Sample Category Title

The US dollar is moving in different directions against the basket of major currencies. The US currency is still under pressure due to investors' concern over the escalation of the trade and technological conflict between the US and China. The greenback also weakened slightly against the Japanese yen since US President Donald Trump is putting pressure on Japan to reduce its positive trade balance with the United States. At the moment, financial market participants expect additional drivers. The dollar index (#DX) has the potential for further correction.

The euro is stable after the Pro-EU parties took two-thirds of the seats in the elections to the European Parliament. The election results disappointed anti-immigration and anti-European politicians, led by Marine Le Pen and Italian Deputy Prime Minister Matteo Salvini, who oppose the close integration of EU countries. The euro is tending to recover after a continuous decline.

UK Foreign Secretary Jeremy Hunt said no-deal Brexit would be “political suicide.” He also added that he would require more time to conclude a new agreement on Brexit if he replaced Prime Minister Theresa May.

The "black gold" prices have been growing after the collapse last week. At the moment, futures for the WTI crude oil are testing the mark of $59.00 per barrel.

Market Indicators

• Yesterday, the US financial marketplaces were closed due to the holiday.
• The 10-year US government bonds yield is declining. Currently, the indicator is at the level of 2.29-2.30%.

The news feed on 2019.05.28:

• CB consumer confidence index in the US at 17:00 (GMT+3:00).

Eurozone Economic Sentiment rose to 105.1 in May, up from 103.9 and beat expectation of 103.9. The improvement of euro-area sentiment resulted from higher confidence in industry and, to a lesser extent, in services and among consumers, while confidence remained virtually flat in retail trade and cooled down significantly in construction.

Amongst the largest euro-area economies, the ESI increased sharply in France (+4.0), markedly also in Italy (+1.7) and Spain (+1.3) and mildly in Germany (+0.4). Sentiment eased only in the Netherlands (-1.3).

Industrial Confidence rose to -2.9, up from -4.3 and beat expectation of -4.2. Services Confidence rose to 12.2, up from 11.8 and beat expectation of 11.0. Consumer Confidence was finalized at -6.5.

For EU28, ESI was muted, up 0.2 to 103.8 only. That was mostly due to a strong deterioration in the largest non-euro area EU economy, the UK (-4.8).

Also released, Business Climate dropped -0.12 to 0.30, below expectation of 0.40. Managers' views on the past production, as well as export order books deteriorated sharply, as did, to a lesser extent, their assessments of overall order books, while the production expectations and appraisals of the stocks of finished products improved.

EUR/USD

Current level - 1.1182

The support area around 1.1170 should provide a base for another upswing, towards 1.1260.

USD/JPY

Current level - 109.49

Still neutral and while 109.00 support holds, trading will remain in range mode.

GBP/USD

Current level - 1.2668

Current slide after 1.2750 peak should be considered corrective, preceding another advance towards 1.2810.

If you are not ready then get ready, because the bitcoin price is about the blast past the level of $10K, recovering half of its losses from its all time high, a real embarrassing moment for those who said that the currency will never recover from its losses. Well, it is the best performing asset of 2019 and the YTD gains are standing at 140 percent and it has gone up by 70 percent only during the month of May. This is what Bitcoin is all about, never doubt the resilience of the currency and the support it has among the community.

Remember, I have said this before as well, the more it gets beaten down, the stronger the resilience it builds.

Technically speaking, I think Bitcoin price is likely to blast through level of 10K this week or by next week, if the momentum continues at this pace. The price is trading well above the important moving averages, 50, 100 and 200-day simple moving averages and the most important among all of them is the 242-day moving average.

Check the resilience of this moving average on a daily time frame and everything will become crystal clear. I strongly think that as long the price stays above this moving average, this bull run would continue.

The next important price levels are: the resistance of 10K followed by 15K level. It is highly likely that the price may break through the 10K mark and reach $12K or $13K and then start to retrace back to its support of $8K, before the momentum tries again to reach the level of 15K again.

The Fixed income market is also under the spot light today, the Greek government bond prices roared today on the back of the snap election news. Greece, which was once on unstable footing, it has seen its bond yield dropping to a level not seen going back all the way to year 2000. The country benchmark 10-year bond yield plunged by 33 basis point and the stock market is in motion to record some strong gains.

The current government has done a good job (in a relative perspective), the bond yields have dropped substantially from their record high, the country has also experienced growth and it has exited from its bailout programs.

The current drop in the bond yield is because Alexis Tsipras, the country’s prime minister decided to call for a general election because of Syriza party’s weak position in the European elections. The elections are likely to take place next month or the month after and the opinion polls suggest that a business friendly party, New Democracy is likely to gain lead. If this happens, the stock market condition is likely to improve further.

