• Prior +7.2%
• CPI -0.1% vs +0.2% m/m expected
• Prior +0.4%
• HICP +6.3% vs +6.8% y/y expected
• Prior +7.6%
• HICP -0.2% vs +0.2% m/m expected
• Prior +0.6%

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

• We have the votes to pass the debt limit bill today – McHenry
• Fed’s Mester: No compelling reason to wait on rate hikes
• ECB’s de Guindos: Inflation data today and yesterday has been positive
• ECB’s Villeroy: It is quite likely that inflation has passed its peak in France
• Traders pare ECB rate hike bets after French inflation data
• France May preliminary CPI +5.1% vs +5.5% y/y expected
• Saxony May CPI +6.5% vs +7.6% y/y prior
• Bavaria May CPI +6.1% vs +7.2% y/y prior
• North Rhine Westphalia May CPI +5.7% vs +6.8% y/y prior
• Italy May preliminary CPI +7.6% vs +7.4% y/y expected
• Germany April import price index -1.7% vs -0.5% m/m expected
• Germany May unemployment change 9k vs 15k expected
• France Q1 final GDP +0.2% vs +0.2% q/q prelim
• Italy Q1 final GDP +0.6% vs +0.5% q/q prelim
• US MBA mortgage applications w.e. 26 May -3.7% vs -4.6% prior

Markets:

• USD and JPY lead, AUD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields down 5 bps to 3.646%
• Gold flat at $1,959.58
• WTI crude down 2.6% to $67.67
• Bitcoin down 2.4% to $27,121

It was an eventful session as there were a couple of broad market themes playing out in European trading today.

For one, the dollar resumed its bid from last week as it advanced across the board despite falling yields once again (it was the opposite yesterday). Poor China data from Asia trading earlier sort of set the tone for a more risk-off mood in Europe and that was certainly the case with the greenback gaining ground alongside the yen.

Equities fell as such and even with lower inflation figures in France, Italy, and German states, it wasn’t enough to turn the tide.

Instead, it was a typical flight to safety with commodity currencies and oil being offered. Despite a stronger dollar, gold held its ground as it seems like haven bids are helping out.

Going back to FX, EUR/USD declined from 1.0710 to 1.0660 before holding around 1.0680 now. Meanwhile, GBP/USD also fell from 1.2390 to 1.2350 with USD/CHF even moving up by 0.5% to clip the 0.9100 level on the day.

But it was against the commodity currencies where the dollar did most of its work, with AUD/USD down 0.6% to 0.6475 and NZD/USD down 0.6% as well to test the 0.6000 mark. Both pairs are down to their lowest levels for the year, threatening a further downside break.

WTI crude is keeping down by nearly 3% on the day as China’s worries weigh on demand prospects, testing waters below $68.

Month-end trading is also in focus, so just keep an eye out ahead of the London fix later in case we do get another injection of volatility.

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

On the
daily chart below, we can see that USDCHF has recently broke out of the major
downward trendline and has
now extended towards the 0.91 handle. The moving averages have
crossed to the upside confirming the change in trend. The rally has come amid
strong US economic data in May that have made the market to reprice interest
rates expectations on the hawkish side. In fact, the market is now giving a 65% probability for a 25
bps hike at the June meeting. This can all change with the next NFP and CPI
reports of course, so traders will be very attentive to those two releases.

USDCHF Technical Analysis

On the 4
hour chart below, we can see that USDCHF has recently bounced again on the
upward trendline, as that has been a strong support since the price bottomed in
early May, and kept offering buyers good entry points. We can notice that now
the price is diverging with the
MACD right
when it approaches the resistance at 0.91.
This is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we may get a pullback either to the broken resistance turned support at
0.9070 or even better the upward trendline.

On the 1
hour chart below, we can see that we have a strong support zone at the 0.9070
level. In case USDCHF pulls back, the buyers will be leaning on that level with
a defined risk just below it and target the breakout of the 0.91 handle for new
highs afterwards. The sellers, on the other hand, should defend the 0.91 handle
here targeting new lower lows and thus offer the pullback to the support zone.

As
mentioned above, the trend is bullish, so the sellers will have much more work
to do before getting back the control. In fact, only a break below the upward
trendline would switch the bias to the downside and see the sellers piling in
more aggressively.

This article was written by ForexLive at www.forexlive.com.

• Prior -4.6%
• Market index 197.4 vs 205.0 prior
• Purchase index 154.4 vs 158.3 prior
• Refinance index 412.5 vs 443.0 prior
• 30-year mortgage rate 6.91% vs 6.69% prior

Once again, mortgage activity declined as there is a significant jump in the interest rate of the most popular US home loan. The 30-year rate increased to 6.91% in the past week, marking its highest level since the first week of November last year. That led to a further decline in both purchase and refinancing activity. Pain.

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

It’s all just semantics at this point as the debt ceiling issue is now kicked down the road once again, as it has always been over the past many decades. As mentioned earlier in the week, this isn’t going to be a concern for markets anymore as the focus switches back to central banks, inflation, and the economy.

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