Sample Category Title

It can not be seen on the hourly chart. However, the yellow metal has found support at the 1,260 mark. The successful rebound has evolved into a surge up to the 1,270 level on Wednesday morning. The surge might be at its end, as the 100-hour SMA is closing in on the commodity price from the upside at the 1,271.90 level. However, the 55-hour simple moving average did not manage to hold the ascent of the bullion's price. Instead it quickly began to provide support. This fact strengthens the hypothesis that by the end of the day gold price might reach the next notable level of resistance. The next notable resistance is located at the 1,276 level, where the weekly pivot point and the 200-hour simple moving average are located at.

EURUSD

The EURUSD had another indecisive movement yesterday. The bias is neutral in nearest term. Price is still in a bearish correction phase after broke below the trend line support as you can see on my H4 chart below, but still respects 1.1160 support area which need to be clearly broken to the downside to continue the bearish correction phase testing 1.1080 key support which remains a good place to buy with a tight stop loss. Immediate resistance is seen around 1.1235. A clear break above that area could trigger further bullish pressure retesting 1.1285 key resistance which need to be clearly broken to the upside to continue the bullish scenario targeting 1.1350 – 1.1425 region.

GBPUSD

The GBPUSD had a bullish momentum yesterday topped at 1.2756. This fact keeps the pin bar bullish scenario remains valid especially if price able to make a clear break above 1.2780 resistance with nearest target seen around 1.2900 area. The bias is bullish in nearest term. Immediate support is seen around 1.2710. A clear break below that area could lead price to neutral zone in nearest term but key support is seen at 1.2635 which need to be clearly broken to the downside to nullify the pin bar bullish scenario targeting 1.2500 area.

USDJPY

The USDJPY was indecisive yesterday. The bias remains bearish in nearest term testing 109.25/00 region. Immediate resistance is seen around 110.35/50. A clear break above that area could lead price to neutral zone in nearest term testing the trend line resistance and 111.00 region which remains a good place to sell with a tight stop loss. On the downside, a clear break and daily close below 109.25/00 would expose 108.00 area.

USDCHF

The USDCHF had another indecisive movement yesterday. The bias remains neutral in nearest term probably with a little bearish bias testing 0.9650 support area. A clear break below that area could trigger further bearish pressure testing 0.9600 region. Immediate resistance remains around 0.9727. A clear break above that area could trigger further bullish pullback testing 0.9815 which remains a good place to sell with a tight stop loss. I still prefer a bearish scenario at this phase.

EUR/USD

Another day came and went with the EUR/USD pair stuck around 1.1200, unable to react to macro figures released in Europe or the US. Speculative interest is waiting for Fed's meeting outcome, to decide whether is worthy to resume EUR's buying or if it's time to take profits out of the table and bet some chips on the greenback. The overall sentiment is that the US Central Bank will offer a dovish hike, meaning that it will probably pull the trigger and raise rates by 25 bps, but offer a cautious stance about future moves, amid soft data in the US over the last few months.

The macroeconomic calendar will be quite busy this Wednesday, starting with Chinese sales and industrial data, and including German inflation, UK employment, and US inflation among others, and ahead of Fed's decision, which means some action could be seen across the board, although directional breakouts are quite unlikely.

Early Asia, the EUR/USD pair technical picture is short term neutral, as the price has traded within a 60 pips range ever since the week started. The downside potential is well-limited as long as the price holds above the 1.1120 region, where buying interest surged during the past three weeks, but further gains will only be confirmed on a break above 1.1300. In the 4 hours chart, the price remained unable to advance above its 100 SMA, but stands a few pips below it and hovering around a bearish 20 SMA, whilst technical indicators stand flat around their mid-lines, reflecting the ongoing absence of directional strength.

