenfold growth. Currently, SOL is around $172 and ranks fifth in market capitalisation. Given Solana's current position, Novogratz is confident this altcoin has a good chance of being included in the pool of spot ETFs. Recently, BKCM investment company CEO Brian Kelly expressed a similar view.