Headlines:

• USD/JPY pares gains on the day as risk flows weigh
• French stocks near the next key technical juncture amid a further drop today
• The Fed’s preferred measure of inflation is expected to ease further
• BOJ governor Ueda: It is important to reduce JGB purchases in a predictable manner
• BOJ governor Ueda says will begin tapering bond purchases immediately after July meeting
• BOJ governor Ueda: The pre-announcement today is an exceptional measure
• BOJ governor Ueda: Will adjust rates if underlying inflation rises towards 2% target
• Japan’s Hayashi says will continue to closely monitor FX market
• ECB’s Vasle: rate cutting is likely to be slower than hiking was
• ECB’s Kazāks: Market expectations on rates are ‚reasonable‘
• ECB’s Centeno: Disinflation process to resume after August
• France May final CPI +2.3% vs +2.2% y/y prelim
• Eurozone April trade balance €15.0 billion vs €20.0 billion expected
• China May M2 money supply +7.0% vs +7.2% y/y expected

Markets:

• CHF leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields down 3.5 bps to 4.205%
• Gold up 1.2% to $2,331.17
• WTI crude up 0.1% to $78.68
• Bitcoin up 0.5% to $67,030

The session started with a focus on the Japanese yen, with markets taking to the more dovish decision by the BOJ to only pre-announce the tapering of their JGB purchases. The central bank said that they will only go into more detail on that in July, disappointing those expecting the decision to have come today instead.

USD/JPY was holding higher near 158.00, before extending gains to a high of 158.25 ahead of Ueda’s press conference. The pair lingered around 157.80-00 in the aftermath, before heavier risk flows weighed on market sentiment.

Equities sank while bond yields dropped as safety flows came into play and that dragged USD/JPY down to 157.00.

The dollar though, maintained a modest advance elsewhere with EUR/USD falling from 1.0720 to 1.0670. GBP/USD also fell from 1.2740 to 1.2695 before a mild bounce now to 1.2715 on the day.

The commodity currencies are the laggards as such, with AUD/USD down 0.2% to 0.6620 and NZD/USD down 0.5% to 0.6135 currently. The franc is the standout, with USD/CHF itself down 0.2% to 0.8920 on the day.

It looks like the unhealthy balance in the equities space is finally catching up to tech stocks. And that could spell for an ugly day to wrap up the week. In the bigger picture, this is very much a repeat of the runback from last month’s CPI report as well.

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

Fundamental
Overview

The USD was sold across the
board on Wednesday following the soft US CPI report. The data made the market to price back
in two cuts for this year. Later in the day though we got a bit more hawkish
than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this
year despite the soft US CPI report.

This gave the greenback a
boost although Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. Moreover,
the US Dollar found further support yesterday as the market went into risk-off
mode for unclear reasons.

The GBP, on the other hand,
got under pressure mainly because of the risk-off sentiment and the US Dollar
strength. If we go back into risk-on, we should see the greenback losing ground
against the Pound again.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD spiked above the 1.28 handle following the soft US CPI release
but eventually gave back everything following the more hawkish than expected
FOMC decision and the risk-off sentiment.

The price is now trading around
a key support
zone at the 1.27 handle. A breakdown should open the door for new lows with the
first target coming around the 1.26 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have the 38.2% Fibonacci retracement level of the entire rally since
April standing around the 1.2634 level which is going to be the first target
for the sellers in case the price breaks decisively below the 1.27 support zone.

The buyers, on the other
hand, will likely step in here at the 1.27 support zone with a defined risk
below it to position for a rally into new highs.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price is near the lower level of the average daily range. This is where we might see a
bounce as the price generally doesn’t extend beyond the level without a strong catalyst.

In case we get a pullback,
the sellers will likely lean on the minor downward trendline
and the 38.2% Fibonacci retracement level at 1.2740. The buyers, on the other
hand, will want to see the price breaking higher to gain even more confidence
and increase the bullish bets into new highs.

Upcoming
Catalysts

Today we conclude the week with the University of Michigan Consumer Sentiment
survey where the data is expected to show an increase to 72.0 vs. 69.1 prior.

