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Daily Pivots: (S1) 0.8937; (P) 0.8962; (R1) 0.8995; More...

Range trading continues in USD/CHF and intraday bias stays neutral. On the downside, break of 0.8900 will resume the fall from 0.9146 to 0.8818 low or below. But for now, strong support is still expected from 0.8756 long term support to bring rebound. On the upside, above 0.9011 will bring stronger rise towards 0.9146 resistance.

In the bigger picture, fall from 1.1046 (2022 high) is seen as a leg in the long term range pattern from 1.0342 (2016 high), which might have completed at 0.8818 already, just ahead of 0.8756 long term support. Sustained trading above 0.9058 support turned resistance should confirm medium term bottoming.

Daily Pivots: (S1) 1.0883; (P) 1.0928; (R1) 1.0957; More...

EUR/USD is extending the sideway pattern from 1.1011 and intraday bias stays neutral. For now, further rally is still mildly in favor. Break of 1.1011 will resume the rise from 1.0634 and target 1.1094 resistance. Decisive break there will resume larger up trend from 0.9534. However, break of 1.0843 will turn bias to the downside for 1.0634 support instead.

In the bigger picture, as long as 1.0515 support holds, rise from 0.9534 (2022 low) would still extend higher. Sustained break of 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high).

In the currency trading arena, there's been a notable lack of movement today. Gold has caught the market's attention, sliding past the 1900 psychological level. Yet Dollar remains relatively undisturbed, also showing no significant response to the latest jobless claim data and Q1 GDP final figures. Likewise, the release of higher-than-anticipated German CPI data sparked only a fleeting and mild rally in Euro, lacking subsequent follow-through. Despite today's tranquil conditions, market participants are bracing for potential turbulence tomorrow, as data releases including China's PMIs, Eurozone's CPI flash, and US PCE inflation data are slated.

So far this week, US Dollar and Euro are neck-and-neck in the contest for the strongest currency, with Swiss Franc hot on their heels. Australian and New Zealand Dollars are battling it out to avoid the week's weakest currency title, though Canadian Dollar may still swoop in and claim that unenviable status. Japanese Yen finds itself in the middle of the pack, trading within a consolidation range, under threat potential government intervention. British Pound is showing signs of weakness, but any significant depreciation is yet to materialize.

Technically, Gold is now quickly approaching fibonacci support at 38.2% retracement of 1614.60 to 2062.95 at 1891.68. Strong rebound from that level, followed by break of 1939.24 resistance, will be the first sign of bottoming, and keep the decline from 2062.95 as a near term correction only. However, sustained break of 1891.68 would raise the chance of trend reversal. Or, at least that would open up deeper fall to 1804.48, and possibly to 61.8% retracement at 1785.86.

In Europe, at the time of writing, FTSE is down -0.48%. DAX is down -0.03%. CAC is up 0.44%. Germany 10-year yield is up 0.072 at 2.391. Earlier in Asia, Nikkei rose 0.12%. Hong Kong HSI dropped -1.24%. China Shanghai SSE dropped -0.22%. Singapore Strait Times rose 0.06%. Japan 10-year JGB yield dropped -0.0041 to 0.384.

Fed Powell: A long way to go to bring inflation down to 2%

In a speech today, Fed Chair Jerome Powell underscored the ongoing battle with inflation, asserting, "Inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go."

He added that "a strong majority of Committee participants expect that it will be appropriate to raise interest rates two or more times by the end of the year," referring to the latest dot plot.

Powell painted a mixed picture of the U.S. economy. He noted that "recent indicators suggest that economic activity has continued to expand at a modest pace." He also pointed to the effects of higher interest rates and slower output growth on business fixed investment.

His comments also highlight the persistent tightness in the labor market. "Over the past three months, payroll job gains have been robust," Powell said, adding that "labor demand still substantially exceeds the supply of available workers." Nevertheless, he also observed "some easing in nominal wage growth, and declining vacancies."

Fed Bostic not seeing urgency to hike again as by others including Powell

Atlanta Fed President Raphael Bostic signaled a more cautious stance on interest rate hikes, contrary to some of his peers' sentiments. he said, "I don't see as much urgency to move as stated by others, including my Chair," expressing his willingness to assess further signs of economic slowdown before advocating for more aggressive action.

Bostic highlighted the fact that Fed has "only been in restrictive territory for 8-10 months". He is waiting for "more signs that a slowdown is happening in the next several months".

Nevertheless, Bostic left room for adaptability based on incoming data. He remarked, "If inflation moves away from target or seems to significantly stall out, then we'll probably have to do more." However, he also noted that, "We're not seeing either of those right now."

US initial jobless claims dropped to 239k, vs exp. 265k

US initial jobless claims dropped -26k to 239k in the week ending June 24, below expectation of 265k. Four-week moving average of initial claims rose 1.5k to 257.5k, highest since November 13, 2021 when it was 260k.

Continuing claims dropped -19k to 1742k in the week ending June 17. Four-week moving average of continuing claims dropped -13k to 1758k.

