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BoC Governor Tiff Macklem emphasized overnight that the central bank doesn't want monetary to be "more restrictive than it has to be,". Yet he also cautioned against lowering borrowing costs "too quickly" as it could undermine progress on controlling inflation.

Macklem pointed out that although wage growth remains above pre-pandemic levels, there are signs that the labor market is rebalancing and inflation is moderating, which could reduce compensation pressures.

"Wages tend to lag adjustments in employment," he explained, adding, "Going forward, we will be looking for wage growth to moderate further."

Key Highlights

• Bitcoin price started another decline below the $60,000 support zone.
• BTC is trading below a major bearish trend line with resistance at $63,800 on the 4-hour chart.
• EUR/USD remained stable and attempted to recover above 1.0720.
• Oil prices are eyeing more upsides above the $82.50 resistance.

Bitcoin Price Technical Analysis

Bitcoin price failed to clear the $66,500 resistance zone and started a fresh decline. BTC/USD traded below many supports such as $65,500 and $65,000.

Looking at the 4-hour chart, the price settled well below the $65,000 zone, the 100 simple moving average (red, 4 hours), and the 200 simple moving average (green, 4 hours). The bears even dragged the price below the $62,000 support zone.

They seem to be aiming for a move toward the $57,500 support zone. If there is a recovery wave, the price could face resistance near the $61,400 level.

The first key resistance is near the $63,500 zone. There is also a major bearish trend line forming with resistance at $63,800 on the 4-hour chart. The trend line is close to the 61.8% Fib retracement level of the downward move from the $66,542 swing high to the $58,209 low.

The next resistance is near $66,500 and the 100 simple moving average (red, 4 hours). A successful close above $66,500 might start another steady increase. In the stated case, the price may perhaps rise toward the $68,000 level.

Conversely, Bitcoin might extend losses. Immediate support is near the $60,000 level. The main support sits at $59,200. Any more losses might send the price toward the $57,500 support zone.

Today’s Economic Releases

• Fed's Bowman speech.

San Francisco Fed President Mary Daly, in a speech last night, discussed the ongoing challenges with inflation and the labor market. Daly remarked that the inconsistent inflation data this year has not built confidence. While recent figures are promising, it remains uncertain if the path to sustainable price stability is secure.

While, the labor market has been slow to adjust, with only a slight increase in the unemployment rate, Daly warned that "we are getting nearer to a point where that benign outcome could be less likely. "

Emphasizing Fed's situation with "two goals, one tool, and a lot of uncertainty," and Daly stressed that "policy has to be conditional" and policymakers have to "think in scenarios."

Daly outlined the possible policy responses to different economic scenarios. "If inflation turns out to fall more slowly than projected, then holding the federal funds rate higher for longer would be appropriate."

Conversely, "If inflation falls rapidly, or the labor market softens more than expected, then lowering the policy rate would be necessary."

Daly also addressed a middle-ground scenario, saying, "If we continue to see gradual declines in inflation and a slow rebalancing in the labor market, then we can normalize policy over time, as many expect."

Full speech of Fed's Daly here.

During Monday's session, the GBPJPY pair continued its uptrend, reaching a high of around 202.50, its highest level since 2007. Despite earlier attempts by sellers to push the pair down to 106.14, buyers regained control and drove the pair to new cycle highs. The Daily Relative Strength Index (RSI) at 68 suggests ongoing bullish momentum, though nearing overbought territory indicates a possible correction. The Daily Moving Average Convergence Divergence (MACD) shows continued bullish momentum with rising green bars, though it might be peaking. Traders should note that while the pair's performance is strong, supported by its position above key SMAs, indicators point to potential corrections, with support around 202.00 and resistance near 203.00.

GBPAUD – H4 Timeframe

The far-left side of the attached chart shows evidently that a bullish break of structure occurred, pushing prices all the way to the high at 1.93440 before beginning a corrective move. However, at the moment, I expect price to bounce off the drop-base-rally demand zone I have highlighted on the chart, since the price action has even created a QMR pattern right in the middle of the demand zone. In the case of GBPAUD, my argument is bullish.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.91006
• Invalidation: 1.89556

EURGBP – H4 Timeframe

EURGBP on the 4-timeframe chart shows an initial sweep of the sell-side liquidity from the highlighted arrowed line, and the break of structure that followed was also highlighted. According to LIT techniques (Liquidity Inducement Theorem), we ought to see price retrace low enough to sweep liquidity once again from the induced low. So, once price breaks below the trendline support of the ascending channel, my sentiment for a short entry would be validated.

