The euro rose against most of the major currencies on Wednesday and Thursday morning, on the back of the hope that an agreement will be reached before the latest deadline for the Greek debt repayment. However, the discussions have failed to reach an agreement as Creditors and Greek Prime Minister Alexis Tsipras negotiating about pensions, sales taxes and debt relief. The discussion continues today, on Thursday morning with the hope that Eurozone will remain united. If a deal achieved, the funds will be transferred shortly in Greece in order to meet its debt obligation of €1.5 billion to IMF on 30th of June.
It’s worth noting, this time is the first time that the [B]Greek uncertainty[/B] over the bankruptcy, the Grexit or a deal [B]expanded in the whole European markets[/B], even in the US. In Germany, the Business Confidence, after six months of consecutive increases fell for the second time in a row in June as the IFO Survey revealed. The Current Assessment and the Expectations are also decreased showing a weak month for the economy.
However, the euro remained virtually unchanged against the Australian dollar and the Japanese Yen while it plunged versus the New Zealand dollar. [B]EUR/USD[/B] plunged the last couple of days confirming the weakness in momentum, following a good run over the last few weeks. The Relative Strength Index fell below 50 and is moving downwards as the MACD plunged in a bearish territory and is trading below its trigger line. These movements strengthen my conviction that we are likely to see further consolidation or a downward corrective wave, perhaps to test the 1.1100 level as a support this time. If it breaks below here, it could result in a failure swing formation on the daily chart, which would suggest we may see another attempt to break below the key support level of 1.0820 (neckline). Alternatively, if the pair fails to break below the 1.1150 level, we should see further pressure on 1.1280, which includes the 50-period SMA on the 4-hour chart.
[B]Greenback lower on US Economy Contraction[/B]
The dollar was lower against most of the G10 currencies on Wednesday and early Thursday as the US GDP showed that the economy contracted an annual rate of 0.2%. The economy in the first quarter contracted less than the markets forecast of -0.3% but still shows the weakness of the US economy, especially comparing with the previous quarters when economy expanded by 2.2% and 5%.
[B]Pound declined broadly[/B]
The British Pound was traded lower against its G10 peers on Wednesday and early Thursday despite the advanced number of the Mortgages Approvals in May which will help the economy advances in the macro view. The British Bankers’ Association approved 42.5k mortgages in May while the market expected 43.1k.
The [B]GBP/USD[/B] is trading lower again this morning, after making small losses against the dollar on Wednesday. The middle Bollinger band (20-day SMA) is once again providing support for the pair though around 1.5700. This has been a key level of support for the pair over the last few weeks and as long as it continues to hold, I will remain bullish. Below here we also have another major support level around 1.5650. If both of these levels are broken, it would suggest the market has turned more bearish for further correction towards the 1.5550 level, which includes the 38.2% Fibo level as well as the 200-period SMA on the 4-hour chart.
[B]Kiwi extends its losses on possible further rate cut[/B]
The New Zealand dollar continues to lose ground on the reflection of the Reserve Bank of New Zealand willing for further tightening monetary policy. The [B]NZD/USD [/B]plunged to a five-year low 0.6900, a level the pair has been since mid-2010. The New Zealand dollar weakened more than 150 pips versus the US dollar after the RBNZ surprised with a rate cut of a quarter to 3.25% in May. At the moment, the NZD/USD is trading slightly above the psychological level of 0.6900. On the upside, the 200-period SMA is ready to provide a significant resistance slightly above the 0.6900 while the 50-period SMA is ready to prevent and bears moves near the 0.6860 region.
[B]U.S. Indices[/B]
The US indices closed negative on the lower than expected US economy expansion and on the rear of Greek worries. The [B]Dow Jones Industrial Average [/B]lost 178 points on Wednesday, -0.98% and only one of its thirty stocks recorded positive gains.The gainer stock was Apple Inc (NASDAQ: AAPL) which edged +0.86% higher.The Dow Jones index has been firmly capped below 18185 the last few weeks, having made several failed attempts at breaking that critical level. The index fell below the 200-period SMA on the 4-hour chart as well as below the psychological and critical level of 18000. If we see some more selling pressure in the index, the next key support level will come around 17860.
The [B]Nasdaq Composite Index[/B] fell by 0.73% to 5,122 and the S&P 500 declined by 0.74%, 15.62 points down. Nasdaq index failed to sustain its recent gains above the key support level of 4550, as a result to come under pressure and to slip more than 0.7% during yesterday’s session. Technical studies support a further fall, since the MACD is moving below its trigger line and in a bearish territory (lower timeframes) while the Relative Strength Index and the Stochastic, are both moving downwards below their mid-levels.
[B]Economic Indicators[/B]
Today, the weekly US Jobless Claims report are scheduled as usual. More indicators for Personal Spending and Consumer consumption, an important sector for the economy growth will be released as the preliminary Markit Services and Composite PMIs for June. Later in the day, in Japan the CPI and the Unemployment Rate for May will be published.