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Daily Pivots: (S1) 1.0658; (P) 1.0688; (R1) 1.0710; More....

EUR/USD recovered after breaching 1.0667 briefly and intraday bias remains neutral. Outlook stays outlook stays bearish with 1.0760 resistance intact. Decline from 1.0915 is seen as another leg in the larger corrective pattern. Firm break of 1.0667 will target 1.0601 and below. However, decisive break of 1.0760 will turn intraday bias back to the upside for stronger rebound.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's still in progress. Break of 1.0601 will target 1.0447 support and possibly further to 100% projection of 1.1274 to 1.0447 from 1.1138 at 1.0311. For now, this will remain the favored case as long as 1.0915 resistance holds, in case of rebound.

Dollar weakens broadly weakening in the early US session following the release of a batch of economic data. Durable goods orders presented a mixed bag. Concurrently, continuing claims for unemployment benefits rose to their highest level in more than two-and-a-half years. Despite these indicators, there is no immediate cause for alarm.

Instead, traders, observing the Dollar's inability to extend its near-term rally against Euro, appear to be lightening up their positions ahead of the upcoming PCE inflation data tomorrow and the end of the first half. Adding to the cautious sentiment is the upcoming French parliamentary election on Sunday, which is contributing to market jitters. The potential political shake-up in France could have significant implications for the Eurozone, prompting traders to adopt a wait-and-see approach.

In the broader currency market, Swiss Franc and Canadian Dollar are following the greenback as the next weakest currencies for the day. New Zealand Dollar reversed its earlier losses to become the strongest currency. Euro and the Australian Dollar are also showing strength, while British Pound and Japanese Yen are mixed in performance. Despite heightened verbal intervention by Japanese officials, Yen remains hesitant to stage a meaningful rebound.

A key pair to monitor is EUR/CHF as the French election looms. While recovery from 0.9476 might extend, near term outlook will continue to stay bearish as long as 0.9683 resistance holds. Break of 0.9560 minor support will now argue that the recovery has already completed. Retest of 0.9476 should be seen next, and break there will resume the decline from 0.9928.

In Europe, at the time of writing, FTSE is down -0.09%. DAX is up 0.24%. CAC is down -0.60%. UK 10-year yield is down -0.0079 at 4.131. Germany 10-year yield is up 0.008 at 2.461. Earlier in Asia, Nikkei fell -0.82%. Hong Kong HSI fell -2.06%. China Shanghai SSE fell -0.90%. Singapore Strait Times rose 0.35%. Japan 10-year JGB yield rose 0.0491 to 1.074.

US durable goods orders rise 0.1% mom, ex-transport orders down -0.1% mom

US durable goods orders rose 0.1% mom to USD 283.1B in May, above expectation of -0.1% mom. Ex-transport orders fell -0.1% mom to 187.7B, below expectation of 0.1% mom. Ex-defense orders fell -0.2% mom to USD 266.1B. Transportation equipment rose 0.6% mom to USD 95.4B.

US initial jobless claims falls to 233k, vs exp 230k

US initial jobless claims fell -6k to 233k in the week ending June 22, slightly above expectation of 230k. Four-week moving average of initial claims rose 3k to 236k.

Continuing claims rose 18k to 1839k in the week ending June 15, highest since November 27, 2021. Four-week moving average of continuing claims rose 12k to 1816k, highest since December 4, 2021.

ECB's Kazimir anticipates single additional rate cut in 2024

ECB Governing Council member Peter Kazimir suggested today that "we could expect one more interest-rate cut this year." He underscored his continued concern over the "significant risk of rising inflation," driven primarily by wage growth.

Kazimir reiterated his opposition to an interest-rate adjustment at upcoming July meeting. Instead, he advocated for policymakers to wait until the next round of quarterly economic projections before making any decisions.

"It's appropriate to wait for the September forecast," Kazimir stated. "Those are the right moments to make the correct decisions."

Eurozone economic sentiment falls slightly to 95.9, EU ticks down to 96.4

Eurozone Economic Sentiment Indicator ticked down from 96.1 to 95.9 in June. Employment Expectation Indicator fell from 101.3 to 99.7. Economic Uncertainty Indicator fell from 18.5 to 18.0.

Eurozone industry confidence fell from -9.9 to -10.1. Services confidence fell from 6.8 to 6.5. Consumer confidence improved slightly from -14.3 to -14.0. Retail trade confidence fell from -6.8 to -7.8. Construction confidence fell from -6.2 to -7.0.

EU ESI fell from 96.6 to 96.4. EEI fell from 101.2 to 100.4. EUI fell from 17.9 to 17.3. For the largest EU economies, the ESI improved markedly for Spain (+1.1) and more moderately for the Netherlands (+0.5), while it deteriorated for France (-0.7) and Italy (-0.7). The ESI remained broadly stable for Germany (-0.2) and Poland (-0.1).