Support levels: 1.1160 1.1120 1.1080

Resistance levels: 1.1250 1.1300 1.1345

USD/JPY

The USD/JPY pair traded around the 110.00 figure all through this Tuesday, peaking at 110.26, but retreating towards the mentioned threshold in the US afternoon, ending the day a couple of pips below it. Back to usual, the Japanese currency was aligned with US Treasury yields, tracking them for direction. Attention in Asia will center in Chinese data, while Japan will release its April Industrial Production figures, these last, hardly enough to trigger strong moves in the pair, moreover ahead of the US Federal Reserve announcement. Technical readings in the 4 hours chart favor a downward extension, given that the intraday recovery stalled short of the 61.8% retracement of its latest rally at 110.50, also below a bearish 100 SMA, now at 110.70. In the same chart, the Momentum indicator accelerated south below its mid-line, but the RSI indicator consolidates around 47, limiting chances of a steeper decline during the upcoming hours. Nevertheless, the risk remains towards the downside, and it will take an unlikely recovery beyond 112.00 to consider an interim bottom and further recoveries afterwards.

Support levels: 109.80 109.30 108.80

Resistance levels: 110.10 110.50 110.80

GBP/USD

The Sterling recovered nicely this Tuesday, following an advance in UK's inflation ahead of BOE's meeting later this week, although chances that the Central Bank will hike rates on this figures are quite null. UK CPI rose to 2.9% in May surpassing consensus of 2.7%. The producer price index, which measures prices at factory gates, remained unchanged at 3.6% YoY, while when compared to April, surged by 0.1%, less than expected. The UK will release its latest employment figures this Wednesday, with the market expecting a decrease in unemployment claims to 10.0K from previous 19.4K and the unemployment rate seen unchanged at 4.6%. Wages, which are forecasted to remain on hold, will be in the eye of the storm after latest inflation readings, as it they match expectations will be bad news for the Pound long term, as the widening gap between both will dent consumption further. From a technical point of view, the upward corrective movement seems to have come to a halt, as in the 4 hours chart, technical indicators were unable to present a clear follow-through beyond their mid-lines. In the same chart, the price is a handful of pips above a bearish 20 SMA, but below the post-election high at 1.2780, now the level to surpass to see the ongoing recovery extending.

Support levels: 1.2705 1.2660 1.2635

Resistance levels: 1.2780 1.2830 1.2870

GOLD

Spot gold fell to a fresh weekly low of $1,259.24 a troy ounce this Tuesday, undermined by speculation the Fed will raise rates this Wednesday. Anyway, the commodity trimmed all of its daily losses, ending the day pretty much flat at 1,267.45. Gold looks vulnerable from a technical point of view, after further retreating from an approach to the 1,300 mark late May, although the downward strength has decelerate this week, according to the daily chart, where technical indicators have turned horizontal around their mid-lines, and with the price right below a horizontal 20 DMA, but above the 100 and 200 DMAs. Shorter term, the 4 hours chart, shows that the price retreated after testing the 20 and 100 SMAs, both converging around 1,269.00, while technical indicators have recovered within negative territory and are about to challenge their mid-lines, indicating that a strong advance beyond 1,270.00 is required to revert the latest bearish strength.

Support levels: 1,263.50 1,253.20 1,245.50

Resistance levels: 1,271.40 1,282.60 1,295.90

WTI CRUDE OIL

Crude oil prices advanced modestly ahead of US inventories data, with West Texas Intermediate futures settling at $46.42 a barrel, not far below its weekly high of 46.69. The commodity started the day with a sour tone, weighed by news that OPEC's crude oil production in May rose, despite the output cut deal, up by 336K barrels per day to average 32.12 million bpd, amid rising production in Libya, Nigeria and Iraq. The commodity, however, recovered in the US session, on hopes US stockpiles report will show a large draw-down after last week surprise build. From a technical point of view, the daily chart shows that, despite being up for the last three trading sessions, the upward potential remains well limited, with the price developing far below a bearish 20 DMA, whist technical indicators hold flat within negative territory. In the 4 hours chart, the price has settled above a horizontal 20 SMA, while technical indicators also lack directional momentum and barely above their mid-lines, not enough to confirm further recoveries ahead.

