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EUR/USD is flat in the Wednesday session. Currently, the pair is trading at 1.1317, down 0.08% on the day. On the release front, there are no major eurozone or German events. In the U.S., well get a look at consumer inflation for May. CPI is expected to dip to 0.1%, while core CPI is projected to improve to 0.2%. On Thursday, Germany releases Final CPI and the eurozone posts industrial production. The U.S. will release unemployment claims.

The Federal Reserve shook up the currency markets last week, as the comments from Fed chair Jerome Powell and FOMC member James Bullard hinted at a rate cut later in the year. Since raising rates in December, the Fed has been neutral with regard to the direction of the next rate move, but rising trade tensions have raised fears of a slowdown in the U.S. economy. This has prompted the Fed to reconsider a rate cut later this year. The CME Group has projected a 66% likelihood for a rate cut at the July meeting, up sharply from a month ago, when the odds of a July cut were just 16%. Fed officials will be keeping a close eye on the May CPI numbers – if inflation remains at very low levels, as expected, there will be more pressure on the Fed to lower rates in order to boost economic activity and inflation.

The ECB is also in dovish mode, which is no surprise, given the economic slowdown which has gripped the eurozone. Germany, the locomotive of the bloc, is also grappling with weaker economic conditions. The manufacturing sectors in Germany and the eurozone continue to contract, as a weak global economy has led to reduced appetite for European exports. This has hurt key sectors such as the German auto industry. If the bitter U.S-China trade row continues, the slowdown in the eurozone could worsen.

WTI oil holds in red for third straight day and retests cracked key Fibo support at $51.61 (61.8% of $42.36/$66.58 ascend).

Fresh weakness retraces the largest part of $50.59/$54.79 corrective action, which was capped by falling 10SMA on Monday.

Technical studies send mixed signals on MA’s in full bearish configuration, Stochastic heading south, but oversold RSI and north-heading momentum, suggesting that bears may show hesitation on approach to key support at $50.59 (5 June low), but will remain fully in play while holding below falling 10SMA (currently at $53.26).

Fundamentals, on the other side, significantly changed focus from supply side (OPEC+ production cut, US sanctions on Venezuela and Iran) towards demand, as fears of global recession increase concerns about drop in global demand for crude oil.

This may further pressure oil price, which holds near pivotal supports at $50.59/00 (5 June low / psychological support), loss of which would spark fresh bearish acceleration.

Strong rise in crude stocks (API report on Tuesday showed build of 4.8 mln bls vs 3.5 mln bls build previous week) and potential surprise on today’s EIA report (0.4 mln bls draw f/c vs 6.7 mln bls build previous week) would add to negative sentiment.

Res: 52.69, 53.26, 54.02, 54.67
Sup: 51.46, 51.23, 50.59, 50.00

The Australian dollar falls further in European session on Wednesday after Monday's strong fall consolidated within narrow range on Tuesday.

Fresh weakness probes again below 30SMA (0.6948), with firm break to threaten test of key supports at 0.6931/24 (20SMA (Fibo 61.8% of 0.6864/0.7022).

Monday's long bearish candle continues to weigh, along with strong US/China rhetoric, offsetting positive impact from weaker US dollar.

Weakening daily momentum adds to negative tone, which needs close below 20SMA for confirmation.

Broken 10SMA caps today's action and marks pivotal barrier at 0.6962, break of which would ease downside pressure.

Res: 0.6962, 0.6985, 0.7000, 0.7022
Sup: 0.6943, 0.6931, 0.6924, 0.6900

Yesterday, the EUR/USD currency pair tried to surpass the resistance level formed by the monthly R2 at 1.1338. During today's morning, the pair was still testing the given resistance.

Note, that the exchange rate is supported by the 55– and 100-hour moving averages, currently located at 1.1319 and 1.1304 respectively. Thus, the rate could surpass the given resistance and reach the 1.1360 level.

If the given resistance level holds, it is expected, that the pair could continue to trade sideways. Also, it is unlikely, that the rate could drop lower than the weekly PP at the 1.1281 mark.

On Tuesday, the GBP/USD exchange rate extended gains and reached the psychological level at the 1.2730 mark. During Wednesday's morning, the rate was testing the upper boundary of the short-term descending channel.

From a theoretical point of view, it is expected, that a reversal south should occur within the following trading hours. In this case, the currency pair could target the support level formed by the 55– and 100-hour SMAs, as well the weekly PP at 1.2705.

However, if the given channel does not hold, it is likely, that a breakout north occurs soon. Note, that the pair has to surpass the resistance level located at the 1.2760 mark.

During the previous trading session, the USD/JPY currency pair reversed from the upper boundary of the short-term ascending channel at 108.75. During today's morning, the pair was testing the support level—the weekly PP at 108.22.

If the given support level holds, it is expected, that the exchange rate could reverse north. However, note, that the rate hs to surpass the resistance cluster formed by the 55-, 100– and 200-hour SMAs, as well the Fibo 38.20% and the weekly R1 in the 108.36/108.61 range.

If the given support does not hold, it is likely, that a breakout south from the channel could occur soon. A possible downside target is the psychological level at the 108.00 mark.

Yesterday, the XAU/USD exchange rate reversed north from the lower boundary of the short-term descending channel at 1,321.57. During Wednesday's morning, the rate was testing the upper channel line at 1,337.87.

From a theoretical perspective, it is likely, that a reversal south could occur in the nearest future. However, note, that gold has to surpass the support cluster formed by the 55– and 100–hour SMAs, as well the monthly R2 in the 1,328.49/1,333.67 range.

However, if the given channel does not hold, the price for gold could continue to increase. In this case, the exchange rate could target the psychological level the at 1,345.00 mark.

