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EURUSD is edging lower today as the short-term uptrend that started in early June appears to have halted. The September 28, 2022 upward sloping trendline has acted as strong resistance, pushing EURUSD towards the 50-day simple moving average at 1.0874. The current correction could also be a product of the bearish divergence that has formed between the stochastic oscillator and the recent EURUSD price action.

In addition, the remaining momentum indicators appear to be more balanced at this juncture. The Average Directional Movement Index (ADX) is rapidly approaching its 25-threshold and thus signaling a quickly evaporating bullish trend. Similarly, the RSI is a tad above its 50-midpoint and the stochastic is trying to break below its overbought territory. Such a move would clearly open the door to a sizeable correction and challenge the recent May 31, 2023 low of 1.0634.

Should the bears want to capitalize on the various bearish signals, they would have to first clear the 1.0874 level and test the support set by the 1.0711-1.0809 range that is defined by the December 15, 2022 high, the 100-day SMA and the 23.6% Fibonacci retracement of the September 28, 2022 – April 26, 2023 uptrend respectively. Even lower, they will have the chance of making a lower low in their attempt to push EURUSD towards the busier 1.0532-1.0571 range.

On the flip side, the bulls are keen on stopping the current correction by keeping EURUSD above 1.0874. They would then try to retest the 1.1032-1.1095 range that is populated by the February 2, 2023 and April 26, 2023 highs respectively. If successful, they could then record a new 2023 high and potentially set their eyes on the March 31, 2022 high at 1.1184.

To conclude, EURUSD bears are trying to take advantage of the formed bearish divergence and commence a significant downleg, eventually achieving a push below the recent 1.0634 low.

• Tokyo sends warning over yen’s deprecation
• Yen has slumped over 7% against US dollar since April

USD/JPY is in positive territory on Monday. In the European session, the yen is trading at 143.15, down 0.36%.

Tokyo issues warning over slumping yen

The Japanese yen continues to lose ground and the Japanese government is not amused. The yen slipped 1.26% last week and fell as low as 143.87 on Friday, its lowest level since November 7th. Since the start of April, the yen has plunged over 7% against the dollar.

On Monday, Japan’s top currency diplomat, Masota Kanda warned that the yen’s weakening was “rapid and one-sided”. Kanda said he would not rule out any options, including currency intervention. The markets have become accustomed to verbal intervention when the yen drops sharply and these verbal warnings don’t have much effect.

The concern is that the government could intervene and purchase yen, as it did in September and October 2022. At that time, the yen was below 151, but Tokyo could decide that it doesn’t want to wait for the yen to fall that low before it intervenes.

The Bank of Japan maintained its ultra-loose policy at last week’s meeting, and the divergence between the BoJ and other major central banks keeps hammering at the yen. The US/Japan rate differential has been widening as the Fed has tightened aggressively and is expected to raise rates further in the second half of the year.

The BoJ could provide some fast relief to the yen if it raised interest rates, but that doesn’t seem likely anytime soon. A more likely scenario is for the central bank to tweak its yield currency curve control, which sparked a yen rally when the BoJ widened its target band for interest rates. Governor Ueda, who took over in April, has sounded more receptive to tightening policy than his predecessor but so far he has toed the line and maintained a dovish stance.

USD/JPY Technical

• USD/JPY is testing support at 143.45. The next support level is 142.35
• There is resistance at 144.65 and 145.59

On the hourly chart of Gold on FXOpen, the price struggled to clear the $1,938 resistance against the US Dollar. The price is now consolidating above the 50-hour simple moving average.

On the upside, the price seems to be facing resistance near a connecting bearish trend line at $1,928. The next major resistance is near the $1,938 level (a multi-touch zone).

A clear move above the $1,938 resistance could send the price toward the $1,955 resistance. Any more gains might send the price toward $1,965.

On the downside, immediate support is near the $1,915 level. The next major support is near the $1,910 level, below which the price might decline toward the $1,900 support level in the near term. Any more losses may perhaps open the doors for a move toward the $1,888 zone.

US 500 stock index (cash) is extending its slide from the June 16 high of 4,446.77, but the negative momentum appears to be weakening somewhat as the price approaches the 20-day simple moving average (SMA).

Technical indicators continue to point to a bearish bias in the near term but there are some early signs that the selling pressure is subsiding. The stochastic oscillator is headed towards the oversold territory, while the RSI’s decline is slowing even before reaching the 50 neutral mark.

Should the negative pressures ease off further, the 20-day SMA, which is being bolstered by the 61.8% Fibonacci retracement of the January-October 2022 downtrend in the 4,310 region, stands a good chance of halting the slide. A rebound off the 20-day SMA would switch the attention back to the 14-month high of 4,446.77.

However, this remains an extremely challenging area as there are several hurdles within this vicinity - the 4,500 level lies slightly higher, followed by the 78.6% Fibonacci of 4,533.37. Further up, the March 2022 peak of 4,637.36 poses one final test before the all-time high of 4,817.51 comes into scope.