Support levels: 45.90 45.40 44.70

Resistance levels: 46.70 47.35 47.90

DJIA

Wall Street edged higher this Tuesday, with the DJIA and the S&P both ending at record highs. A recovery in the tech sector coupled with gains in energy-related currencies, resulting in the Dow Jones Industrial Average adding 92 points to end at 21,328.47. The Nasdaq Composite closed at 6,220.37, up 0.73%, while the S&P added 11 points, or 0.45% to 2,440.35. Within the Dow, El du Pont was the best performer, up 1.72%, followed by Visa which gained 1.67%. General Electric led decliners, ending the day -1.74%, followed by Verizon that shed 1.57%. The Dow's daily chart shows that the index stands near its intraday record high of 21,332, extending further above its moving averages, and with the shortest, the 20 SMA gaining upward strength. The Momentum indicator turned north after approaching its mid-line, but remains well-below June's high, while the RSI advanced up to 70, all of which supports additional gains ahead. In the 4 hours chart, technical indicators maintain their upward slopes well above their mid-lines, whilst the 20 SMA also advanced below the current level, in line with the longer term perspective.

Support levels: 21,282 21,241 21,187

Resistance levels: 21,335 21,380 21,410

FTSE100

The FTSE 100 lost 11 points or 0.15% to end the day at 7,500.44, as despite improving investors' mood, a stronger Pound weighed on local shares. Ongoing political uncertainty in the UK, however, kept the benchmark within a limited intraday range, as speculative interest waits for some definitions before taking big decisions. LSE was the best performer, up 5.38%, followed by ConvaTec Group that added 3.02% as the tech sector bounced following the latest selloff. 3i Group led decliners with a 2.96% loss, followed by Merlin Entertainments that shed 2.68%, after saying that recent terror attacks in the kingdom have reduced domestic demand. Daily basis, the Footsie has made little progress, holding around a bullish 20 DMA, and with technical indicators having retreated further within positive territory. Shorter term, and according to the 4 hours chart, the technical picture is also neutral, with the index hovering around its 20 SMA but above bullish 100 and 200 SMAs, whilst technical indicators remain stuck within neutral territory.

Support levels: 7,482 7,445 7,405

Resistance levels: 7,541 7,588 7,620

DAX

The German DAX managed to add 75 points, to close at 12,764.98, although European equities had a mixed performance. The tech sector bounced after two days of steady losses, supporting DAX's recovery, alongside with easing risk sentiment. Only five components closed in the red, with Beiersdorf being the worst performer, down 0.48%. Deutsche Lufthansa led advancers, adding 2.75%, followed by Adidas that added 2.28%. Despite the cautious short-term stance, European equities hover near multi-year highs, supported by strong local data and rising optimism, which means that will take little to trigger bullish moves. Technical readings in the daily chart present a neutral-to-bullish stance, as the index held once again above a horizontal 20 DMA, while technical indicators turned modestly higher above their mid-lines, with limited momentum at the time being. In the 4 hours chart, the price advanced above its moving averages that anyway have little directional strength, whilst technical indicators aim higher within positive territory, also with limited upward strength.

Support levels: 12,771 12,734 12,695

Resistance levels: 12,818 12,845 12,880

Fade politics buy China

The political circus that Washington has become continues to draw investors’ attention away from fundamentals. Just when the smoke cleared from Attorney General Sessions testimony, news broke that nearly 200 Democrat congressmen had filed a lawsuit against the Trump administration for alleged improper business interests. Political uncertainty and disappointment in Trump's failing pro-growth agenda will continue to weigh on USD sentiment. However, steady economic developments including China's solid data released today suggest a positive backdrop for risk-taking and potential for an overly bearish USD market to reverse.

In China, economic data indicated that despite decelerating pace of fixed asset and real estate investment (positively slowing rate of financial leverage buildup), industrial production and retail sales were strong. In our view the balanced results indicate higher level of economic stability in China than the market recognises. We remain constructive on China growth outlook and would materialise our view via long China technology stocks.

FOMC and long USDJPY

What needs to be said has already been said and now we wait. The markets have fully priced-in a 25bp to 1.0-1.25% range hike for this afternoon's FOMC rate decisions. We agree with the Fed that activity and inflation data has been stymied by transitional factors. We expected cyclical improvement in the 2H and anticipated another 25bp hike in December. Slightly less dovish commentary on economic outlook should see marginal repricing of US rate curve for 2017 and cause USD strength.

