US layoffs fall to a seven-month low in June, as employers were seen cutting 40,709 jobs – down 49% compared to May. Still, the number for the month is well above that of the same period last year (32,517 job cuts). The year-to-date figure shows 458,209 job cuts so far and that is well above the 133,211 job cuts announced in the first six months of 2022.
This article was written by Justin Low at www.forexlive.com.
The market is beginning to factor in a more hawkish
path for the Federal Reserve due to the consistently positive economic data
since the last FOMC meeting. According to Fed Chair Powell, if the data remains
strong, a majority of the FOMC anticipates two or more rate hikes this year.
Conversely, the European Central Bank (ECB) has
already committed to a rate hike in July, but there is a strong debate about
their plans for September. In fact, recent economic indicators for the Eurozone
have been disappointing significantly, indicating a potential recession in the
second half of the year.
All else being equal, we should see EURUSD pair
trending downwards as the market adjusts its expectations, discounting the
likelihood of ECB rate hikes and factoring in the possibility of rate cuts.
EURUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that we might have a
major head and shoulders pattern
with the black neckline coming roughly at the 1.07 handle. The moving averages are
crossing to the downside indicating a possible change in trend, but the price
will need to fall below the 1.0840 to confirm it. In case we see a break below
the neckline, the target should be the 1.02 handle.
EURUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the price has
recently broke below the upward trendline and made
a new lower low. In fact, the price has formed a king’s crown pattern, which is
similar to the head and shoulders pattern, but has the right shoulder low lower
than the left shoulder one. We now have a support level at
1.0840 where the buyers keep on piling in to target a breakout of the 1.1033
high.
EURUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price has recently broke below the neckline of the double top
pattern marked by the two orange arrows. This is another signal that the
bearish momentum is prevailing, and the sellers are in control. Once the price
breaks below the support with conviction supported by a fundamental catalyst,
we can expect a selloff into the 1.07 handle. The buyers will need to break
above the 1.0940 resistance zone to invalidate the bearish setup and start
another uptrend.
Upcoming Events
Today the data to watch
will be the US Jobless Claims and the US ISM Services PMI, while tomorrow the
markets will focus on the main event of the week: the US NFP report. If we see
beats to the expectations, we will likely see the EURUSD falling as the market
will price in even more hawkishness from the Fed. On the other hand, if the
data misses forecasts, EURUSD may rally as some of the hawkishness will be
priced out.
This article was written by FL Contributors at www.forexlive.com.
Mortgage activity sees a sharp fall in the past week ahead of the long weekend in the US, with both purchases and refinancing also falling significantly. That comes amid another acceleration in the average rate of the most popular US home loan by 10 bps to 6.85%.
This article was written by Justin Low at www.forexlive.com.
Bitcoin
has displayed a remarkable resilience to lots of negative news like the
regulatory crackdowns or the more hawkish interest rates pricing. Despite
everything that has been thrown to it, the cryptocurrency remains strong and
it’s even targeting a new higher high. Looks like only a recession or a very
hawkish Fed can stop bitcoin from reaching new highs, but even if we see a
selloff to either of those scenarios, we are likely to see a much stronger
rebound once the Fed starts cutting interest rates.
Bitcoin Technical Analysis
– Daily Timeframe
On the daily chart, we can see that after breaking
out of the trendline, bitcoin
rallied strongly to the 31K high where it found resistance. This
will be a key level to watch because a clear break to the upside should open
the door for a rally towards the 45K level. The sellers are likely to pile in
here with a defined risk above the resistance and target the 25K support.
Bitcoin Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can see that bitcoin has
been struggling a lot to break above the resistance and this has led to a
consolidation just beneath the level. We now have a support zone at the 29500
level and a resistance at the 31000 one. The best strategy in such cases would
be to wait for a clear breakout and ride the following momentum. One can also
“play the range” though buying at support and selling at resistance.
Bitcoin Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can see more
clearly the rangebound price action. At the moment the price is making lower
lows and lower highs after the rejection from the resistance, and the moving averages are
crossed to the downside. The sellers are in control in the short term so the
target should be the 29500 support. If we see a break to the upside though, we
can expect new higher highs and the buyers piling in aggressively.
Upcoming Events
In the next days we will have some top
tier economic indicators like
the US Jobless Claims and ISM Services PMI tomorrow and the main event of the
week: the US NFP report on Friday. Strong data should lead to a more hawkish
pricing for interest rates and weigh on bitcoin, while negative readings should
support the cryptocurrency as the market is likely to price in a more dovish
path for interest rates.
This article was written by FL Contributors at www.forexlive.com.
Well, this is what you’d expect from Germany as they have always took the more hawkish position when voicing their policy stance. It is a bit of a contrast to Italy as you can see here:
This article was written by Justin Low at www.forexlive.com.
Markets:
After the slow start in Asia, things did pick up a little in Europe but not by much. Keep in mind that US traders are returning to the market today after an extended break from the 4th of July festivities since the weekend.
During the session, risk did tilt lower and the selling in equities is the notable development as stocks postured more defensively. S&P 500 futures were flattish early on but are now down 0.5% with European indices keeping most of their opening losses to be down around 0.5% to 0.7% currently.
