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EUR/GBP daily

On the daily chart, EUR/GBP is trading in a bull leg flirting with the 200-day simple moving average (SMA) at 0.8794. 
EUR/GBP is reversing up from the 2019 low while it has been up for 11 consecutive days.

EUR/GBP 4-hour chart

EUR/GBP is trading in a bull channel above its main SMAs.

EUR/GBP 30-minute chart

EUR/GBP is trading above its main SMAs suggesting bullish momentum. The next resistance buyers will need to overcome is at 0.8780 level. If broken, bulls might set their eyes on 0.8820 level resistance. On the way down, immediate support is at the 0.8750 and 0.8620 levels.

Additional key levels

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In an interview with German daily Handelsblatt, James Bullard, president of the St. Louis Federal Reserve, said that he was worried about low core inflation and added that he would get more aggressive in pushing the FOMC to lower the policy rate if the softness in inflation were to become persistent.

“On the inflation part of our mandate our preferred measure of inflation which is core PCE inflation is only running at 1.6 percent year-over-year,” Bullard explained. “This is a concern to me. I do think that this number plus relatively low inflation expectations warrant attention from the FOMC.”

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NZD/USD trading range narrows in the second half of the day. US Dollar Index stays calm below the 98 mark. FOMC Chairman Powell and Vice Chair Clarida are scheduled to speak today.

The NZD/USD pair is fluctuating in a very tight range on Monday as the trading action in the FX space turns subdued in the absence of fundamental drivers. As of writing, the pair was up 0.25% on a daily basis at 0.6535.

Despite the modest rebound today, the pair is likely to struggle to gather bullish momentum in the near-term as investors are staying on the sidelines while waiting to see the impact of the U.S. decision to cut off Huawei supplies on the U.S.-China trade dispute. An escalation in the conflict could continue to hurt antipodeans such as the kiwi as we have witnessed in the previous week and put the pressure under a renewed bearish pressure.

Meanwhile, following last week’s rally, the US Dollar Index is extending its consolidation phase below the 98 mark today, helping the pair remain in its narrow trading band. Later in the session, FOMC Vice Chair Clarida and Chairman Powell will be delivering speeches. 

The only data from the U.S. revealed that the Chicago Fed’s National Activity Index dropped to -0.45 in April from 0.05 in March but was largely ignored by the participant. 

Credit card spending from New Zealand will be released in the early trading hours of the Asian session on Tuesday ahead of the GDT auction and the retail sales data on Wednesday.

Technical levels to watch for

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The Swiss franc is among top European performer today, on a quiet session.  USD/CHF heads for first lost after rising during four days in-a-row. 

The USD/CHF pair is trading at 1.0085, near the daily low it reached after the beginning of the American session at 1.0079. The pair holds a bearish intraday tone amid a lower US Dollar across the board. Today the Swiss franc is up also against the Euro and the Pound. EUR/CHF reached the lowest level since April 11 at 1.1255 

The greenback is falling amid lower US yields, a decline in equity prices in Wall Street and also following the release of the Chicago Fed Activity Index that showed a decline to -0.45 from 0.05 (below the -0.33 expected). The US Dollar Index (DXY) is down 0.10%, back below 98.00. Wall Street is falling on the back of Huawei fallout concerns and the impact on trade negotiations. 

USD/CHF Retreating from the 20-day moving average

A week ago, USD/CHF bottomed at 1.0049 and then started to correct higher, rising during four consecutive days. On Friday it lost strength after reaching a top at 1.0120. The mentioned level was tested today but it held below. It has become the key barrier to the upside and is also the 20-day moving average. A daily close above 1.0120 would clear the way for an extension to the upside. While it remains below, the bias would favor the downside. 

Below the daily low, the next support might be seen at 1.0070, followed by the last week low at 1.0050 and then 1.0025/30. 

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EUR/USD daily chart

EUR/USD is trading in a bear trend below its main simple moving averages (SMAs). 


EUR/USD 4-hour chart

EUR/USD is trading below its main SMAs suggesting a bearish momentum in the near term. 

EUR/USD 30-minute chart

The market is trading above the 50 and 100 SMAs suggesting a consolidation in the short term. The next hurdle for bulls is 1.1180 resistance followed by 1.1200 the figure and 1.1220 level. On the flip side, a break below 1.1150 (Monday low) can lead to 1.1140 and 1.1110 (2019 low) on the way down.

Additional key levels

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According to Morgan Stanley, the global economy is likely to head to a recession if the U.S. and China fail to reach a trade deal and the U.S. decides to impose 25% tariffs on the remaining Chinese imports worth $300 billion, as reported by Reuters.