In regards to balance sheet reduction, we believe the Fed is not ready to announce their strategy for reducing its $4.5trn balance sheet (expectation for Sept). Yet that is really the rub, further Fed grinding movement towards normalisation either via balance sheet reduction or interest rate hikes are inherently hawkish.

In order to keep the USD weak, the Fed will attempt misdirection in order to keep the markets focused on Fed fund rates while they step away from supporting rates. We remain buyer of USDJPY given the pair’s high sensitive to US-JP interest rate differentials. The flattening of the yields curve indicated that markets are convinced of today’s hike (pushing short end higher) but uncertainty of futures hike (keeping long end low). Should our view prove correct, watch for US 10s yields to steadily climb well above 2.21% current levels towards 2.30% and USDJPY to 112.00. Elsewhere, US CPI and retail sales will be released likely adding general confusion heading into the FOMC.

RUB had a wild ride

It has been a wild ride for the Russian ruble over the last 18 months. USD/RUB fell as much as 35% between January 2016 and April 2017 before stabilising at between 56 and 58 ruble per US dollar. The sharp appreciation was mostly driven by the recovery in crude oil prices, easing political tensions on the geopolitical level and a tight monetary policy.

Over the same period, crude oil prices recovered from the massive debasement of 2014-2015 as a barrel of Brent rose from $27.10 to above $50, giving the ruble a boost. Indeed, the Russian currency has always been heavily correlated to crude oil prices as Russia stands amongst the main producers of black gold. However, this strong relation has weakened recently: crude oil price came under renewed downside pressures following supply glut fears and concerns over the sustainability of the OPEC output deal while the ruble held steady.

One of the reasons that could explain this deviation from this long-term relationship is the tight monetary policy adopted by the central bank. Elvira Nabiullina, the CBR’s president, held a restrictive monetary policy to bring inflation levels under control. Yet both the core and headline measures, currently standing at 3.8% y/y and 4.10% y/y respectively, are close to the institution’s target of 4%. Therefore, the CBR will accelerate the rate cut pace that will give a breath of fresh air to the economy but also allow the ruble to depreciate. Indeed, carry traders will lose interest in the ruble and continue to search for higher yields somewhere else.

All in all, we think that both the re-correlation with crude oil and a looser monetary policy will translate into a weaker ruble. We target the 60 resistance level in USD/RUB in the medium-term.

'The Bank of England is in an increasingly difficult position.' - Dominic Bryant, BNP Paribas

British inflation hit its highest level in nearly four years last month, putting pressure on consumers. The Office for National Statistics reported on Tuesday that its CPI surged 2.9% year-over-year in May. That followed a 2.7% rise in the preceding month and marked the largest increase since June 2012. The consumer price jump was mainly driven by the sharp fall in the value of the Pound. In the meantime, the so-called core CPI climbed 2.6% during the reported month, compared to the prior month's gain of 2.4%, whereas analysts anticipated an increase of 2.3%. Since inflation is rising at a quicker-than-initially-estimated pace, it is not clear for how long the Bank of England will tolerate the inflation rate above the 2% target. Other report released by the ONS revealed that input prices for producers dropped 1.3% on a monthly basis in May, following April's downwardly revised fall of 0.3% and surpassing expectations for a 0.5% decline. Thus, on an annual basis, rose just 11.6%, down from April's 15.6%. Tuesday's data also showed that the Retail Price Index climbed 3.7% year-over-year in May, topping expectations for a 3.5% climb.