The softer mood did drag commodity currencies lower with the aussie and loonie in particular being offered. USD/CAD is now up 0.4% to 1.3280 with AUD/USD down 0.4% to 0.6660 levels, with the latter facing a rejection from key resistance from its 100 and 200-day moving averages at around 0.6690-94 earlier.
The dollar is trading more mixed across the board with little changes against the euro (large expiries at 1.0900), yen, and pound.
We’ll see how Wall Street takes to the early developments above and don’t forget we also still have Fed minutes to come later.
This article was written by Justin Low at www.forexlive.com.
The dollar is sitting rather mixed across the board but is holding decent gains against the commodity currencies at least, with both the loonie and aussie being the laggards today.
Despite oil holding higher as OPEC+ meets and Saudi Arabia pledging their commitment to support the market, the Canadian dollar is down 0.5% against the greenback with USD/CAD up to 1.3290 currently. Meanwhile, AUD/USD is down 0.5% to 0.6660 after having brushed against key resistance from its 100 and 200-day moving averages at 0.6690-94 earlier.
That continues to be a key resistance point for the pair as sellers are looking to snap a run of four straight days of gains since last week.
The softer mood in equities is part of the reason weighing on risk currencies today. There is more of a defensive flow with 2-year and 10-year Treasury yields also down by 4.6 bps and 1.9 bps respectively at the moment.
This article was written by Justin Low at www.forexlive.com.
The manufacturing sector has been contracting
basically all over the world with the biggest economies like US, China and
Eurozone being the highlights. We had recently a rally in copper prices due to
the expectations of more economic stimulus from China, but the market got
disappointed from the weak actions and it’s erasing the entire rally since the
beginning of June. As long as the central banks continue to tighten monetary
conditions and the global economy keeps on slowing down, we can expect lower
and lower prices for copper.
Copper Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the rally that
started from the bounce on the major trendline and the
3.54 support seems to
have ended at the 3.9575 resistance where we had also confluence from the
61.8% Fibonacci retracement level.
Copper sold off pretty heavily and the moving averages crossed
to the downside possibly signalling a restart of the downtrend. The target
should now be the major trendline and the 3.54 support below. A break below the
3.54 support would open the door for a big fall into the 3.14 low.
Copper Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the price
started to roll over as soon as it broke out of the rising channel. The recent
pullback seems to have ended at the 38.2% Fibonacci retracement level of the
entire drop. The buyers will need the price to break above the 3.8250 resistance
to get back some conviction and pile in for a new higher high above the 3.95
level.
Copper Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that we
have a key support zone at the 3.7550 level. We can expect more sellers piling
in in case the price breaks below the support and target the 3.62 level. On the
other hand, the buyers may lean on this support with a defined risk below it to
target the breakout of the 3.8250 resistance.
Upcoming Events
We will have some important economic
indicators in the next few days like the US Jobless
Claims and the ISM Services PMI tomorrow and the US NFP report on Friday. Weak
data, especially in the NFP report should bring recessionary fears back into
the market and lead to more downside for copper.
This article was written by FL Contributors at www.forexlive.com.
Markets:
The 4th of July holiday in the US is putting a dampener on the market mood today. Major currencies didn’t do much in general, though we did see the aussie bounce around after the RBA decided to press the pause button and leave the cash rate unchanged.
AUD/USD fell initially from 0.6680 to 0.6645 before recovering to around 0.6690 now, up 0.3% on the day. Besides slight gains in the antipodeans, there wasn’t much else to take note of with dollar pairs keeping little changed mostly.
EUR/USD is hugging the 1.0900 handle, down 0.1% on the day. Meanwhile, USD/JPY is down just 0.2% to around 144.30-40 levels for the most part during the session.
There was a distinct lack of appetite and that is to do with US being out as a continuation from the weekend (there was an early market closure yesterday too).
Hopefully things will start to pick up tomorrow but do keep in mind that we have US non-farm payrolls on Friday and that could set markets into another lull before that.
This article was written by Justin Low at www.forexlive.com.
The RBNZ, on the other
hand, went on pause at the last meeting and unless we see the data surprise to
the upside, especially the inflation numbers, the central bank should remain on
hold.
NZDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the price has
rebounded strongly from the 0.6050 level, and it now looks like the NZDUSD is
targeting the trendline at the
0.63 handle. The moving averages are
again about to crossover and we should see more upside more here, but a lot
will depend on the next NFP and CPI data.
NZDUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the break of
the 0.61 support resulted
in a fakeout and the price rallied back strongly above the resistance and it’s
now breaking above the upper bound of the bullish flag pattern.
The breakout should lead to even more conviction for the buyers and a rally
into the 0.63 handle where we find the previous swing high resistance and the
major trendline. The sellers are likely to step in there with a defined risk
above the level and target the 0.5987 support.
NZDUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price is now diverging with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. We should see the first rejection from the 0.62 swing high
resistance where the sellers are likely to pile in targeting a break below the
trendline and new lows. The buyers instead should wait for the price to come
into the trendline to position for more upside. Alternatively, the buyers may
pile in as soon as the price breaks above the 0.62 handle with conviction.
Upcoming Events
It’s Independence Day today for the US, so
liquidity will be thinner. In the following days we will have some important data releases like
the US Jobless Claims and ISM Services PMI on Thursday and the main event of
the week: the US NFP report on Friday.
This article was written by FL Contributors at www.forexlive.com.