Eurozone economic sentiment fell to 95.3, EU down to 94.0

Eurozone Economic Sentiment Indicator dropped from 96.4 to 95.3 in June, slightly below expectation of 96.0. Employment Expectations Indicator rose from 104.6 to 105.0. Economic Uncertainty Indicator dropped from 21.6 to 20.4. Industry confidence fell from -5.3 to -7.2. Services confidence fell from 7.1 to 5.7. Retail trade confidence fell from -5.3 to -6.0. Construction confidence fell from -0.3 to -2.0. Consumer confidence improved from -17.4 to -16.1.

EU Economic Sentiment Indicator fell from 95.1 to 94.0. Employment Expectation Indicator rose from 103.9 to 104.3. Economic Uncertainty Indicator dropped from 21.2 to 20.1. Amongst the largest EU economies, the ESI deteriorated in Germany (-1.9), Italy (-1.1), the Netherlands (-1.0) and Spain (-0.9), while it remained virtually unchanged in Poland (-0.1) and improved in France (+0.8).

Japan retail sales rose 1.3% mom, 5.7% yoy, beat expectations

In the latest release from Japan, retail sales rose 1.3% mom, surpassing the anticipated increase of 0.8% mom. This growth also reflects a robust 5.7% yoy rise, again beating expectations of 5.2% year-on-year.

While inflation remaining above 3% mark could have been a contributing factor in boosting retail sales, there is evidence to suggest that return of overseas tourists is also playing a substantial role in stimulating economic activity.

Earlier reports from Japan National Tourism Organization highlighted that number of overseas visitors is nearing 70% of pre-pandemic levels as of May, indicating a resilient recovery of the tourism sector, and with it, potential for further economic growth.

In separate release, Consumer Confidence index nudged up from 36.0 to 36.2. This is the highest reading observed since January 2022, suggesting that households are more optimistic about the economy's trajectory. This could potentially translate into a higher propensity to spend, further bolstering retail sales and overall economic performance in the coming months.

NZ ANZ business confidence rose to -18, subtle signs of easing inflation pressures

New Zealand ANZ Business Confidence Index improved notably from -31.1 to -18.0 in June, marking the highest level since November 2021. Furthermore, the outlook for their own activity rose from -4.5 to 2.7, turning positive for the first time in 14 months.

Digging into the details reveals a more nuanced picture. Despite the improved overall business sentiment, export intentions dipped from 2.0 to -1.8. However, there were more encouraging signs in other areas: investment intentions rose from -6.8 to -2.7, and employment intentions followed suit, moving from -5.7 to -3.5. Meanwhile, pricing intentions have shown a modest decline from 52.4 to 49.3.

On the inflation front, there are tentative signs that pressures might be easing slightly. Cost expectations dropped from 84.1 to 76.0, and inflation expectations decreased from 5.47% to 5.29%. There was also a slight improvement in profit expectations, which rose from -27.4 to -24.1.

Commenting on the results, ANZ noted, "for now, cautious optimism appears to be emerging that the worst could be past – but it's conditional on those inflation indicators continuing to fall."

Australia retail sales rose 0.7% mom, boosted by sales events

Australia retail sales turnover rose 0.7% mom to AUD 35.52B in May, well above expectation of 0.1% mom. Through the year, sales turnover was up 4.2% yoy.

Ben Dorber, ABS head of retail statistics, said: "Retail turnover was supported by a rise in spending on food and eating out, combined with a boost in spending on discretionary goods.

"This latest rise reflected some resilience in spending with consumers taking advantage of larger than usual promotional activity and sales events for May."

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0883; (P) 1.0928; (R1) 1.0957; More...

EUR/USD is extending the sideway pattern from 1.1011 and intraday bias stays neutral. For now, further rally is still mildly in favor. Break of 1.1011 will resume the rise from 1.0634 and target 1.1094 resistance. Decisive break there will resume larger up trend from 0.9534. However, break of 1.0843 will turn bias to the downside for 1.0634 support instead.

In the bigger picture, as long as 1.0515 support holds, rise from 0.9534 (2022 low) would still extend higher. Sustained break of 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high).

Economic Indicators Update

US initial jobless claims dropped -26k to 239k in the week ending June 24, below expectation of 265k. Four-week moving average of initial claims rose 1.5k to 257.5k, highest since November 13, 2021 when it was 260k.

Continuing claims dropped -19k to 1742k in the week ending June 17. Four-week moving average of continuing claims dropped -13k to 1758k.

Full US jobless claims release here.

EURGBP is consolidating after 0.70% advance in past two days, sparked by renewed ECB and Fed’s hawkishness, but keeps firm tone for renewed attack at pivotal 0.8643/54 barriers (Fibo 38.2% of 0.8875/0.8518 / 10WMA) where bulls faced significant headwinds.

Improving daily studies on rising positive momentum, MA’s (10/20/30) now in bullish setup and 10/20 DMA bull-cross formation, support the action and add to positive fundamentals, after the ECB signaled further rise in interest rates and warned that borrowing cost will remain elevated for extended period.

Bulls need a clear break through cracked 0.8643/54 barriers to confirm initial bullish signal and spark further retracement of 0.8875/0.8518 descend.