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

• Some recovery in real wages is inevitable
• We should continue to be data-dependent

Despite the headline remark, he isn’t as confident to suggest when exactly the ECB can resume cutting rates. For now, July is definitely out of the question. But they’re not pre-committing to a September move for the time being at least.

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

Fundamental
Overview

The USD was sold across the
board on Wednesday following the soft US CPI report. The data made the market to price back
in two cuts for this year. Later in the day though we got a bit more hawkish
than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this
year despite the soft US CPI report.

This gave the greenback a
boost although Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. Moreover,
the US Dollar found further support yesterday as the market went into risk-off
mode for unclear reasons.

The EUR, on the other hand,
got hit hard by the European elections as the political uncertainty weighed
on the sentiment and led to some increase in bonds risk premia and selloff in
European stocks.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD broke through the key 1.0727 support
zone today and increased the bearish momentum as the sellers piled in more
aggressively. The target should be around the 1.06 handle. A break below the
1.06 handle would open the door for a drop into the key 1.05 level which is
basically the bottom of the range since late 2022.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the break of the support where we had also the 61.8% Fibonacci
retracement level for confluence.
From a risk management perspective, late sellers might want to wait for a
pullback into the 1.08 support-turned-resistance
to position for a continuation of the downtrend into the 1.06 handle with a
better risk to reward setup.

The buyers, on the other
hand, will want to see the price rally back above the 1.08 resistance to gain
more control and start targeting the 1.09 level next.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the pair is near the lower level of the average
daily range. That’s where we might see a bounce as the price generally
doesn’t extend beyond the levels without a strong catalyst.

Upcoming
Catalysts

Today we conclude the week with the University of Michigan Consumer Sentiment
survey where the data is expected to show an increase to 72.0 vs. 69.1 prior.

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

It is shaping up to be a rather risk averse session in European trading today. Equities are falling across the board and bonds are being bid quite strongly on the session. Of note, France’s CAC 40 index is now down over 2% with S&P 500 futures down 0.4% on the day. And 10-year yields in the US are down to 4.21% after having been at a high of 4.27% earlier in Asia trading.

That is all weighing on USD/JPY as risk-off flows come into play. The pair traded to a high of 158.25 following the BOJ policy decision but has now pared all gains to 157.00 on the day.

The dollar is holding firmer for the most part despite that though. EUR/USD is down 0.6% to 1.0675 while GBP/USD is down 0.5% to 1.2695 on the day. USD/CHF is lower amid the negative risk mood, down marginally by 0.1% to 0.8930 currently.

Looking to commodity currencies, USD/CAD is up 0.2% to 1.3765 while AUD/USD is down 0.4% to 0.6605 at the moment.

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

Headlines:

• Dollar keeps steadier so far on the day, awaits more US data
• What now after the US CPI and Fed showdown yesterday?
• What has changed after the US CPI and FOMC?
• ECB’s Muller: It is too early to say when the next rate cut can happen
• ECB’s Vasle: Possible for more rate cuts if baseline scenario holds
• Spain May final CPI +3.6% vs +3.6% y/y prelim
• Germany May wholesale price index +0.1% vs +0.4% m/m prior
• Eurozone April industrial production -0.1% vs +0.2% m/m expected

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures up 0.1%
• US 10-year yields up 2.3 bps to 4.318%
• Gold down 0.7% to $2,306.83
• WTI crude down 0.9% to $77.81
• Bitcoin down 0.5% to $67,740

The dollar is standing its ground on the day, keeping firmer after the Fed helped to stem the tide in trading yesterday.

The greenback was steadier early on before nudging a little higher now as we look to US trading. EUR/USD was hugging around 1.0800 before falling now to 1.0785. Meanwhile, GBP/USD stuck around 1.2790 before easing to 1.2765 currently.

USD/JPY was little changed, having already pushed up in Asia trading – holding around 157.10-20 levels, up 0.3% on the day.

Elsewhere, AUD/USD is down 0.3% to 0.6640 with USD/CAD up 0.2% to 1.3750 on the day now.

In the equities space, tech shares are still largely higher but the overall mood is mixed. Nasdaq futures may be up 0.6% but Dow futures are down 0.3%. For European indices, there is some catching up to do to the late retreat after the Fed yesterday too. Major indices in the region are down closer to 1% across the board.