'The fact that the ZEW index remains in positive territory means that the majority of investors still see economic conditions improving in the next six months.' - Jennifer McKeown, Capital Economics

The mood of German investors deteriorated unexpectedly in June, official figures showed on Tuesday. The Mannheim-based ZEW reported that its Economic Sentiment Index dropped to 18.6 in June from the preceding month's 20.6, whereas analysts anticipated an increase to 21.6 points during the reported month. Meanwhile, the Current Conditions Index surged to 88.0, the highest level since July 2011, up from May's 83.9 points. The German Economy Minister said on Tuesday that the German economy was continuing performing strongly in the Q2 of 2017, supported by higher private and state spending and strong industrial activity growth. Moreover, he said that German exports growth also provided a significant boost to the economy. Back in May, the Munich-based Ifo Institute reported that its Economic Sentiment Index hit its all-time high. The next Ifo report will be published on June 26. Apart from that, ZEW said that its measure for expectations in the Euro zone advanced to 37.7 points in June, following the prior month's 35.1 and topping expectations for a climb to 37.2 points.

"Inflation down at the producer level of the economy's factory-to-consumer supply chain remains on the warm side, which is in keeping with the economy moving beyond full employment." - Chris Rupkey, MUFG

US producer prices held steady last month amid low energy prices. The Labour Department reported on Tuesday that its Producer Price Index came in at 0.0% in May, following the preceding month's climb of 0.5% but meeting analysts' expectations. On an annual basis, the headline PPI rose 2.4%, compared to April's 2.5% jump, which was the largest yearly rise since February 2012. In the meantime, the so-called core PPI climbed 0.3% last month, following April's rise of 0.4%, whereas analysts expected core producer prices to increase 0.2%. Tuesday's data showed that energy prices fell 3.0%, the biggest drop since February 2016, after advancing 0.8% in April. The gasoline price dropped 11.2% last month, the biggest fall since February 2016. On the other side, services prices climbed 0.3% in May, as final demand for trade services surged 1.1% last month. Back in April, services prices advanced 0.4%. Even though price pressures in the United States are weak, the Federal Reserve is widely expected to raise interest rates for the second time this year at the end of its two-day meeting on Wednesday.

The crucial US retail sales and inflation figures for May will be released at 13:30 BST today, June 14th, it will be followed by the long-awaited FOMC June rate decision at 19:00 BST and the press conference at 19:30 BST.

US CPI and core CPI has reached, and held above, the Fed’s 2% target since December 2016 and November 2015 respectively, however, both saw a decline since February 2017 partially caused by falling energy prices. Consensus for CPI and core CPI for May (YoY) are 2.0% and 1.9% respectively. If the figures released are better than the consensus it will likely provide USD support.

US retail sales (MoM) has seen a downtrend since 2016 December mainly caused by the decline in auto and petroleum sales. The April figure saw a 0.4% rebound. Retail sales excluding autos (MoM) also saw a downtrend since January 2017 with the April figure showing a 0.3% rebound.

Per the CME’s FedWatch tool the probability for a June rate hike has climbed to 99.6%. Regardless of the incoming retail sales and inflation data performance it appears to be a certainty that the Fed will announce a rate hike today. At present a September rate hike appears to be less likely as economic data over the past few months showing a slowdown. Besides, recent political turmoil also likely result in the Fed’s actions being less active. Per the CME’s FedWatch tool the current probability for a September rate hike is only 23.4%.

The Fed will continue monitoring economic data performance, labour market conditions and inflation pressure over the following months to adjust the future rate hike pace. If the US economy continues to show a slowdown with ongoing political turmoil then the next rate hike will likely happen after December.

US data performance, and the tone of the Fed’s statement, will be the major drivers of USD and gold strength this week. USD prospects currently remain moderately bearish. The dollar index has seen a 0.4% fall over the past three sessions. This morning, in early European session, it hit a 4-day low of 96.82, trading below the resistance level at 97.00.

Gold rebounded 0.85% since Tuesday after testing the significant support line at 1260, hitting a 3-day high of 1269.93 this morning. USD/JPY recovered the significant level at 110.00 on Tuesday. EUR/USD consolidates above the psychological level at 1.1200. GBP/USD has rebounded 1% since Tuesday, hitting a 3-day high of 1.2795 this morning.

EUR/USD

Current level - 1.1215

The overall outlook remains negative below 1.1240 minor resistance, for a slide towards 1.1108 low. Initial support lies at 1.1165.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 110.04

The outlook here is neutral and only a violation of the crucial dynamic resistance at 110.40 will signal trend dynamics for a rise towards 112.10 area.