Morgan Stanley further argued that the Fed would cut rates back to zero by 2020 if that were to materialize and China would ramp up the fiscal stimulus by around $500 billion to 3.5% of its GDP.

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10-year US T-bond yield turns positive on the day. Wall Street rebounds after starting the day deep in the red. US Dollar Index continues to move sideways below 98.

After edging higher to a two-week high of 110.30 during the Asian session, the USD/JPY pair reversed its direction and erased 50 pips to touch a session low 109.80 in the early trading hours of the NA session before rebounding modestly. As of writing, the pair was down 0.1% on the day at 110.

Pressured by the ongoing conflict with the U.S. government and the Chinee tech-giant Huawei, major equity indexes in the U.S. started the day deep in the negative territory today to help the safe-haven JPY outperform its rivals. However, the fact that the Dow Jones Industrial Average almost returned to last week’s closing level in the last hour and the 10-year Treasury bond yield turned positive on the day suggests that the market sentiment is turning neutral.

On the other hand, the US Dollar Index, which gained 0.7% on a weekly basis to close near 98 last Friday, stays in the upper half of its latest trading range, helping the pair limit its losses. Although the data published by the Chicago Fed today hinted at a slowdown in the economic expansion in April, the greenback didn’t have a difficult time resilient against its major rivals. The DXY was last at 97.94, losing only 0.07% on a daily basis.

The next data from Japan, machinery orders and trade balance, will be released on Wednesday and the risk perception is likely to continue to drive the pair’s price action in the near-term.

Technical levels to consider

With a daily close above 110 (psychological level), the pair could target 110.40 (20-DMA) and 110.80 (100-DMA). On the downside, support could be seen

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In view of analysts at BNP Paribas, Eurozone’s slowdown is becoming increasingly evident, especially in the German economy, which has suffered from one-off factors but also from a slowdown of exports to China.

Key Quotes

“Capacity constraints also play a role. Business climate in the manufacturing sector continues to decline. Italy has now entered a technical recession with quarterly growth negative in the third and fourth quarter of 2018.”

“Inflation is now expected to decrease following the past drop in the oil price, while core CPI is hardly moving. The activity slowdown also implies that the pick-up in core inflation should be slower than expected until recently. We do not expect the ECB to move rates this year.”

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GBP/USD daily chart

GBP/USD has been trading steeply down in the last two weeks. The major supports to the downside are seen at 1.2700 figure, 1.2670 swing low and 1.2550 figure.

GBP/USD 4-hour chart

GBP/USD is below its main SMAs.


GBP/USD 30-minute chart

GBP/USD is currently consolidating above the 1.2700 figure. Cable is trading below its 100 and 200 SMA while above the 50 SMA. It is unclear if the bears will give it another go to the downside or if the market will be stabilizing above 1.2700. A recovery would put 1.2760 to the test followed by 1.2800 figure. Supports are at 1.2700 and 1.2670 levels.


Additional key levels

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Analysts at Deutsche Bank lists down the key events and macro releases from across the globe, which are going to have maximum impact on the markets.

Key Quotes

“Tuesday: Another sparse session for data releases with the May CBI survey in the UK, May consumer confidence for the Euro Area and April existing home sales in the US the data due. The Fed’s Powell will speak early in the morning, followed later on in the afternoon by Evans and Rosengren. BoE Governor Carney is due to testify to Parliament about the May inflation report. The OECD will also publish its latest Economic Outlook.”

“Wednesday: The highlight will likely be the release of the FOMC minutes from the April 30-May 1 meeting. As for data, Japan’s April trade balance is due in the morning followed by April inflation and public sector net borrowing data in the UK. There’s nothing of note in the US. The Fed’s Bullard, Williams and Bostic are all due to speak, along with the ECB’s Draghi and Praet. The BoJ’s Harada will also speak in the morning.”

“Thursday: The European Parliament will start the four-day process of holding continent wide elections. As for data, the headline releases are the flash May PMIs in Europe and the US. The flash manufacturing PMI in Japan will also be released. Elsewhere, the final Q1 GDP revisions are due in Germany, May confidence indicators in France, May IFO survey in Germany and claims, April new home sales and April Kansas Fed manufacturing survey due in the US. The Fed’s Kaplan, Daly, Bostic and Barkin are also due to speak, while over at the ECB Nowotny is due to speak. The ECB meeting minutes from the April policy decision is also due.”

“Friday: Data releases include April inflation in Japan, April retail

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