EUR/USD Forms Double Bottom, Eyes Resistance at 1.0730
EUR/USD: A double bottom pattern is forming after searching the level 1.0680 support level. The next resistance level is at around the 1.0730 level followed by the 1.0780.
Gold Shows a Head and Shoulders Pattern with the Next Support at 2332
The price of gold is showing a head and shoulders pattern on its daily chart, which indicates a possible reversal, but further confirmation from fundamentals is needed. In the short term, the next support is at the 2332 level; if the price falls below this, the next support is at 2320.
Investors Cautiously Await Key Economic Data as Geopolitical Tensions Simmer
The dollar index remained below 105.5 on Tuesday, reflecting a 0.3% decline from the previous session, as investors awaited the upcoming US PCE inflation data and comments from the Federal Reserve to gain insights into future interest rate decisions. This anticipation comes with preparations for the first US presidential debate between Joe Biden and Donald Trump scheduled for Thursday. Last week, the dollar reached a near two-month high, contrasting with other major central banks that have started easing their rates earlier due to the Fed’s cautious stance on rate cuts.
The euro experienced a slight decline of 0.1% to $1.0725, influenced by political unrest in France following President Emmanuel Macron’s unexpected decision to call a snap election earlier in the month. Despite this, the euro has mostly maintained its position within the $1.07-1.08 range throughout the year. Upcoming inflation data from Germany and France, along with the initial round of the French election on Sunday, are expected to be significant for the euro’s performance.
The Japanese yen continued to strengthen for the second consecutive session, with the USD/JPY pair nearing the 160.00 level, a point that previously triggered substantial yen-buying interventions by Japanese authorities. Japan’s Corporate Service Price Index showed a slight deceleration in growth, increasing by 2.5% in May compared to 2.7% in April. Investors are now focusing on additional domestic economic reports, including retail sales and unemployment data for May, as well as Tokyo’s inflation figures for June.
Gold prices saw a decrease on Tuesday, while the market’s attention is fixed on the forthcoming key US inflation data, which could clarify the Federal Reserve’s position on interest rate adjustments. Oil prices remained stable after a 1% increase in the previous session, driven by expectations of stronger demand during the summer and ongoing geopolitical tensions in Eastern Europe and the Middle East. However, gains were limited due to cautious investor sentiment ahead of the PCE data release and concerns over the demand outlook in China. Additionally, ongoing conflicts, such as Ukrainian missile strikes on Russian oil infrastructure and the escalating conflict between Israel and Hezbollah, continue to support oil prices.
EUR/USD Reversal Validates with Potential Breakout Above 1.0730
EUR/USD: The pair’s reversal pattern has been confirmed, with the price reaching the 1.0730 resistance area. A potential breakout above this level could propel the price toward the next target at 1.0780.
Gold Exhibits Head and Shoulders Pattern, Signaling Potential Reversal
The price of gold is displaying a head and shoulders pattern on its daily chart, suggesting a potential reversal. However, further confirmation from fundamental analysis is necessary. In the short term, the price is exhibiting uncertain movements, with the next support at the 2332 level. If the price falls below this, the subsequent support is at 2320.
Inflation Surges, Rate Hikes, and Political Pressures Shake Up Forex Markets
In May, Australian inflation surged to a six-month high, leading traders to consider the possibility of a rate hike, which subsequently boosted the Australian dollar. The probability of an increase by September is now seen as just over 50% by short-term interest rate markets.
In the United States, expectations are mounting that upcoming data will show a deceleration in the annual growth of the Federal Reserve’s preferred core personal consumption expenditure (PCE) index to 2.6% in May, marking the lowest rate in more than three years. This slowdown could potentially open the door to future rate cuts. However, Fed Governors Lisa Cook and Michelle Bowman have indicated a cautious approach, underscoring that policy decisions will remain data-dependent.
Japan’s Vice Finance Minister Masato Kanda reaffirmed the government’s readiness to act should excessive fluctuations in the yen adversely affect the national economy. Despite these statements, the impact on the yen was minimal, largely due to the Bank of Japan’s reluctance to outline a plan for reducing bond purchases, a stark contrast to the Federal Reserve’s hawkish stance. This suggests that the USD/JPY pair might continue to rise.
The euro is currently facing pressure ahead of the first round of the French legislative elections, where the far-right National Rally party is expected to make significant gains. This political uncertainty is affecting the stability of the euro.