Analyst’s Expectations:

• Direction: Bearish
• Target: 0.84279
• Invalidation: 0.84800

GBPCAD – H4 Timeframe

Within the GBPCAD daily timeframe pivot zone, we can see the attached chart showing a bullish breakout of a triangle pattern on the 4-hour timeframe, right within the demand zone. The implication of this is simply that we should begin to see increased bullish participation in the market since the bullish breakout often signifies that buyers are now in control of the markets.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.73685
• Invalidation: 1.72873

The US Dollar (USD) declined during Monday's European session as political concerns in Europe receded, shifting focus to France's upcoming election. This reduced safe-haven demand for the USD. Meanwhile, the Japanese Yen (JPY) continued to weaken against the USD, nearing the critical 160.00 level, which previously triggered intervention by Japan's Ministry of Finance. Economically, lighter data is expected this week, including the Dallas Fed Manufacturing Business Index for June. In case you missed our weekly market review on the YouTube channel, here are a few trade ideas.

AUDUSD – H1 Timeframe

The 1-hour timeframe of AUDUSD as seen on the attached chart is currently under pressure from an area of supply, with increased confluence as a result of the sweep of the previous high, followed by the bearish break of structure. The supply zone and the 88% of the Fibonacci retracement tool helps solidify my sentiment as bearish, with an initial target at the 23% level.

Analyst’s Expectations:

• Direction: Bearish
• Target: 0.66390
• Invalidation: 0.66810

EURUSD – H4 Timeframe

EURUSD as seen on the 4-hour chart recently had a massive reaction off the confluence of the trendline support, and the drop-base-rally demand zone. As indicated by the slanted arrowed line, I am expecting price to keep pushing higher because of the Fair Value Gap price left behind as a result of the very volatile break below the previous low, and the fact that price swept liquidity from an induced low right before tapping into the area of demand.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.08182
• Invalidation: 1.06481

GBPUSD – H4 Timeframe

The price action on the 4-hour timeframe of GBPUSD recently broke below the support trendline of an ascending channel, implying the onset of a bearish trend. On that basis, I have plotted a resistance trendline that overlaps a supply zone and is supported by the 50 and 100 moving averages as confluence for the bearish sentiment. The 88% of the Fibonacci is another factor worth considering in favor of the bearish sentiment.

Analyst’s Expectations:

• Direction: Bearish
• Target: 1.26489
• Invalidation: 1.27439

• EURJPY approaching strong resistance level 171.55
•  Likely to correct down from 171.55

EURJPY currency pair approaching the strong resistance level 171.55 (which stopped the previous sharp upward impulse wave 1 at the end of April, as you can see below).

The resistance level 171.55 is further strengthened by the upper daily Bollinger Band.

Given the strength of the resistance level 171.55 and the overbought reading on the daily Stochastic indicator, EURJPY currency pair can be expected to reverse down from the resistance level 171.55 – when it reaches it.

Fundamental Analysis

This week we will have a few high-impact data releases from the economic calendar. Still, the focus will be on several speeches by Fed officials, with five out of eight appearances scheduled featuring hawkish members. This will drive a strong pushback against market expectations of two rate cuts this year. This hawkish stance is expected to bolster the strength of the dollar, adding momentum to its already strong performance in the first half of the year.

Additionally, the dollar could benefit from European political risks ahead of the French elections; Le Pen's advantage over Macron and weak June PMI data in Europe increase investor anxiety.

This week we will have the following USD-related releases from the economic calendar:

1. CB Consumer Confidence (June). Tuesday 25
2. New Home Sales (May). Wednesday 26
3. Durable Goods Orders (monthly) (May). Thursday 27
4. Final Q1 GDP. Thursday 27
5. Unemployment Claims. Thursday 27
6. PCE Price Index (May). Friday 28.

PCE data is expected to be lower than last month, so to cause a more aggressive downward reaction, a significantly lower PCE is needed to shift the market trend of speculating on two rate cuts this year and signalling an imminent cut for September.

Technical Analysis

Dollar Index (DXY), H4

• Supply Zones (Sells): 105.85 and 106.21
• Demand Zones (Buys): 105.96, 105.42, 104.88

The dollar's bearish correction came to an end after reaching a new higher high last week at 105.52. The opening correction towards the last uncovered point of control (POC) at 105.06, which is a demand zone for buying, will likely be defended by buyers. This defense could trigger a rally towards the opening at 105.44 and the Asian supply zone. We will then evaluate the strength of the ascent and price behaviour in that zone, as the next price action depends on it.

With a stronger rally breaking the Asian supply zone indicated at the opening, we will see an impulse seeking to break the May 9 resistance, the uncovered POC at 106.04, and only after its breakout consider the weekly target at the May resistance of 106.33.

On the other hand, a decisive break of the POC at 105.06 may encourage a retracement towards the area near the 104.69 support, observing a possible bullish rebound towards the opening sell zone at 105.43, and after its breakout extend buys towards 106.04.

EURUSD, H3

• Supply Zones (Sells): 1.0745 / 1.0806
• Demand Zones (Buys): 1.0691

After reaching the average daily range high (ADR High) and a weekly supply zone, a retracement towards the Asian POC at 1.0691 is expected, from where new buys will be considered. The extension of the bullish correction will be observed with quotes decisively breaking the supply zone between 1.0750 and 1.0633, confirming the intraday bullish reversal with a weekly target at 1.08.