But in the event that the bears prevail and the price breaches the 61.8% Fibonacci, the index would then be eying the 50-day SMA, currently at 4,213.49, and the 50% Fibonacci of 4,153.64. A drop below these key levels would risk shifting the bullish medium-term outlook back to neutral, which would be confirmed if the downside correction reaches the 200-day SMA just below the 4,000 handle.

To conclude, US 500 is still in selloff mode but the impending support at the 20-day SMA could help turn things around for the bulls. On the other hand, breaching it would endanger the positive outlook in the medium term.

Daily Pivots: (S1) 181.70; (P) 182.33; (R1) 183.39; More...

Intraday bias in GBP/JPY stays on the upside at this point. Current up trend is expected to target 138.2% projection of 148.93 to 172.11 from 155.33 at 187.36 next. On the downside, however, break of 179.90 support will confirm short term topping, and turn bias back to the downside for deeper pull back.

In the bigger picture, up trend from 123.94 (2020 low) is extending. Next target is 195.86 (2015 high). For now, medium term outlook will remain bullish as long as 172.11 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 155.49; (P) 156.20; (R1) 157.33; More....

Intraday bias in EUR/JPY remains neutral as consolidation from 156.92 is extending. Further rally would remain in favor as long as 154.30 minor support holds. Above 156.92 will resume larger up trend to 100% projection of 139.05 to 151.60 from 146.12 at 158.67. On the downside, break of 154.03 will turn bias back to the downside for deeper pull back.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 100% projection of 124.37 to 148.38 from 138.81 at 162.82. For now, medium term outlook will remain bullish as long as 148.38 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.8533; (P) 0.8570; (R1) 0.8605; More...

Intraday bias in EUR/GBP stays neutral and outlook remains bearish with 0.8635 resistance intact. Break of 0.8517 will resume the fall from 0.8977 to 161.8% projection of 0.8977 to 0.8717 from 0.8874 at 0.8453. Nevertheless, decisive break of 0.8635 will confirm short term bottoming, and bring stronger rebound to 55 D EMA (now at 0.8661) and above.

In the bigger picture, the down trend from 0.9267 (2022 high) is still in progress. It's seen as part of the long term range pattern from 0.9499 (2020 high). Deeper fall would be seen towards 0.8201 (2022 low). But strong support should be seen from there to bring reversal. This will now remain the favored case as long as 0.8717 support turned resistance holds.

Daily Pivots: (S1) 1.6222; (P) 1.6280; (R1) 1.6370; More...

Outlook in EUR/AUD is unchanged. Corrective fall from 1.6785 should have completed with three waves down to 1.5846. Intraday bias stays on the upside for 1.6513 resistance. Firm break there will confirm this case and target 1.6785 high next. On the downside, though, break of 1.6187 minor support will mix up the outlook and turn intraday bias neutral first.

In the bigger picture, with 38.2% retracement of 1.4281 to 1.6785 at 1.5828 intact, rally from 1.4281 is still in progress. Firm break of 1.6785 will confirm rally resumption. Rejection by 1.6785 will extend the corrective pattern with another fall leg. But outlook will stay bullish as long as 1.5828 holds.

Daily Pivots: (S1) 0.9743; (P) 0.9779; (R1) 0.9808; More...

Intraday bias in EUR/CHF stays on the downside at this point. Corrective rebound from 0.9670 could have completed at 0.9840 already. Deeper fall would be seen to retest 0.9670 low. Sustained break there will resume the whole fall from 1.0095. Nevertheless, break of 0.9840 will resume the rebound to 0.9878 resistance.

In the bigger picture, medium term outlook is staying bearish as the pair is capped below falling 55 W EMA (now at 0.9918). Down trend form 1.2004 (2018 high) is in favor to extend through 0.9407 at a later stage. Nevertheless, decisive break of 38.2% retracement of 1.1149 to 0.9407 will raise the chance of bullish trend reversal.

EURUSD is consolidating within a narrow range in early Monday trading, following 0.85% drop last Thu/Fri, on pullback from new multi-week high at 1.1012 (June 22).

Near-term action remains weighed by a bull-trap above 1.0983 Fibo barrier and strong rejection above psychological 1.10 resistance, with repeated close below 10DMA / daily cloud top (1.0907/05) seen as minimum requirement to keep fresh bears in play.

Close below cracked pivotal Fibo support at 1.0868 (38.2% of 1.0635/1.1012) is needed to confirm signal and open way for deeper pullback towards pivotal supports at 1.0823/05 (Fibo 50% / 20DMA / daily cloud base).

Conversely, returning and closing above 10DMA / cloud top, would ease downside pressure on formation of a bear-trap under 1.0868 Fibo support and add to scenario of healthy correction preceding fresh attack at 1.10 zone.

Markets did not show any significant reaction on turmoil in Russia over the weekend, though the Euro was pressured by fresh drop in German business morale in June.

Res: 1.0905; 1.0923; 1.0958; 1.1000.
Sup: 1.0868; 1.0844; 1.0820; 1.0805.