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Oil prices trade deeply lower today as the impact of Russian supply recovery was more than enough to offset Saudi Arabia production cut. Indeed, Goldman Sachs has lowered its WTI forecast for December from 89 to 81 (above current level at around 68 though).

Technically speaking, WTI crude oil was clearly rejected by falling 55 D EMA repeatedly, keeping outlook bearish. Immediate focus is now on 67.05 support. Firm break there could prompt downside acceleration through 63.67 low to 61.8% projection of 83.46 to 63.67 from 74.38 at 62.14. Also,l outlook will stay bearish as long as 74.38 resistance holds, in case of another recovery.

Market picture

According to CoinMarketCap, the total capitalisation of the crypto market fell 7.6% over the week to $1.06 trillion, close to lows not seen since almost mid-March. Adding to the market’s nervousness was a sharp sell-off in altcoins in light of the SEC’s ongoing crusade against the crypto business.

The biggest demand in such a market is for USDT, as issuer Tether decided to print an additional 1 billion stablecoins.

Bitcoin once again briefly acted as a safe haven, temporarily enjoying an influx of buyers as one of the most liquid assets in the sector. At the same time, the technical picture remains bearish. Bitcoin closed the week below its 200-week moving average, which last time out resulted in a 20-week downtrend. On the daily timeframe, there is little to cheer about as the decline remains within the bearish corridor. However, the final victory of the bears can only be seen in the case of a fix below $25,000, from which BTCUSD bounced over the weekend.

Ethereum lost 6.5% to $1750. Other leading altcoins from the top 10 changed from 3% (XRP) to -28% (Solana) and 22% (BNB).

News background

The US authority’s crackdown on the Binance and Coinbase exchanges has hit the entire crypto industry. Altcoins, which the SEC classifies as securities, have been particularly hard hit.

Former SEC official John Reed Stark believes that owners of cryptocurrency assets should abandon their investments because the storm in the US crypto industry has only just begun. Crypto exchanges have no reason to comply with laws and regulations prohibiting manipulation, insider trading and other fraudulent activities. A former SEC official says they operate without oversight and offer poor customer protection and risk identification.

Binance is prepared to spend $1 billion to fight the SEC, Bitboy Crypto’s YouTube blogger reported, citing the company’s lawyer.

According to Bloomberg strategist Mike McGlone, the likelihood of a negative stock market recession in the US and a gold hoarding trend coupled with Fed policy tightening could harm crypto investor sentiment. As a result of the pressure, the riskiest assets could be pushed out of investment portfolios.

During a conference call, Ethereum developers approved details of a future update to the network, called Dencun (Cancun-Deneb), expected later this year.

Ethereum co-founder Vitalik Buterin published a roadmap outlining critical areas for the sustainable development of the world’s second-largest cryptocurrency.

• There are no UK of US tier-1 releases on Monday
• On Tuesday, UK releases jobs data and BoE’s Bailey testifies before House of Lords committee
• US releases inflation data on Tuesday, with Fed rate announcement on Wednesday

The British pound is trading quietly on Monday at 1.2566, up 0.11%. The pound took advantage of a broadly weak US dollar last week, gaining 1%.

There are no tier-1 releases out of the US or the UK, so it should be a calm day for the pound. Tuesday could be the polar opposite, with key releases on both sides of the pond. The UK releases May employment data and Bank of England Governor Bailey testifies before a House of Lords Committee. In the US, the markets are anxiously awaiting Tuesday’s inflation report, which comes just one day before the Fed rate announcement.

UK jobs numbers could point in different directions

The UK labour market has proven resilient to the BoE’s aggressive tightening cycle. Perhaps too much of a good thing, as inflation remains sticky, although it did fall to 8.7% in May, down from 10.1% in April. The good news for the BoE is that the labour market appears to be cooling, and that should help reduce inflation.

