• A big day coming up for markets
• What are the main events for today?
• France’s Macron calls for democratic parties to unite to form a governing pact
• France’s Macron: I do not want to hand the keys of power to the far-right in 2027
• UK April monthly GDP 0.0% vs 0.0% m/m expected
• Germany May final CPI +2.4% vs +2.4% y/y prelim
• US MBA mortgage applications w.e. 7 June +15.6% vs -5.2% prior
• The „crypto president“ says he wants all remaining Bitcoin „to be made in the US“

Markets:

• CHF leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.1%
• US 10-year yields flat at 4.398%
• Gold down 0.1% to $2,312.79
• WTI crude up 1.1% to $78.77
• Bitcoin up 0.8% to $67,800

It was a quiet and more tentative session as markets are waiting on the main events later today.

It will be the first time since June 2020 that the US CPI report and FOMC meeting both falling on the same day, setting up for a blockbuster session in US trading ahead.

That is keeping markets on edge, with major currencies little changed overall. French president Macron came out to say that he will fight on and that is nudging the euro a little higher. EUR/USD is up 0.2% to 1.0760, with the dollar keeping mixed on the day so far.

USD/JPY is seen up 0.2% to 157.35 while GBP/USD is up 0.1% to 1.2755 currently, not doing a whole lot overall.

In the equities space, European indices are seeing a slight bounce back after the political angst weighed on sentiment in the last two days. US futures aren’t doing much though, waiting on the inflation numbers and the Fed later before acting.

It’s been a bit of a wait this week but we’re finally here now. Time to get the party started!

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

• 63 of 65 economists expect BOE to cut rates starting August
• All economists polled expect there to be no change to rates later this month
• 35 of 65 economists see two rate cuts by the BOE for this year
• 24 of 65 economists see three rate cuts by the BOE for this year
• Only 3 of 65 economists anticipate more than three rate cuts by the BOE for this year

It has been a while now that markets and the BOE itself have converged to a timeline for an August move. After a more resilient showing in Q1, the UK economy looks set to return to its sluggish roots again in Q2. That will add some pressure for the BOE to move, although price pressures remain relatively sticky for the time being.

It will certainly be a test of the central bank’s resolve with August being just two months away now.

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

The USD has been stronger
since last Friday following the US NFP report where the data surprised with solid jobs
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.

The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.

The CAD, on the other hand, has been already a bit under pressure as the Bank of Canada delivered a slightly more dovish
cut than expected. Overall, the central bank said that they remain data
dependent and the rate cuts expectations didn’t change much.

If we go back into risk-on
sentiment, the greenback could start to lose ground against the major
currencies again, so the US CPI report today will be key as the recent breakout
could be invalidated in case we get soft data. On the other hand, if we get a
hot report, we should see the pair reach the 1.3861 level in the next weeks.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD broke out of the recent range as it breached the 1.3740 resistance following the US NFP release. The
target for the buyers remains the 1.3860 level and we can expect them to pile
in around the recent resistance now turned support.

The sellers, on the other
hand, will want to see the price falling back below the 1.3740 zone to
invalidate the bullish bias and start looking for a drop back into the 1.36
support.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the breakout and the support now around the 1.3740 level where
we can also find the 38.2% Fibonacci retracement level for confluence.

This is where we can expect
the buyers to step in with a defined risk below the support to position for a
rally into the 1.3860 level with a better risk to reward setup. The sellers, on
the other hand, will want to see the price breaking lower to position for a
drop back into the 1.36 support.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a trendline around the 1.3720 level which is
going to be the last line of defence for the buyers in case the price dips
below the support. The red lines define the average daily range for today but do note that the
price can extend beyond them when there are strong catalysts like today’s US
CPI report.

A hot report should give
the buyers even more conviction to increase the bullish bets into new highs,
while in-line or soft data will likely give the sellers more control.

Upcoming
Catalysts

Today we get the US CPI data and the FOMC rate decision. Tomorrow,
we have the US PPI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the University of Michigan Consumer Sentiment survey.

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

• Prior -5.2%
• Market index 208.5 vs 180.4 prior
• Purchase index 143.7 vs 132.3 prior
• Refinance index 554.7 vs 432.1 prior
• 30-year mortgage rate 7.02% vs 7.07% prior

That’s quite a rebound in mortgage applications in the past week, owing much to a surge higher in refinancing activity. The latter is seen jumping up to its highest since September 2022. The data has been rather volatile in the last few weeks especially, so we’ll have to see how this plays into the overall trend in the months ahead.

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

Based on the attached chart and the highlighted guidance, here’s a detailed trade idea for Russell:

Let’s break down the key elements of this trade setup:

• Retest:
  • The price action appears to be revisiting a previous support level (horizontal line) after a pullback. This retest suggests a potential buying opportunity if the price bounces back up. 🛠️
• Anchored VWAP:
  • The purple line on the chart indicates the Volume-Weighted Average Price (VWAP), acting as a dynamic support/resistance zone. A retest of this area, combined with the support level, strengthens the case for a long position. 📊

Trade setup details:

• Trade setup: Long position on Russell with a reward-to-risk ratio of 4.5:1.
• Entry point: Place a limit buy order at 2021.8 🛒
  • This entry point is just above the recent retest and the anchored VWAP, which serves as a confluence of support.
• Stop loss: Set a stop loss at 2011.5 🚫
  • This means risking 10.3 points on the trade, ensuring a manageable risk.
• Take profit: Aim for a target profit of 46.3 points, exiting at 2068.1 🎯
  • This target capitalizes on the potential upside with a favorable reward-to-risk ratio.