GBP/USD

Current level - 1.2746

The recent rebound above 1.2610 major support signals a positive intraday bias, for a possible test of 1.2830 hurdle. Minor intraday support lies at 1.2735.

Today, all eyes will be on the much-awaited FOMC policy decision. This will be one of the 'bigger' meetings, which includes fresh economic forecasts, an updated 'dot plot', as well as a press conference by Chair Yellen. The forecast is for the Committee to raise borrowing costs by 25bps, something overwhelmingly supported by market pricing. The implied probability for such action currently rests at 99.6%. Given that a rate hike is fully priced in at this stage, we think market focus will mostly be on any potential changes to the 'dot plot'. In addition, market participants may look for clues as to when the Fed will begin normalizing its enormous balance sheet.

Economic developments have been quite disappointing recently. Inflation has slowed, inflation expectations have declined notably, wage growth is flat, and expectations regarding fiscal stimulus have diminished. As such, we expect Chair Yellen to maintain a cautious stance with regards to the economic progress. Having said that though, a cautious tone does not necessarily imply that the dollar will weaken in the aftermath. The market is already extremely pessimistic with regards to the pace of future rate increases.

Following this hike, the next one is fully priced in for June 2018, which means investors are anticipating a pause in the Fed's normalizing cycle. So, in case the 'dot plot' is left untouched, signaling one more hike in 2017 and another three in 2018, this could be enough to revive speculation regarding another rate increase this year and perhaps keep investors from unwinding their long USD positions. In such a case, the reaction in USD may be somewhat positive. In order for the dollar to weaken notably, the 'dots' would likely need to be revised lower, in our view.

EUR/USD has been moving in a sideways manner since the ECB meeting, oscillating between the 1.1160 (S1) barrier and the resistance of 1.1240 (R1). Nevertheless, the price structure on the 4-hour chart suggests that an uptrend is in place since the 10th of April. Therefore, even if the Fed leaves the 'dot plot' unchanged and the EUR/USD declines, we would treat such a setback as a corrective phase. Given the continued recovery in the Euro area and the removal of the ECB's interest rate easing bias, we expect the bulls to take the reins again soon and push the battle up for a test near 1.1300 (R2). On the other hand, if the Fed revises its rate path down, we would expect the aforementioned test to come today, without a preceding correction.

USD/JPY also traded quietly yesterday, staying slightly below the crossroad of the 110.30 (R1) resistance line and the downtrend line taken from the peak of the 11th of May. In case the rate path stays untouched, the rate may trade higher and break above that resistance zone. Such a break could initially aim for the next resistance of 110.75 (R2). Now, in case the plot is downgraded, USD/JPY could tumble below the support of 109.70 (S1), overcome the next at 109.35 (S2), and perhaps challenge the 108.90 (S3) territory.

As for the rest of today's highlights:

During the European day, UK employment data for April are due out. The unemployment rate is expected unchanged, average weekly earnings including bonuses are forecast to have risen at the same pace as previously, while earnings excluding bonuses are anticipated to have slowed slightly. Considering that inflation accelerated notably in April, unchanged or slowing wages would push real wages further into the negative territory, something that could weigh on the pound.

As for the US indicators, we get CPI and retail sales data, all for May. Kicking off with the CPIs, the headline rate is expected to have declined again, albeit marginally, while the core rate is anticipated to have held steady. As for the retail sales, the forecast is for both the headline and the core rates to have ticked down from previously, but to have remained within the positive territory. Even though a slight slowdown in the headline CPI and retail sales could hurt the dollar somewhat on the news, the currency's forthcoming direction will probably be decided by the FOMC signals later in the day.

Besides Fed Chair Yellen, we have one more speaker on the agenda: ECB Vice President Vitor Constancio.

EUR/USD

Support: 1.1160 (S1), 1.1110 (S2), 1.1075 (S3)

Resistance: 1.1240 (R1), 1.1300 (R2), 1.1370 (R3)

USD/JPY

Support: 109.70 (S1), 109.35 (S2), 108.90 (S3)

Resistance: 110.30 (R1), 110.75 (R2), 111.25 (R3)