The markets are expecting mixed numbers in May. The unemployment rate is expected to rise from 3.9% to 4.0% and employment change is projected to fall from 182,000 to 150,000. At the same time, wage growth including bonuses is expected to rise from 5.8% to 6.1% and unemployment claims are expected to drop. If the data turns out to be a mixed bag, it will be interesting to see Governor Bailey’s take when he testifies before the House of Lords committee.

Inflation is expected to continue to ease in May. Headline inflation is expected to fall from 4.9% to 4.1%, and the core rate is projected to ease from 5.5% to 5.3%. Market rate pricing is swinging, with the probability of a pause rising from 70% on Friday to 77% today, according to the CME’s FedWatch. A rate hike remains unlikely, barring a sharp spike in inflation.

If the Fed stays on the sidelines, the markets will be looking for clues as to what happens next. The Fed may decide to skip raising rates on Wednesday but leave the door wide open for further rate hikes, as early as in July. There seems to be some support amongst Fed members for more tightening, and a pause tomorrow may turn out to be a short skip ahead of more rate increases.

GBP/USD Technical

• There is resistance at 1.2645 and 1.2734
• 1.2513 and 1.2436 are providing support

• AUD/USD continues to rally
• Australia to release business, consumer confidence on Tuesday
• US to release inflation on Tuesday, FOMC rate announcement on Wednesday

The Australian dollar continues to rally and is higher on Monday, trading at 0.6766, up 0.33% on the day. The Aussie is coming off an excellent week with gains of 2.1%. Will the rally continue?

Australia kicks off the week with consumer and business confidence numbers early Tuesday. Consumers continue to struggle with the cost-of-living crisis, while businesses are grappling with uncertain economic conditions and high interest rates. Westpac Consumer Confidence plunged 7.9% in June while NAB Business Confidence climbed up 1 point to zero in May. An improvement in the numbers on Tuesday could give the Aussie a boost.

In the US, the week ended on a quiet note, with no releases on Friday. There is plenty of action on the economic calendar this week, with the inflation report on Tuesday and the FOMC rate announcement the following day.

Inflation is expected to continue to ease in May. Headline inflation is expected to fall from 4.9% to 4.1%, and the core rate is projected to ease from 5.5% to 5.3%. Market rate pricing has moved sharply, with the probability of a pause rising sharply from 70% on Friday to 80% today. The inflation release could be a game changer, coming just one day before the Fed meeting. If inflation falls, it could cement a pause. However, if inflation moves higher, all bets are off and we could see a rate hike.

If the Fed opts not to raise rates, as expected, the markets will be scrutinizing the rate statement and Jerome Powell’s press conference for insights as to whether the non-move is a skip, in which the Fed would take a short breather and resume tightening in July. We haven’t heard from Fed members over the past 10 days to the blackout period, but prior to that, several Fed members signalled that even if the Fed paused in June, the door would remain open to further tightening.

AUD/USD Technical

• There is resistance at 0.6804 and 0.6864
• 0.6729 and 0.6593 are providing support

Australian dollar continues to trend higher vs its US counterpart and hit five-week high and hit five-week high in European trading on Monday.

The Aussie remains underpinned by the latest RBA action, after the central bank surprised by 25 basis points rate hike and signals of further tightening, as inflation remains elevated despite strong measures.

On the other hand, the US Federal Reserve meets this week and is widely expected to keep interest rate on hold for the first time in over one year.

Near-term uptrend from 0.6458 (2023 low, posted on May 31) remains intact on daily chart, as fresh bullish signal was generated on Friday’s close above 0.6725/37 pivots (Fibo 38.2% of 0.0.7157/0.6458 / 100DMA), the last obstacle en-route towards key resistances at 0.6807/18 (50% retracement of 0.71570.6458 / May 10 high).

Firm break here would signal bullish continuation and expose targets at 0.6890/0.6915 (Fibo 61.8% / weekly cloud top).

Caution on strongly overbought stochastic on daily chart which signals that bulls may face headwinds in coming sessions.