European markets are on the front foot today, they are kick starting the week on a positive note. Investors are feeling comfortable by placing their bets in riskier assets after the results of the European Elections as Pro-EU parties have taken the lead. The European election results did show that nationalism, initially architecture by Trump, is on the rise but it is far less than many have feared and this triggered the feeling of relief.

The Australian dollar was slightly bid in Asia on Tuesday, but quick fall in Europe pressures Monday’s low at 0.6913 (also broken Fibo 23.6% of 0.7068/0.6864).

Recovery from 0.6864 base (lows of 17/23 May) showed initial signs of stall on Monday’s upside rejection on approach to key barriers at 0.6942/45 (double-Fibo barrier / falling 20SMA), but slight bullish bias is expected to stay alive above pivotal supports at 0.6913 and 0.6900 (10SMA / hourly cloud base).

North-heading momentum, formation of 5/10SMA’s and thick hourly cloud underpin the action, but prevailing trend is bearish and sentiment soured on expectations of interest rate cut in RBA’s next week policy meeting.

Sustained break above 0.6942/45 pivots is needed to signal further recovery, neutral near-term mode can be expected while the price action holds between 0.6900/45 range, while break below 0.6900 handle will be bearish.

Res: 0.6930, 0.6945, 0.6966, 0.6990
Sup: 0.6913, 0.6901, 0.6864, 0.6845

The Euro extends lower and cracks pivotal support at 1.1175 (Fibo 38.2% of 1.1107/1.1215/ 10SMA) after recovery rally from 1.1107 low stalled, following repeated failure to clear 1.1200 barrier.

Initial bearish signal was generated on Monday’s close below falling 30SMA, with sustained break of 1.1175 pivot needed to signal lower top at 1.1215 (Mon high) and risk fresh acceleration lower.

Daily momentum is breaking into negative territory and stochastic is reversing from overbought zone, with stronger dollar in early Tuesday’s trading, adding pressure on Euro.

Caution while the price holds above 10SMA as this may weaker bearish near-term bias, however, any upside attempts would require confirmation on sustained break above 30SMA and Monday’s high (1.1215).

Res: 1.1195, 1.1215, 1.1226, 1.1234
Sup: 1.1175, 1.1161, 1.1148, 1.1132

The AUD/USD is getting close to a resistance cluster 0.6930-46. The price is still consolidating but we might see a rejection soon.

If the price gets in the POC watch for possible reversal patterns. A u-turn might reject the price towards 0.6920. A break of ascending trend line should provide bearish continuation towards 0.6912, 0.6895 and 0.6894. Only a break of 0.6965 to the upside might turn the trend on intraday time frames. Have in mind that the ATR (5) of the pair is only 31 pips so protecting profits on intraday timeframe is crucial.

The USD strengthened against a number of its counterparts yesterday, while on the contrary the EUR lost steam and retreated. The EU is about to discuss the replacement of major EU officials, such as the replacement of the EU Commission President Juncker, ECB President Mario Draghi and EU Council President Tusk. Also, the evident polarization of the EU Parliament after the elections did not help the common currency. Media reported that EU officials were mentioning that the EU Commission is likely to take disciplinary actions against Italy on June 5th, and probably we could be having a repetition of the Italian drama last year. We expect fundamentally both news to weigh on the EUR, however the currency could also be data driven in the near future and should there be soft data released about the EUR we could see it weaken. EUR/USD dropped yesterday, aiming for the 1.1175 (S1) support line. We could see the pair maintaining that direction today as fundamentals and financial releases today are expected to favor its short positions. Should the bears maintain control over the pair’s direction, we could see it breaking the 1.1175 (S1) support line and aim for lower grounds. Should the bulls take over, we could see the pair rising and aiming for the 1.1220 (R1) resistance line.

Oil prices pushed from OPEC cuts and sanction worries

Oil prices rose and stabilized yesterday as worries about supply cuts by OPEC and US sanctions against Iran and Venezuela fueled the commodity’s prices higher. Supply cuts by OPEC have been driving oil prices up since the beginning of the year and the markets seem to be expecting further developments. It should be noted that OPEC +Russia are to meet on June 25th and 26th to discuss the way forward with production cuts. Analysts note that supply side issues seem to be more prominent but at the same time mention that the rise of oil prices currently seems fragile. We expect fundamentals to drive oil prices and should there be further headlines about production cuts, we could see oil prices rising further. Oil prices rose yesterday, testing and currently have broken the 59.10 (S1) resistance line (now turned to support). Should the commodity’s prices distance themselves for the prementioned support line even further the road opens for the 60.50 (R1) resistance line. Should the pair come under the selling interest of the markets, we could see it breaking below the 59.10 (S1) support line once again, aiming for the 57.75 (S2) support barrier.