Meanwhile, recent hawkish comments from influential Federal Reserve officials suggest that the US central bank is not likely to begin reducing interest rates soon, given the ongoing resilience of the US economy. This has led to a modest increase in US Treasury bond yields, which supports the US dollar and puts downward pressure on gold, which does not yield interest. Despite this, the possibility of a rate cut in September remains, influenced by weaker consumer and producer prices in May. Geopolitical tensions in the Middle East and the ongoing conflict between Russia and Ukraine also support the price of gold as a safe-haven asset. US final first-quarter GDP figures are expected on Thursday, and the PCE Price Index on Friday.
EURUSD Tests Support, Eyes Further Dip to 1.0665
The EURUSD pair has returned to a price range after hitting the resistance area at 1.0730 and is now near the support level of around 1.0680. If it breaks below this level, the price may move towards the next target at 1.0665.
Gold Awaits Confirmation for Potential Reversal
The price of gold is displaying a head and shoulders pattern on its daily chart, suggesting a potential reversal. However, further confirmation from fundamental analysis is necessary. In the short term, the price is exhibiting uncertain movements, with the next support at the 2332 level. If the price falls below this, the subsequent support is at 2320.
Fed’s Inflation Outlook Key as Dollar Pulls Back
The dollar has edged lower after reaching its highest level in two months against a basket of currencies. This movement comes in anticipation of US economic data releases scheduled for this afternoon, including a potential drop in durable goods orders. Such data might restrict further appreciation of the greenback. The Federal Reserve has consistently stated that it requires greater confidence in the inflation outlook before considering a policy ease. This stance contrasts with other major central banks like the European Central Bank (ECB), the Swiss National Bank (SNB), and the Bank of Canada (BOC), all of which have already reduced rates. Investors are now focusing on the upcoming economic indicators to refine their market outlook. These include weekly jobless claims, durable goods orders, and pending home sales data set for release on Thursday, along with Friday’s Personal Consumption Expenditures (PCE) inflation report. These data points are crucial for guiding expectations regarding future monetary policy and economic performance.
The yen remained near a 38-year low on Thursday, struggling below the 160 per dollar mark, which has kept markets vigilant for any signs of intervention by Japanese authorities aimed at supporting the currency. Over the month, the yen has depreciated by approximately 2% and by 12% for the year against a robust dollar. This decline is largely attributed to significant interest rate differentials between the US and Japan, which continue to make the yen an attractive funding currency for carry trades.
However, the Australian dollar experienced a rise, bolstered by an unexpected increase in domestic inflation reported on Wednesday. This development has led markets to anticipate further interest rate hikes by the Reserve Bank of Australia within the year.
Gold prices saw a slight increase on Thursday, with the market’s attention firmly on the upcoming US inflation data, which could provide insights into the Federal Reserve’s next steps regarding interest rates. At the end of June, the Federal Reserve adopted a more hawkish stance, with policymakers leaning towards only one interest rate cut by the end of the year. This outlook has supported higher US Treasury bond yields, which in turn, act as a headwind for gold, a non-yielding asset.
Despite this, signs of easing inflationary pressures in the US maintain the possibility of a September interest rate cut by the Fed, keeping this option on the table. However, this has not helped the US Dollar capitalize on its strong performance the previous day, when it nearly reached a two-month peak. The softer tone in equity markets, ongoing geopolitical tensions, and political uncertainties also provide some support to gold as a safe-haven asset. Traders remain cautious, with a keen focus on the US Personal Consumption Expenditures (PCE) Price Index due on Friday, which is expected to significantly influence the Fed’s policy decisions.
Potential Decline for EUR/USD Below Key Support at 1.0680
EUR/USD: The currency pair has settled back into a price range after encountering resistance at 1.0730 and is currently hovering near the support level of 1.0680. Should it break below this level, the pair could potentially decline towards the next target of 1.0665.
Gold Price Tests 2332 Support Amid Uncertain Movements
The price of gold is displaying a head and shoulders pattern on its daily chart, suggesting a potential reversal. However, further confirmation from fundamental analysis is necessary. In the short term, the price is exhibiting uncertain movements, with the next support at the 2332 level. If the price falls below this, the subsequent support is at 2320.
Global Markets React to Political Uncertainty and Inflation Data: Euro Declines, Dollar Surges, and Commodity Prices Rise
The euro is on track for its largest monthly drop since January, impacted by political uncertainty leading up to France’s general elections. Yet, the dollar has surged to a near four-decade high against the beleaguered yen, ahead of critical inflation data.