However, failure to break above 1.0750 and a quick descent below 1.0691 will indicate renewed bearish strength of the pair towards May support at 1.0649 and 1.0624 more extended.

*Uncovered POC: POC = Point of Control: It is the level or zone where the highest concentration of volume occurred. If previously, a bearish movement originated from it, it is considered a sell zone and forms a resistance zone. Conversely, if previously, an upward impulse originated from it, it is considered a buy zone, usually located at lows, forming support zones.

In a CNBC interview today, Chicago Fed President Austan Goolsbee expressed cautious optimism about inflation in the US, describing himself as "closet optimistic" that there will be improvement on the inflation front.

Goolsbee refrained from commenting on the timing of rate cuts but emphasized the need for policymakers to consider whether the current high level of interest rates is appropriate for an economy showing signs of cooling beyond just inflation metrics.

He noted that factors such as rising unemployment claims, slightly increasing unemployment rate, and other indicators returning to pre-pandemic levels should prompt Fed to think more about balancing its dual mandates of controlling inflation and maintaining employment.

Markets

It was a slow but constructive start of the week. The economic calendar had little to offer with the exception of the German Ifo indicator. Confidence fell in June from May with the headline series easing from 89.3 to 88.6. Both the current assessment (88.3) and the expectations (89.0) component fell short of expectations. More or less confirming last week’s (skewed) PMI’s, markets quickly set the downside surprise aside. A mildly constructive atmosphere dominated instead, lifting European equities about 0.80% higher. There’s a noteworthy outperformance of the car sector (> 2%). It followed news over the weekend that the EU and China have agreed to start talks over the bloc’s recently announced EV tariffs. It eases concerns for Chinese retaliatory measures against European carmakers. Core bond yields trade more or less flat, Bunds marginally underperforming Treasuries. German yields rise <2 bps across the curve. Both peripheral and the French spread vs Germany’s 10-yr yield ease a few basis points ahead of the June 30 snap elections (first round). Treasury yields change less than 1 bp in a daily perspective.

The Japanese yen drew most attention on currency markets. Ongoing JPY weakness triggered FX interventions around USD/JPY 160 end April and the beginning of May. Less than two months later, the pair is again closing in on these levels, with the latest acceleration coming on the back of dollar strength. Japan’s finance (vice-)minister this morning reiterated readiness to act again. USD/JPY today suddenly dropped from around 159.8 to 158.8 for no particular reason. We do recall a move out of thin air happening on Friday, April 26 as well (though it was a larger one back then). On Monday, April 29, the first round of interventions took place. The difference, for now, is that USD/JPY is slightly down for the day, as are most other dollar cross rates. EUR/USD rises from just south of 1.07 to 1.0738. The trade-weighted index eases towards 105.47. EUR/GBP continues to bottom out with the Bank of England having protected the pair’s downside better. The combination is currently changing hands around 0.8467, up from a daily low of 0.845.

News & Views

The June industrial trends survey released by the Confederation of British Industry (CBI) showed export orders deteriorating in June, falling from -27% to -39%, the weakest performance since February 2021 and significantly falling below the long-run average of -18%. Total orders on the other hand improved from -33% to -18% but also remain below average. Output volumes were broadly unchanged in the three months to June (+3%) following an increase in the quarter to May (+14%). Notably, only four out of 17 sub-sectors saw output growth. Growth was noted in the food, drink, and tobacco, motor vehicle and transport, and plastics and furniture and upholstery sub-sectors. Looking at the next three months, the outlook suggested a modest rise in output of +13%. Stocks of finished goods (+14%) are sufficient to meet expected demand. CBI lead economist Jones said that it’s encouraging to see that manufacturing remain confident the economy is heading in the right direction with the survey suggesting a broadening out over summer. Soft orders are a note of caution. Expectations for average selling prices accelerated from 15% to 20%.

Belgian business confidence stabilized in June (-11.1 from -11). This stability masks contrasting developments in the sectors surveyed, with a strong improvement observed in business-related services (1.4 from -2.1; mainly more favorable activity expectations) but a fall in confidence in trade (-21.5 from -17.4; more negative employment expectations and intentions of placing orders with suppliers), building (-11.4 from -10.3) and manufacturing (-13.1 from -12.7; worse demand expectations and a more negative assessment of total order books and stock levels). Last week, Belgian consumer confidence improved from -7 to -1, the second best level since February 2020.

Graphs

USD/JPY nears 160, triggering a new series of verbal (for now) interventions from Japanese finance officials

EuroStox50: carmakers among the best performers as China and EU agreed to start tariff talks

EUR/GBP extends its recent bottoming out process and has the BoE to thank for it

EUR/CZK eases after touching highest level in a month last Friday as it goes into the CNB’s (hawkish) cut on Thursday