Other economic highlights, today and early tomorrow

Today during the European session, we get Germany’s Gfk Consumer Sentiment for June along with Eurozone’s business and industrial climate indicators for May. In the American session, we get the US consumer confidence indicator for May. As for speakers, please note that BoJ’s Governor Kuroda and RBNZ Governor Orr are scheduled to speak on Tuesday morning.

WTI H4

Support: 59.10 (S1), 57.75 (S2), 56.00 (S3)
Resistance: 60.50 (R1), 62.00 (R2), 63.70 (R3)

EUR/USD H4

Support: 1.1175 (S1), 1.1125 (S2), 1.1075 (S3)
Resistance: 1.1300 (R1), 1.1260 (R2), 1.1220 (R3)

• Euro slips back below $1.12 on reports the EU could fine Italy with $4 billion penalty over high deficit
• Dollar supported by risk-off even as Treasury yields fall back towards 19-month lows
• Stocks buoyed by M&A news, hopes of more Chinese stimulus

Euro on the backfoot again as Italy faces EU fine

The euro's bounce from yesterday's results of the election for the European Parliament proved short-lived as the row over Italy's high budget deficit came back to haunt the single currency. There was widespread relief on Monday when Eurosceptic and populist parties failed to grab control of the European Parliament in EU-wide votes held last week. Although mainstream parties in many EU states suffered badly, the gains made by populist parties weren't as significant as had been feared.

There were exceptions, however, as anti-EU parties came top in both the UK and Italy. The far-right League party in Italy, which comprises one half of the governing coalition, may see their victory as strengthening their hand in negotiations with the European Commission to allow the country to run excessive budget deficits to help boost growth.

But all the indications are that Italy is headed for another big showdown with the Commission, which yesterday warned that the country could be fined $4 billion for not bringing down its budget deficit and national debt levels. The Commission could begin disciplinary procedure as early as June 5 when it will be reviewing Italy's finances.

The yield on Italy's 10-year government bonds jumped higher on the reports and surged again today to a 1½-week high of 2.727%. In contrast, German 10-year bund yields fell to fresh 2½-year lows, with the euro coming under pressure from the widening yield differential.

Dollar reverses upwards, along with yen

Ongoing uncertainty about a US-China trade deal and the possibility of a trade dispute with Japan provided broad-based support for the greenback and the yen, while driving down sovereign bond yields. US 10-year Treasury yields slumped to 19-month lows and the 5-year yield remained inverted with the 2-year one. The dollar index climbed back above 97.80, while the yen was firmer against most of its major peers, including the US currency.

President Trump cast fresh doubt about striking an agreement with China anytime soon after he told reporters on a state visit to Japan that the US was “not ready” to make deal. There was also some confusion about the timeframe of a deal with Japan as Japanese officials played down Trump's remarks that suggested an announcement could come by August.

Some positives for stocks amid risk aversion

With no let-up still in trade tensions, equity investors focused their minds on the possibility of further policy stimulus by Chinese authorities. Another drop in Chinese industrial profits in April raised hopes that more stimulus could be on the way. The next clue on China's economy will come on Friday from the latest manufacturing PMIs.

Meanwhile, news that Fiat Chrysler has proposed a merger with French carmaker Renault lifted auto stocks in Europe and Asia. Most Asian indices closed in the green today, though European equities were slightly lower at the open as traders were awaiting direction from UK and US markets, which were closed yesterday for a public holiday.

US housing and consumer confidence data coming up

Data on the US house prices and consumer confidence will be watched later today. Any disappointment in those figures that adds to concerns about the US growth outlook could hurt the dollar.

The New Zealand dollar will also be in focus as a speech by RBNZ Governor Adrian Orr at 23:00 GMT could provide hints on further rate cuts by the bank. The kiwi, along with its aussie cousin, were both firmer on Tuesday, helped by higher commodity prices, particularly in iron ore prices.

WTI crude oil futures found strong support at a fresh two-and-half-month low of 57.40, where the 38.2% Fibonacci retracement level of the upward rally from 42.50 to 66.60 is standing. The price drifted below the ‘golden cross’ of the 50- and 200-simple moving averages (SMAs) in the daily timeframe, while the stochastic is raising chances for bullish correction at it created a positive cross within the %K and %D lines in the oversold zone.

Should the price edge higher, positive momentum could probably last until the 200-day SMA currently at 60.23, while slightly higher the 60.70 resistance and the 23.6% Fibonacci of 60.90 could act as strong resistance levels. More upside tendency could open the door for the 50-day SMA around 62.20 ahead of the 64.00 handle.

On the downside, the 38.2% Fibonacci mark of 57.40 could act as significant support once again. A failure to hold above this level could strengthen the sell-off towards the 50% Fibonacci of 54.50.

In brief, WTI oil futures are looking more positive in the medium-term, however, in the near-term the price remains below the ‘golden cross’ formation but the stochastic indicates positive retracement.