Broken 100DMA / Fibo 38.2% (0.6737/25) reverted to solid supports which should keep the downside protected.

Res: 0.6818; 0.6864; 0.6890; 0.6915.
Sup: 0.6725; 0.6689; 0.6666; 0.6635.

Daily Pivots: (S1) 1.0732; (P) 1.0760; (R1) 1.0776; More...

Intraday bias in EUR/USD remains on the upside as rebound from 1.0634 short term bottom is extending. Sustained trading above 55 EMA (now at 1.0812) will pave the way back to retest 1.1094 high. Nevertheless, break of 1.0700 minor support should resume the fall from 1.1094 through 1.0634 support.

In the bigger picture, as long as 1.0515 support holds, rise from 0.9534 (2022 low) would still extend higher. Sustained break of 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high).

Daily Pivots: (S1) 138.85; (P) 139.29; (R1) 139.81; More...

Intraday bias in USD/JPY remains neutral as consolidation from 140.90 is extending. Further rally is expected as long as 138.22 minor support holds. On the upside, break of 140.90 will resume larger rise from 127.20 to 142.48 fibonacci level. However, considering bearish divergence condition in 4 hour MACD, break of 138.22 will confirm short term topping, and turn bias back to the downside for 55 D EMA (now at 136.77).

In the bigger picture, rise from 127.20 is seen as the second leg of the corrective pattern from 151.93 high. Stronger rally would be seen to 61.8% retracement of 151.93 to 127.20 at 136.34. Sustained break there will pave the way back to retest 151.93. On the downside, however, break of 133.73 support will argue that the pattern could have started the third leg through 127.20 low.

Daily Pivots: (S1) 1.2547; (P) 1.2568; (R1) 1.2602; More...

Intraday bias in GBP/USD remains on the upside for retesting 1.2678 high. Firm break there will resume larger up trend to 1.2759 fibonacci level next. On the downside, however, break of 1.2532 minor support will turn bias back to the downside, to extend the pattern from 1.2678 with another falling leg back towards 1.2306 support instead.

In the bigger picture, as long as 1.1801 support holds, rise from 1.0351 medium term bottom (2022 low) is expected to extend further. Sustained break of 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759 will add to the case of long term bullish trend reversal. However, firm break of 1.1801 will indicate rejection by 1.2759, and bring deeper decline, even as a correction.

Daily Pivots: (S1) 0.8998; (P) 0.9019; (R1) 0.9052; More...

Intraday bias in USD/CHF is neutral for the moment. But risk stays on the downside as long as 0.9146 resistance holds. Corrective recovery from 0.8818 has probably completed at 0.9146 already. Deeper decline could be seen to 0.8818 support and possibly below. But strong support is still needed at around 0.8756 long term support to bring another rebound.

In the bigger picture, fall from 1.1046 (2022 high) is seen as a leg in the long term range pattern from 1.0342 (2016 high), which might have completed at 0.8818 already, just ahead of 0.8756 long term support. Sustained trading above 0.9058 support turned resistance should confirm medium term bottoming. Further break of 0.9439 resistance will confirm bullish trend reversal.

Daily Pivots: (S1) 0.6708; (P) 0.6729; (R1) 0.6766; More...

Intraday bias in AUD/USD remains on the upside for 0.6817 structural resistance. Decisive break there will carry larger bullish implications. On the downside, however, break of 0.6640 minor support will turn bias back to the downside for retesting 0.6457 low again.

In the bigger picture, fall from 0.7156 is still in favor to continue as long as 0.6817 resistance holds. Prior rejection by 55 W EMA (now at 0.6801) keeps medium term outlook bearish. Break of 0.6457 will target 0.6169 key support (2022 low). Nevertheless, firm break of 0.6817 will indicate that fall from 0.7156 has completed in a three-wave corrective structure. Rise from 0.6169 would then be ready to resume through 0.7156.