RBA's Hauser cautions against policy decisions based on single data point

In an event today, RBA Deputy Governor Andrew Hauser emphasized the need for comprehensive analysis before making policy decisions, stating, "it would be a bad mistake to set policy on the basis of one number and we don't intend to do that."

This comment comes in the wake of Australia's May CPI release earlier this week, which showed an unexpected acceleration to 4%, leading money markets to price in a 50-50 chance of another 25bps rate hike in August.

Hauser highlighted the importance of considering the broader economic context, noting that the monthly consumer price indicator provides only partial information.

He stressed, "there's a whole series of data coming out between now and when we meet in August."

NZ ANZ business confidence falls to 6.1, inflation pressure eases further

New Zealand ANZ Business Confidence fell from 11.2 to 6.1 in June. Despite this decrease in overall confidence, there was a slight improvement in the own activity outlook, from 11.8 to 12.2.

Cost expectations decreased from 72.6 to 69.2, while pricing intentions dropped significantly from 41.6 to 35.3, signaling easing price pressure in the business environment. Furthermore, inflation expectations continued their steady descent, moving from 3.59% to 3.46%.

ANZ noted that "the economy is clearly weak, as the RBNZ intended." More importantly, there appears to be "renewed meaningful progress on bringing inflation pressures down." This fosters optimism that RBNZ might be able to lower the Official Cash Rate considerably earlier than the currently projected August next year.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0658; (P) 1.0688; (R1) 1.0710; More....

EUR/USD recovered after breaching 1.0667 briefly and intraday bias remains neutral. Outlook stays outlook stays bearish with 1.0760 resistance intact. Decline from 1.0915 is seen as another leg in the larger corrective pattern. Firm break of 1.0667 will target 1.0601 and below. However, decisive break of 1.0760 will turn intraday bias back to the upside for stronger rebound.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's still in progress. Break of 1.0601 will target 1.0447 support and possibly further to 100% projection of 1.1274 to 1.0447 from 1.1138 at 1.0311. For now, this will remain the favored case as long as 1.0915 resistance holds, in case of rebound.

Economic Indicators Update

US initial jobless claims fell -6k to 233k in the week ending June 22, slightly above expectation of 230k. Four-week moving average of initial claims rose 3k to 236k.

Continuing claims rose 18k to 1839k in the week ending June 15, highest since November 27, 2021. Four-week moving average of continuing claims rose 12k to 1816k, highest since December 4, 2021.

Full US jobless claims release here.

US durable goods orders rose 0.1% mom to USD 283.1B in May, above expectation of -0.1% mom. Ex-transport orders fell -0.1% mom to 187.7B, below expectation of 0.1% mom. Ex-defense orders fell -0.2% mom to USD 266.1B. Transportation equipment rose 0.6% mom to USD 95.4B.

Full US durable goods orders release here.

The Australian dollar has posted small gains on Thursday. AUD/USD is trading at 0.6654 in the European session, up 0.10% on the day.

Australian inflation expectations rises to 4.4%

This week’s inflation indicators have risen more than expected, an indication that inflation remains sticky and that the road to the Reserve Bank of Australia’s inflation target band of 2% to 3% will be bumpy.

On Wednesday, the Melbourne Institute Inflation Expectations rose to 4.4% in June, up from May’s 4.1% gain, which was a 2.5-year low. The reading comes a day after CPI accelerated to 4.0% in May, up from 3.6% in April and higher than the market estimate of 3.8%.

This was the highest inflation level since November 2023 and marked the third straight acceleration in headline inflation, a trend that has the RBA worried. With the battle against inflation stalling badly, the RBA could be forced to delay a rate cut until 2025.

With inflation not only failing to fall but moving higher, the specter of a rate hike is real. The RBA has stressed that a rate hike is on the table and discussed this possibility at the past two rate meetings. Ultimately, policy makers decided to hold the cash rate at 4.35%. Australia releases the first-quarter inflation report on July 31, just a week before the next RBA meeting. If Q1 inflation remains doesn’t decline, it could set up a rate hike from the central bank at the August meeting.

In the US, we’ll get a look at Final GDP (third estimate) later in the day. The market estimate stands at 1.4%, compared to 1.3% for the second estimate. The US economy has slowed down significantly in the first quarter, after a strong 3.4% gain in Q4 2023.

AUD/USD Technical

• AUD/USD tested resistance at 0.6685 earlier. Above, there is resistance at 0.6729
  0.6635 and 0.6591 are the next support levels

The USD/JPY pair soared to 160.34 on Thursday, reaching levels not seen since 1986, as market participants increasingly anticipate potential interventions from Japanese authorities. Despite repeated verbal assurances, the Japanese government has not taken concrete financial measures, leaving the yen vulnerable.

