• Euro holds higher as France’s far-right sweep first round of elections
• USDJPY Technical Analysis – The bullish bias remains intact
• Bavaria June CPI +2.7% vs +2.7% y/y prior
• Eurozone June final manufacturing PMI 45.8 vs. 45.6 prelim
• UK June final manufacturing PMI 50.9 vs 51.4 prelim
• UK May mortgage approvals 59.99k vs 59.90k expected
• UK June Nationwide house prices +0.2% vs -0.1% m/m expected
• SNB total sight deposits w.e. 28 June CHF 452.0 bn vs CHF 451.8 bn prior

Markets:

• EUR leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 0.8 bps to 4.408%
• Gold up 0.5% to $2,336.82
• WTI crude up 0.6% to $81.97
• Bitcoin up 4.2% to $62,643

The main mover among major currencies to start the week is the euro. The single currency opened with a gap higher after the first round of the French elections, which shows a comfortable win for Le Pen’s far-right faction.

It is perhaps the lack of any real surprises that is giving some relief to the euro, with some pollsters anticipating a relative majority with an outside chance of an absolute majority for the National Rally party.

Macron’s alliance has been significantly weakened and it doesn’t look bode well for them ahead of the second round of votes on 7 July. That said, there is still much uncertainty as we have to wait on deal-making developments in the days ahead. I wouldn’t rule out a political standstill so quickly, so be cautious on the euro gains.

EUR/USD stuck around 1.0740-50 levels mostly, up around 0.3% to 0.4% on the day. The dollar is keeping more mixed across the board, with little changes elsewhere. USD/JPY continues to stay buoyed at around the 161.00 level.

Besides that, we got the German state CPI readings and they reaffirmed a slight softening in headline annual inflation for June. That should see the national reading later come in more or less around estimates of 2.3%.

In the equities space, French stocks are leading the way but have seen the optimism tempered slightly. The CAC 40 index opened with gains of around 2.6% but are now up just 1.5% on the day. As for US futures, S&P 500 futures are up 0.2% with Wall Street hoping to keep the July winning streak going this year.

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

The USD started the week on
the backfoot as the new month begins. The last week’s strength might have been
influenced more by quarter-end flows rather than something fundamental as the
economic data didn’t change interest rates expectations. Nonetheless, the data should
continue to support the risk sentiment amid a pickup in growth without
inflationary pressures.

The AUD, on the other hand,
should be favoured in such environment as it’s also backed by a slightly more
hawkish RBA. Last week, the Aussie got a boost from
another hot monthly CPI report which raised the chances of
a rate hike, although RBA’s
Hauser poured some cold water on the expectations as he would rather hold rates
steady for longer.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD is getting close to the key resistance zone around the 0.6713 level. All
else being equal, the fundamentals are in place for an upside breakout. That’s
what the buyers will want to see to increase the bullish bets into the 0.6870
level next.

The sellers, on the other
hand, will likely step in around the 0.6713 resistance zone with a defined risk
above it to position for a drop back into the bottom of the range at 0.66.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action between the 0.67 resistance and
the 0.66 support. These will be the key levels that the market will need to
break to start a more sustained trend. For now, we could keep bouncing around until
we get a clear breakout.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the recent price action has formed another minor range between the 0.6625
support and the 0.6680 resistance. From a risk management perspective, the
buyers will definitely have a better risk to reward setup around the supports,
while the sellers will want to lean on the resistances.

Nevertheless, if the
price stays above the 0.6680 resistance, the buyers should remain in control and
extend the rally into the 0.6713 resistance. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is full of important events. We begin today with the release of the US
ISM Manufacturing PMI. Tomorrow, we have the US Job Openings and Fed Chair
Powell speaking. On Wednesday, we get the US ADP, the US Jobless Claims, the US
ISM Services PMI and the FOMC Meeting Minutes. Thursday is going to be a US
Holiday for Independence Day. Finally, on Friday, we conclude the week with the
US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

It’s tough to see this bounce as being any more than a slight relief for now. There were no major surprises to the outcome of the first round of votes in the French elections. And I reckon that’s what markets are responding to mostly, alongside the fact that the worst-case scenario of there being a political standstill may be avoided.