Investors fear that a new French government might escalate fiscal spending, which could undermine the sustainability of France’s public debt and destabilize the eurozone’s financial system. This concern has driven the risk premium on French government bonds to its highest level since 2012, just ahead of the first round of voting in the country’s parliamentary elections. There is apprehension that a coalition led by either far-right or far-left parties could increase fiscal spending.
The dollar is set for a second consecutive quarterly gain, reaching a near four-decade high against the yen. Traders are cautiously probing Japan’s determination to defend its currency while awaiting crucial U.S. inflation data. During the political landscape, Republican U.S. presidential candidate Donald Trump launched a series of sometimes inaccurate criticisms against President Joe Biden in their first campaign debate in Atlanta. The dollar strengthened as Biden stumbled over his words in several early exchanges.
Core inflation in Tokyo accelerated in June, but this has done little to strengthen the yen. Persistently low Japanese interest rates have encouraged the selling of yen for higher-yielding currencies, despite rising Japanese yields and official warnings of possible currency intervention. Japan has replaced its top currency diplomat, Masato Kanda, with financial regulation expert Atsushi Mimura. Finance Minister Shunichi Suzuki expressed deep concern over the impact of “rapid and one-sided” movements in the yen.
Gold prices are edging higher ahead of key U.S. inflation data, supported by recent jobless claims figures that suggest a softening labor market. This has raised hopes that the Federal Reserve might soon begin to cut rates. Moreover, safe-haven demand has surged in recent weeks amid a challenging political environment. Upcoming elections in France, the U.K., and the U.S. are fueling concerns over potential policy changes.
Oil prices are climbing on the anticipation that the U.S. central bank will soon start cutting interest rates and due to growing fears of an expanded conflict between Israel and the Iran-backed militia group Hezbollah.
EUR/USD Stalls Near Resistance at 1.0730
EUR/USD: The currency pair remains directionless within a price range after encountering resistance at 1.0730 and is currently hovering near the support level of 1.0680. If it breaks below this level, the pair could potentially decline towards the next target of 1.0665.
Head and Shoulders Pattern in Gold: 2332 Key Support Level
The price of gold continues to display a head and shoulders pattern on its daily chart, suggesting a potential reversal and continuous uncertainty at the moment. However, further confirmation from fundamentals is necessary. In the short term, the price is exhibiting uncertain movements, with the next support at the 2332 level. If the price falls below this, the subsequent support is at 2320.
Market Review: Euro Gains Pressure Dollar Amid French Election Results and US Inflation Data
The offshore Chinese yuan fell below 7.30 per dollar, nearing its lowest point in over seven months, amid mixed reactions to recent Chinese PMI data. While a private survey indicated strong growth in the manufacturing sector in June, hitting a three-year high and surpassing forecasts, suggesting positive momentum in industrial activity, official figures released over the weekend painted a less optimistic picture. These figures revealed ongoing contraction in manufacturing for the second straight month, highlighting the necessity for further stimulus measures as China aims to stabilize its economy.
The Japanese yen traded at 161 per dollar, closely approaching a 38-year low of 161.28 reached last week following a downward revision in Japan’s first-quarter GDP, which continued to weigh on the currency. The revised data showed that Japan’s economy contracted at an annualized rate of 2.9% in the January-March period, a steeper decline from the previously reported 1.8%, largely due to weaker public works spending. Despite this, confidence among large Japanese manufacturing firms rose to a two-year high in Q2, reflecting an improved economic outlook. Last week, the yen fell to its lowest levels in decades after Atsushi Mimura was appointed as Japan’s top currency diplomat by the Ministry of Finance, amid increasing pressures to bolster the currency. The yen depreciated by 2.3% against the dollar in June, extending its year-to-date decline to approximately 14%, as the Bank of Japan pursued a more cautious approach in its monetary policy normalization efforts compared to market expectations.
On Monday, the dollar index edged down towards 105.6, marking its third consecutive decline, primarily due to the euro’s strength following the initial round of France’s snap election held over the weekend. Marine Le Pen’s National Rally secured victory in the first round of the parliamentary election as widely predicted, although their lead was narrower than expected. The dollar had already come under pressure on Friday after US PCE inflation figures for May showed a slowdown, reinforcing expectations of interest rate cuts by the Federal Reserve later this year. Currently, markets are pricing in a 63% probability of a Fed rate cut in September, with increased chances also seen for moves in November and December. Investors are now awaiting US manufacturing activity data later in the day for further economic insights and potential impacts on monetary policy. Among major currencies, the dollar showed its largest weakness against the euro, the British pound, and currencies from Australia and New Zealand.