Falling 55DMA marks initial target at 0.8682, followed by 0.8696 (50% retracement), with stronger bullish acceleration to focus 0.8740 zone (Fibo 61.8%, reinforced by diverging 100/200DMA’s, which formed a bear-cross.

Caution on repeated failure to clear 0.8643/54 barriers, which would signal that bulls might be running out of steam, but near-term bias expected to remain positive while the price action stays above broken daily Kijun-sen (0.8613).

Res: 0.8654; 0.8682; 0.8696; 0.8740.
Sup: 0.8623; 0.8613; 0.8588; 0.8535.

Atlanta Fed President Raphael Bostic signaled a more cautious stance on interest rate hikes, contrary to someof his peers' sentiments. he said, "I don't see as much urgency to move as stated by others, including my Chair," expressing his willingness to assess further signs of economic slowdown before advocating for more aggressive action.

Bostic highlighted the fact that Fed has "only been in restrictive territory for 8-10 months". He is waiting for "more signs that a slowdown is happening in the next several months".

Nevertheless, Bostic left room for adaptability based on incoming data. He remarked, "If inflation moves away from target or seems to significantly stall out, then we'll probably have to do more." However, he also noted that, "We're not seeing either of those right now."

Here's the latest news from Federal Reserve Chair Jerome Powell. While speaking at a conference in Portugal, Powell expressed optimism about the US economy and decreased the possibility of a recession, stating that the economy has shown resilience and is still growing, albeit at a modest pace. He acknowledged the possibility of a recession but emphasized that it is not the most likely scenario. The Federal Reserve recently paused its series of interest rate hikes after ten consecutive increases. Powell mentioned that the Fed's goal is to slow down the economy and reduce consumer demand to curb inflation, which currently stands at double the Fed's target of 2%. The policy approach seems to work, as economic activity has slowed while consumer spending and hiring remain solid. The labor market has been strong, with robust job growth in May. Despite a slight slowdown in wage increases, Powell sees it as a positive development for the fight against inflation. Overall, he believes that finding a balance without a severe downturn is the most plausible outcome.

US DOLLAR - H4 Timeframe

Here on the 4-hour timeframe of the US Dollar, we see the price has now reached a supply zone; a crucial one because it overlaps the 200-period moving average while the moving averages are arrayed in descending order - from top to bottom. The implication of this is the likelihood of rejection from that zone, which would, in turn, result in a bearish impulse from the Dollar.

Analyst’s Expectations:

• Direction: Bearish
• Target: 102.221
• Invalidation: 103.258

XAUUSD - D1 Timeframe

Just like we’ve discussed in several of my past pieces, the price action on the US Dollar often correlates negatively to that of the XAUUSD commodity because Gold is often used as a crucial safety net to hedge against inflationary forces and economic instability. On that note, since the price action on the US Dollar suggests a weakening USD, we can also begin to expect bullish price action from Gold. However, let’s see what the lower timeframe looks like now.

XAUUSD - H4 Timeframe

On the H4 timeframe, XAUUSD has reached an area of demand and would be looking to make a quick reversal from this zone in line with the correlation against the US Dollar. There is also trendline support cutting across this demand zone, adding a confluence to the original sentiment. As a result, I believe the price action would favor the bulls.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1945.73
• Invalidation: 1885.80

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

Daily Pivots: (S1) 181.91; (P) 182.81; (R1) 183.48; More...

Intraday bias in GBP/JPY is turned neutral first with current retreat. But further rise is expected as long as 179.90 support holds. Above 183.74 will resume larger up trend to 138.2% projection of 148.93 to 172.11 from 155.33 at 187.36 next. On the downside, however, break of 179.90 support will confirm short term topping, and turn bias back to the downside for deeper pull back.

In the bigger picture, up trend from 123.94 (2020 low) is extending. Next target is 195.86 (2015 high). For now, medium term outlook will remain bullish as long as 172.11 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 157.27; (P) 157.64; (R1) 158.04; More....

Intraday bias in EUR/JPY stays on the upside for 100% projection of 139.05 to 151.60 from 146.12 at 158.67. Firm break there will target 138.2% projection at 163.46 next. Considering bearish divergence condition in 4H MACD, break of 155.74 minor support will indicate short term topping, and turn bias back to the downside for deeper pull back.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 100% projection of 124.37 to 148.38 from 138.81 at 162.82. For now, medium term outlook will remain bullish as long as 151.60 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.8601; (P) 0.8630; (R1) 0.8665; More...

Intraday bias in EUR/GBP stays on the upside at this point. Rise form 0.8517 short term bottom is in progress. But still, as long as 0.8717 support turned resistance holds, fall from 0.8977 could still have another leg through 0.8517 before completion. Meanwhile, firm break of 0.8717 will turn outlook bullish for 0.8977 resistance next.

In the bigger picture, the down trend from 0.9267 (2022 high) is still in progress. It's seen as part of the long term range pattern from 0.9499 (2020 high). Deeper fall could be seen towards 0.8201 (2022 low). But strong support should be seen from there to bring reversal. This will now remain the favored case as long as 0.8717 support turned resistance holds.