The pollsters have Le Pen’s far-right faction likely winning a relative majority with even a small chance of obtaining an absolute majority. I still hold reservations on the latter and in any case, it is still too early to be calling anything just yet. A lot can still change in the days ahead before the second round of votes on 7 July.

I outlined some of the more important details with regards to the parliamentary seats earlier here.

Going back to the euro, it opened with a gap higher today with EUR/USD consolidating gains around 1.0750-60 levels mostly. The high earlier touched 1.0775 but I would argue that the bounce on the day is not too outstanding.

The US ISM manufacturing PMI will be the next key risk event to watch later in the day.

Looking to the chart above, there is still the confluence of the 100 and 200-day moving averages at 1.0790-92 to work through. That alongside key offers at the 1.0800 mark. That will be the key resistance region in keeping a lid on any gains in the euro this week. And I reckon it will do just that.

Besides that, there are also some larger option expiries to take note of throughout the week itself.

On Wednesday, there will be a sandwich of expiries at 1.0700 (€1.5 billion), 1.0750 (€1.0 billion), and 1.0800 (€1.4 billion). On Friday, there are ones at 1.0700 (€1.7 billion) and 1.0800 (€1.9 billion). Those are also likely to factor into the equation in locking price action before we get to the US non-farm payrolls.

In the meantime, just look out for any developments on the French political front. That will be the other driver of EUR/USD price action before the big event on Friday.

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

The USD started the week on
the backfoot as the new month begins. The last week’s strength might have been
influenced more by quarter-end flows rather than something fundamental as the
economic data didn’t change interest rates expectations. Nonetheless, the data
continues to support the risk sentiment amid a pickup in growth without
inflationary pressures.

Even if the US Dollar weakens against the other major currencies, the JPY in this environment
should keep losing ground and the Japanese officials
can’t do much to reverse the trend unless the fundamentals change. We will
likely need weak US growth data to see some sustained Yen strength, although it
might be short lived if it’s not enough to make the market to price in more
aggressive rate cuts for the Fed.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY eventually managed to break above the key 160.00 handle and
extended the rally as the lack of intervention gave the market a bit more
confidence to target new highs.

If we get a pullback into
the 160.00 level, we can expect the buyers to step back in with a defined risk
below the level to target new highs. The sellers, on the other hand, will want
to see the price falling back below the 160.00 handle to gain some conviction
and start targeting the major trendline around the 157.00 handle.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor trendline defining the current upward momentum. We can
expect the buyers to lean on the trendline to keep pushing into new highs,
while the sellers will need to see the price breaking below the trendline and
the 160.00 level to start targeting new lows.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance zone around the 161.25 level as the price
continues to consolidate just beneath it. The buyers will want to see the price
breaking higher to increase the bullish bets into the 165.00 level next, while
the sellers will keep on looking for a break below the trendline to target a
pullback into the 160.00 handle. The white lines define the average daily range for today.

Upcoming
Catalysts

This week is full of important events. We begin today with the release of the US
ISM Manufacturing PMI. Tomorrow, we have the US Job Openings and Fed Chair
Powell speaking. On Wednesday, we get the US ADP, the US Jobless Claims, the US
ISM Services PMI and the FOMC Meeting Minutes. Thursday is going to be a US
Holiday for Independence Day. Finally, on Friday, we conclude the week with the
US NFP report.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 61.14k; revised to 60.82k
• Net consumer credit £1.5 billion
• Prior £0.7 billion; revised to £0.8 billion

Individuals borrowed, on net, £1.2 billion of mortgage debt in May – down from £2.2 billion in April. That sees the annual growth rate for net mortgage lending rising to 0.3% in May, up from 0.2% in April – which was the first rise in the growth rate since October 2022.

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