On Monday, gold maintained its position around $2,325 per ounce as investors continued to evaluate recent US inflation figures. Last Friday, the Federal Reserve’s preferred measure of core inflation slowed to its lowest annual rate since 2021, sparking optimism that price increases may align with target levels and bolstering expectations for two interest rate cuts by the central bank this year. Additionally, prospects of rate cuts in other major economies, including anticipated moves by the Bank of England following the UK’s election and further easing by the People’s Bank of China to support economic recovery, provided further support to bullion prices. Investors are now closely monitoring upcoming US payrolls data and the release of FOMC meeting minutes this week to gain insights into the timing of potential Fed rate adjustments. Meanwhile, in India, the second-largest consumer of gold, demand for physical gold remained subdued last week amid elevated prices.
EUR/USD Opens with Upward Gap Amid French Election News
Due to the news flow related to the elections in France, the EUR/USD pair started the week with an upward gap. The first resistance level is at 1.0780, followed by 1.0810 and 1.0840 respectively. On the downside, the first support is at 1.0750, followed by subsequent supports at 1.0710 and 1.0670.
Gold Faces Initial Support at 2317
For gold, the first support is at 2317, with subsequent levels to monitor at 2297 and 2280 respectively if this level is breached. On the upside, the first resistance is at 2332, followed by levels at 2358 and 2375 if the price moves higher.
Yuan Climbs to Seven-Month High as PBOC Signals Readiness for Depreciation
The Chinese yuan has risen above 7.30 against the US dollar, reaching its highest point in more than seven months amid cautious market sentiment influenced by the People’s Bank of China’s less optimistic stance. The central bank set its daily midpoint at 7.1291 yuan per dollar, the weakest since November 21, indicating a readiness to allow further yuan depreciation. This trend is largely attributed to a strong US dollar, supported by rising US bond yields and speculation surrounding Donald Trump’s potential return to the presidency. Investors are now focused on upcoming Chinese PMI data scheduled for release tomorrow and inflation figures next week, crucial indicators for assessing the health of the world’s second-largest economy.
WTI crude futures reached about $83.5 per barrel on Tuesday, hitting their highest level in over two months. This surge was driven by expectations of increased summer travel demand, with the American Automobile Association forecasting a 5.2% annual growth in holiday travel and a 4.8% rise in car travel from last year. Additionally, bets on potential Federal Reserve rate cuts were supportive, following optimism from softer US inflation data suggesting earlier monetary easing could stimulate economic activity and fuel demand. Investors are now focused on remarks from Fed Chair Jerome Powell, the release of FOMC meeting minutes, and upcoming US nonfarm payroll data for further insights into the Fed’s interest rate outlook.
On Tuesday, the yield on the US 10-year Treasury note edged down to approximately 4.44%, staying close to its highest levels in a month. Recent events, including last week’s debate and a Supreme Court ruling granting broad immunity to ex-presidents, have increased speculation about Donald Trump potentially serving a second term. A potential return of Trump is viewed as likely to drive inflation due to anticipated policies such as tax cuts, stricter immigration measures, and higher tariffs on imports. Federal Reserve monetary policy is expected with soft US inflation data for May and weak manufacturing figures for June. Insights from Fed Chair Jerome Powell’s remarks will also be released, alongside the central bank meeting minutes later this week.
Gold held steady at around $2,330 per ounce, after a slight increase in the previous session. Traders are awaiting upcoming US economic data and Federal Reserve comments to gauge the Fed’s future interest rate decisions. Key events include Fed Chair Jerome Powell’s speech later today, the release of FOMC meeting minutes on Wednesday, and Friday’s nonfarm payrolls report. Recent data, such as the ISM manufacturing PMI shrinking for the third straight month in June and factory input prices hitting a six-month low, provided some support to gold by suggesting ongoing easing in inflation pressures. ECB President Christine Lagarde mentioned on Monday that the ECB is taking time to ensure inflation approaches 2% and indicated no urgency for rate cuts.
EUR/USD Dips After Early Gains, Pressured by Low German CPI
After starting the week with an upward gap due to political tensions in the Eurozone, EUR/USD faced a drop with a low German CPI. The first resistance level is at 1.0750, followed by 1.0780 and 1.0810 respectively. On the downside, the first support is at 1.0710, followed by subsequent supports at 1.0670 and 1.0630.