Looking over to commodities, precious metals are feeling the pinch again as such. Gold is down 0.7% and eyeing the $2,300 mark while silver is down nearly 2% to $29.10 at the moment. I’d still like to see a stronger correction, especially in gold, before further dip buying in this space.

All in all, this has the makings of a turnaround Thursday for the most part. But we’ll have to see if US data later will help to spur that on or not.

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

• Labour market now resembling conditions before the pandemic
• We are creating jobs at a very rapid pace
• Unemployment rate has drifted up a little, labour market has become a little less hot; that is normal

Not quite the same message as the Fed but I reckon the language will be similar once Powell & co. finally decide to lean more towards rate cuts down the road.

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

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Fundamental
Overview

The USD yesterday was sold
across the board following the soft US CPI report. The data made the market to price back
in two cuts for this year. Later in the day though we got a bit more hawkish
than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this
year despite the soft US CPI report.

This gave the greenback a
boost, but Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. So, all in
all, the US Dollar might still come under pressure as the risk sentiment should
improve thanks to the soft US CPI.

The CAD, on the other hand,
has been 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 CAD might appreciate amid a general US Dollar weakness.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD fell back inside the range following the soft US CPI report and
then pulled back to retest the support-turned-resistance on a more hawkish than expected
FOMC decision.

This is where we can expect
the sellers to step in with a defined risk above the resistance to position for a drop back into
the 1.36 support. The buyers, on the other hand, will want to see the price
rallying back above the resistance to regain some conviction and target a break
above the 1.38 handle.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the drop on the US CPI and then the move back up on the FOMC
decision. There’s not much more to add here as the sellers will look for a drop
from the resistance, while the buyers will look for a breakout to the upside to
keep targeting new highs.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price yesterday has also broke below the recent trendline that was defining the bullish trend
from the 1.36 support. If the price were to fall below the 1.3710 level, the
sellers will have another confirmation that the bearish momentum could pick up
steam. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US PPI and the latest US Jobless Claims
figures. Tomorrow, we conclude the week with the University of Michigan
Consumer Sentiment survey.

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

Fundamental
Overview

The USD yesterday was sold
across the board following the soft US CPI report. The data made the market to price back
in two cuts for this year. Later in the day though we got a bit more hawkish
than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this
year despite the soft US CPI report.

This gave the greenback a
boost, but Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. So, all in
all, the US Dollar might still come under pressure as the risk sentiment should
improve thanks to the soft US CPI.

The EUR, on the other hand,
has been gaining ground in the past months against the USD mainly because of
the Dollar weakness amid the general risk-on sentiment regime due to the pickup
in global growth.

This sentiment has been
changed recently by the NFP data and the European elections over the weekend where we got some
governments like France calling snap elections which added even more pressure
on the single currency due to political uncertainty.

Nevertheless, if we see the
market going back into risk-on due to the soft US CPI, the EURUSD pair should
still maintain its upward trajectory amid general US Dollar weakness.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD erased almost all the losses from the strong US NFP report and
the European elections. The price spiked above the 1.08 handle following the US
CPI release and then pulled back as we got a bit more hawkish than expected
FOMC decision.

There’s no real strong fundamental
driver supporting the Euro as the market continues to trade based on the risk sentiment.
If we were to go back into risk-on in the next days, we can expect the pair
climbing back into the 1.09 resistance
and possibly even reach the 1.10 handle.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price rallied above the 1.08 handle and then pulled back into it.
We have also the confluence
of the 38.2% Fibonacci
retracement level sitting there which makes it a good support zone.

This is where we can expect
the buyers to step in with a defined risk below it to position for a rally into
the 1.09 resistance. The sellers, on the other hand, will want to see the price
breaking lower to gain a bit more conviction and position for a drop back into
the 1.0727 support.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the consolidation around the 1.08 support zone. If the price
were to rise above the 1.0820 level, then we can expect the buyers to gain a
bit more confidence on a continuation of the rally. Conversely, a break below
the 1.08 support should turn the bias more bearish giving the sellers more control.
The red lines define the average daily range.

Upcoming
Catalysts

Today we have the US PPI and the latest US Jobless Claims
figures. Tomorrow, we conclude the week with the University of Michigan
Consumer Sentiment survey.

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