The US dollar has been consolidating during yesterday's and today's trading sessions. The US dollar index closed yesterday with a slight decrease (-0.07%). At night, US President Donald Trump criticized the Fed again, having written on Twitter that the euro and other currencies were highly depreciated against the dollar because the Fed put the US at a disadvantage. "The Fed interest rate way too high, added to ridiculous quantitative tightening. They don't have a clue!"

Traders expect that Fed is likely to reduce the interest rate in the near future due to slowing inflation and rising trade tensions. According to the CME Fed Watch Tool, more than 65% of financial market participants believe that the regulator can reduce the range of key interest rate by 25 basis points to 2.00%-2.25% at a meeting on July 31.

The trade conflict between the US and China is still in the focus of attention. On Tuesday, the Ministry of Foreign Affairs of the People's Republic of China announced that China would take retaliatory measures if the United States continued to escalate trade tensions. It should be recalled that Donald Trump recently announced that new tariffs on Chinese goods were ready to come into force unless the parties did not make a deal at the G20 summit at the end of the month. US President has repeatedly said that he is going to meet with Chinese President Xi Jinping at a summit in Japan, but China does not yet give official statements about the meeting.

The "black gold" prices are falling. At the moment, futures for the WTI crude oil are testing the mark of $52.00 per barrel. At 21:00 (GMT+3:00) a report on crude oil inventories will be published in the US.

Market Indicators

• Yesterday, there was a variety of trends in the US stock market: #SPY (-0.02%), #DIA (-0.04%), #QQQ (+0.14%).
• The 10-year US government bonds yield has been declining. Currently, the indicator is at the level of 2.11-2.12%.

The news feed on 2019.06.12:

• Report on inflation in the US at 15:30 (GMT+3:00).

EUR/USD formed support near 1.1215 and climbed steadily in the past few days. USD/CHF is currently recovering from the 0.9859 swing low and it could correct further higher.

Important Takeaways for EUR/USD and USD/CHF

• The Euro remained in a positive zone above the 1.1200 and 1.1220 support levels against the US Dollar.
• There was a break above a couple of bullish patterns near 1.1255 and 1.1310 on the hourly chart of EUR/USD.
• USD/CHF declined heavily and it recently tested the 0.9860 support area.
• The pair broke a major bearish trend line with resistance at 0.9905 on the hourly chart.

EUR/USD Technical Analysis

The Euro started a strong upward move from the 1.1150 swing low against the US Dollar. The EUR/USD pair climbed above the 1.1180 and 1.1200 resistance levels. The pair even surged above the 1.1250 resistance area.

The recent gains were positive, with a close above the 1.1300 level and the 50 hourly simple moving average. During the rise, there was a break above a couple of bullish patterns near 1.1255 and 1.1310 on the hourly chart of EUR/USD.

The pair even climbed above 1.1320 and traded as high as 1.1347 on FXOpen and the pair recently started a downside correction. It broke the 1.1320 level and the 50% Fib retracement level of the last wave from the 1.1251 low to 1.1347 high.

However, the 1.1300 support area prevented further declines. The 61.8% Fib retracement level of the last wave from the 1.1251 low to 1.1347 high also acted as a resistance.

The current price action is positive, suggesting a strong rise above 1.1350. On the downside, the main supports are near 1.1300 and 1.1280.

If there is a close below 1.1280, EUR/USD could move into a bearish zone. The next main support is near the 1.1250 level. On the upside, a break above 1.1350 may push the pair towards 1.1400.

USD/CHF Technical Analysis

The US Dollar remained in a bearish zone after it settled below the 1.0000 support area against the Swiss franc. The USD/CHF pair broke the 0.9980 and 0.9950 support levels to move into a bearish zone.

The pair even broke the 0.9900 support and the 50 hourly simple moving average. A swing low was formed at 0.9859 and the pair recently corrected higher.

There was a break above the 0.9900 resistance and the 50% Fib retracement level of the last decline from the 0.9949 high to 0.9859 swing low. Moreover, there was a break above 0.9910 and the 50 hourly simple moving average.

There was also a break above a major bearish trend line with resistance at 0.9905 on the hourly chart. It opened the doors for more gains above 0.9910 and the 61.8% Fib retracement level of the last decline from the 0.9949 high to 0.9859 swing low.

The pair is currently trading with a positive bias above the 0.9900 level and the 50 hourly SMA. Therefore, there are chances of more gains above the 0.9920 and 0.9940 levels.

The next main resistances are near 0.9980 and 1.0000. Conversely, if there is no break above 0.9940, USD/CHF might start a fresh decline below the 0.9900 support area in the near term.

Six day rally comes to an end

All good runs must come to an end and while this one is hardly one for the history books, it was undoubtedly welcome given the worry that was spreading early last week.

US equity markets gave up early gains to just about end in negative territory on Tuesday, weighing on Asian stocks overnight and European futures as we head into the open. It brought a decent run to an end, one that started suddenly as investors became more convinced that the Fed would cut interest rates sufficiently and ease slowdown fears.

It seems we’re dealing with a very emotional investor at the moment, the way we’re so suddenly swinging between such optimism and pessimism on the basis of such minor actions. A lot seems to hang on how many rate cuts we’ll see from the Fed and to be honest, I think market expectations are too high so we may be setting ourselves up for disappointment.

The rebound may be providing some near-term comfort as we continue to reassure ourselves that everything is ok and the Fed will come to the rescue but I’m not sure that’s healthy, accurate or warrants the kind of bounce we’ve seen over the last week. Then again, a successful Trump/Xi meeting later this month may negate the need for such a significant u-turn from the central bank.