Partial profit strategy:

• Initial partial profit:
  • Consider taking partial profits (50-80% of the position) when the price reaches the target zone 📊.
  • This approach helps to lock in gains and reduce exposure.
• Adjust stop loss:
  • After taking partial profits, move the stop loss to the entry point (2021.8) to secure the remaining position 🔒.
  • This step ensures the trade remains risk-free for the remaining position.

Long-term position:

• Swing trade potential:
  • Hold the remaining position for a longer-term swing trade, riding the potential upward momentum 📈.
  • This strategy allows for additional gains if the bullish trend continues.

Technical consideration:

• Pattern analysis:
  • The trade is based on the descending wedge pattern visible in the chart, indicating a potential breakout 📉➡️📈.
  • The confluence of the retest and anchored VWAP adds to the trade’s validity.

Risk management:

• Proper position sizing:
  • Ensure proper risk management and position sizing to protect your capital 🔐.
  • Only risk a small percentage of your trading account on any single trade to manage potential losses.

Note: This trade idea is shared for informational purposes only and is at the trader’s discretion and own risk. Always perform your own analysis and consult with your financial advisor before making any trading decisions.

This article was written by Itai Levitan at www.forexlive.com.

• The waiting game continues
• ECB’s Lane: We are not pre-committing to a particular rate path
• ECB’s Lane: We will be agile on interest rates
• ECB’s Rehn: Monetary policy has dampened price pressures
• ECB’s Villeroy: We have leeway to lower rates before exiting restrictive stance
• BOJ to begin tapering bond purchases at this week’s meeting – poll
• UK April ILO unemployment rate 4.4% vs 4.3% expected
• US May NFIB small business optimism index 90.5 vs 89.7 prior
• China premier Li Qiang is to visit Australia later this week
• OPEC maintains 2024 oil demand growth forecast in latest report

Markets:

• GBP leads, EUR lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields down 3.2 bps to 4.437%
• Gold down 0.2% to $2,306.94
• WTI crude down 0.2% to $77.58
• Bitcoin down 3.9% to $66,909

It was a slower session once again as markets are finding it tough to have any convictions before the main events later this week.

The euro was lower, carrying over the softer mood from yesterday. The political worries continue to permeate, weighing again on European stocks as well after a light bounce at the open. EUR/USD is down 0.3% to 1.0730 while EUR/GBP is down to nearly two-year lows at 0.8420 levels currently.

Besides that, major currencies were less enthused with the dollar keeping steadier overall. USD/JPY is flat and continuing to hug near the 157.00 level.

In the equities space, US futures are nudging lower as the push and pull continues ahead of tomorrow’s CPI and Fed showdown. As for the bond market, yields are tracking back a little after the rise yesterday. So, the mix of all that isn’t giving traders much firm direction so far this week.

The waiting game continues ahead of the key risk events on the week. The happenings tomorrow should help to kick things into gear. But until then, we’ll just have to wait for a bit more.

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

To balance their outlook, they raised to Q2 2024 forecast by 50k bpd instead. That sees the total 2024 world oil demand growth forecast unchanged at 2.25 mil bpd. For 2025, that figure is also left unchanged at 1.85 mil bpd.

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

• Still have many degrees of flexibility to react to upside or downside shocks
• Have a good degree of confidence at arriving at 2% inflation target

As much as he is trying to sell that they are flexible, there’s only one outlook on their policy stance right now. And that is for lower rates. That especially since the economy, while resilient in Q1, is still relatively soft.

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

• Rates are to stay sufficiently restrictive for as long as needed
• There is still high level of uncertainty
• Price pressures are still elevated and is evident in indicators for domestic inflation
• Economic activity is recovering

This is mainly a rehash of Lagarde’s remarks from last week. Don’t expect anything different from the ECB until we get to the July meeting.

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

The USD came back with a
vengeance last Friday following the strong US NFP report where the data surprised with solid job
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.

The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.

The AUD, on the other hand,
has been supported by a slightly more hawkish RBA and the positive risk
sentiment due to the pickup in global growth. Moreover, the pickup in China’s
economy is generally good news for the Aussie as well as it’s Australia’s
biggest trading partner. If we go back into risk-on sentiment, the greenback
could start to lose ground again.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD dropped back into the bottom of the recent range around the
0.66 handle where we can also find the 38.2% Fibonacci
retracement level of the entire rally since the end of April.

This is where we can expect
the buyers to step in with a defined risk below the support
to position for a rally into new highs with a better risk to reward setup. The
sellers, on the other hand, will want to see the price breaking lower to gain
even more conviction and target the 0.6464 level next.

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. The US CPI report tomorrow will likely decide where we are
going to go next as hot data should give the USD even more strength and send
the pair lower, while soft figures will likely weaken the greenback leading to
a rally in AUDUSD.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that from a risk management perspective, the sellers will have a better
risk to reward setup around the 0.6630 resistance where they will also find the
38.2% Fibonacci retracement level of the recent drop.

The buyers, on the other
hand, will want to see the price breaking higher to gain even more conviction
and increase the bullish bets into new highs. The red lines define the average
daily range for today.

Upcoming
Catalysts

This week is a bit empty on the data front although we will
have the biggest market moving events tomorrow when we get the US CPI data and
the FOMC rate decision. On Thursday, we have the US PPI and the latest US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment survey.

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