Headlines:

• Risk tones stay more cautious in European morning trade
• ECB’s Vujčić: Core inflation pressures remain in the euro area
• Germany May PPI -1.4% vs -0.7% m/m expected
• Eurozone April current account balance €4.0 billion vs €31.2 billion prior
• HSBC slashes China 2023 GDP forecast to 5.3% from 6.3% previously
• Citi cuts its China GDP forecast for 2023 to 5.5%, from 6.1%
• ForexLive Asia-Pacific FX news wrap: The PBOC cut rates, as expected

Markets:

• JPY leads, AUD lags on the day
• European equities mostly lower; S&P 500 futures down 0.4%
• US 10-year yields down 0.4 bps to 3.765%
• Gold flat at $1,950.43
• WTI crude flat at $71.75
• Bitcoin up 0.3% to $26,795

It looks like European traders are waiting on Wall Street before firming up any market moves but it was a session where risk tones remained on the defensive.

China’s rate cuts were greeted with disappointment in Europe, as equities are looking fairly sluggish and kept that way throughout the session. That is pinning the antipodeans lower, with the aussie leading losses in the major currencies space.

AUD/USD was already down to 0.6800 in Asia before extending that drop to 0.6785 – now down 0.9% on the day. The aussie’s plight is not helped by the softer risk mood, a weaker yuan, and some mixed language in the RBA minutes earlier.

The US dollar traded more mixed, keeping relatively steady against the euro while holding a light advance against the pound. But the yen is recovering from last week’s plunge a little, with USD/JPY falling today from 142.00 to 141.40 as Treasury yields also retreat after an early advance.

That might be a sign that we are seeing some risk aversion and perhaps some rotation from stocks to bonds ahead of month-end and quarter-end.

This article was written by Justin Low at www.forexlive.com.

The recent expectations and
eventually the pause in its tightening cycle from the Fed led to a big weakness
in the USD that helped the other major currencies to rally. Although the Fed
has signalled that two more rate hikes might come in the Dot Plot, the market
doesn’t see such a chance due to the recent weakness in the economic data. All
else being equal, the Fed might even skip the July hike if the disinflationary
trend continues, and the labour market data keeps on weakening.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD had
a pretty strong rally since the first hints of a pause in June from a couple of
Fed members. The price has recently broken above the 0.6182 resistance but
pulled back as the rally got overstretched. We may now see a classic “break and
retest” of the broken resistance turned support and
another rally into the 0.63 handle.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has
pulled back into support where we can also find confluence with the
38.2% Fibonacci retracement level
and the lower bound of the regression channel. This is where we should see the
buyers piling in with a defined risk below the Fibonacci level and target the
0.63 level. The sellers, on the other hand, may want to wait for the price to
break below the Fibonacci level to get more conviction and target the 0.6085
support.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a downtrend on this timeframe as the moving averages are
crossed to the downside and the price is making lower lows and lowers highs.
The price has recently pulled back into a previous swing low level where there
is also confluence of the red 21 moving average and the trendline. This
is where more aggressive sellers should enter the market targeting a break
below the support zone and new lows. The buyers, will need to break above this
trendline to switch the momentum to the upside and target the 0.63 handle.

This week
is pretty bare on the data front with just the US Jobless Claims on Thursday
and the US PMIs on Friday. We will also hear from many Fed officials including
Fed Chair Powell who’s expected to testify to Congress on Wednesday and
Thursday.

This article was written by FL Contributors at www.forexlive.com.