Finance Minister Shunichi Suzuki reiterated that the government stands ready to counteract sudden and undesirable fluctuations in the yen's value, highlighting its preparedness to engage in market operations if necessary. However, when and how these interventions might occur remains uncertain, adding to the yen's woes.

A significant factor in the yen's ongoing decline is the stark contrast in interest rates between the Bank of Japan, which maintains a rate close to zero, and the Federal Reserve. This disparity has been a primary driver of the yen's weakness, with the currency losing approximately 2% against the dollar in June alone, culminating in a 14% decline over the year.

USD/JPY technical analysis

The USD/JPY has broken through the critical 160.00 level, reaching up to 160.85. The market is currently retracing to test the 160.00 level from above. Should this level hold, we anticipate further growth towards 161.30, potentially extending the bullish trend to 163.30. This bullish scenario is supported by the MACD indicator, which shows the signal line well above zero, indicating strong upward momentum.

On the H1 chart, after reaching 160.85, the pair is undergoing a correction towards 160.00. Completion of this correction could pave the way for another ascent to 161.30. This view is technically reinforced by the Stochastic oscillator, which is currently below 20 and poised for a rebound towards 80, suggesting a potential resurgence in buying pressure.

Market outlook

As the discrepancy between US and Japanese monetary policies continues to influence the USD/JPY, traders should remain alert to any signs of actual intervention by Japanese authorities. Such intervention could significantly impact market dynamics, potentially stalling or reversing the yen's current depreciation trend.

In an event today, RBA Deputy Governor Andrew Hauser emphasized the need for comprehensive analysis before making policy decisions, stating, "it would be a bad mistake to set policy on the basis of one number and we don't intend to do that."

This comment comes in the wake of Australia's May CPI release earlier this week, which showed an unexpected acceleration to 4%, leading money markets to price in a 50-50 chance of another 25bps rate hike in August.

Hauser highlighted the importance of considering the broader economic context, noting that the monthly consumer price indicator provides only partial information.

He stressed, "there's a whole series of data coming out between now and when we meet in August."

ECB Governing Council member Peter Kazimir suggested today that "we could expect one more interest-rate cut this year." He underscored his continued concern over the "significant risk of rising inflation," driven primarily by wage growth.

Kazimir reiterated his opposition to an interest-rate adjustment at upcoming July meeting. Instead, he advocated for policymakers to wait until the next round of quarterly economic projections before making any decisions.

"It's appropriate to wait for the September forecast," Kazimir stated. "Those are the right moments to make the correct decisions."

• BTCUSD drops to its lowest level since May 2
• Despite initial rebound, price remains under selling pressure
• Momentum indicators hover near oversold territory

BTCUSD (Bitcoin) has been experiencing a vast selloff since the beginning of June, temporarily breaking below the 60,000 psychological mark. Although the price managed to halt its retreat just shy of the 200-day simple moving average (SMA), the bears continue to hold the upper hand.

Should Bitcoin fall back below the 60,000 psychological level, immediate support could be found at the March-April support of 59,600. Sliding beneath that floor, the price could challenge the June low of 58,400. A violation of that zone may set the stage for the April bottom of 56,483.

On the flipside, if buying pressures re-emerge, the price could advance towards 64,500, a region that has acted both as resistance and support in 2024. Conquering that zone, the bulls could attack the April resistance of 67,270. Even higher, the double top region of 71,955 might prove to be a tough barrier for the price to overcome.

In brief, BTCUSD has come under severe selling pressure lately, falling below the 60,000 mark for the first time since May 3. Despite the latest bounce, the retreat is likely to extend towards the 200-day SMA given that the short-term oscillators remain heavily tilted to the downside.

• WTI crude oil fails to rally above 81.90
• RSI and MACD remain above mid-levels

WTI crude oil has been on the sidelines for the most part of the week as the 81.90 level seems to be a real struggle for the bulls. Technically, the price could gain some ground in the short-term as the RSI is changing direction to the upside and holds above the 50 neutral mark, while the MACD is standing above its trigger and zero lines.

A move above the 81.90 resistance could keep the price on the uptrend in the short term started from the rebound off 72.45. Should the price overcome this level, the price could run up to the 84.50 barrier. Higher, the 85.90 and 86.92 lines could next come in focus.

Alternatively, a decline under 80.20 could meet a strong bar near the 50- and the 200-day simple moving averages (SMAs) at 79.00 ahead of the 20-day SMA at 78.30. Even lower, the 72.45 support could take control again.

In the short-term picture, oil prices have gently pointed up over the past three weeks, framing a positive profile. A strong rally above 86.92 would extend the upward pattern, making the outlook even more bullish, while a decisive close below 72.45 would confirm the start of a downtrend.