Basic picture, outlook analysis EUR/USD, USD/JPY, GBP/USD
Updated
The overall macro picture still relates interest rates to the strength of the US Dollar and other major currencies. Here's a summary and evaluation of news and economic market data to start the last trading week of June.
General macro picture (
DXY )
US business activity hit a three-month low in June, with slowing growth in the service sector and deepening contraction in manufacturing. However, overall economic growth in Q2 remained modest, despite concerns that the Federal Reserve's rate hikes in the past year would trigger a recession and sharp decline in production. Service sector activity, however, barely increased as total demand declined for the first time since January.
Friday's data was released shortly after a series of major central banks worldwide increased interest rates, exceeding expectations. This has heightened the risk of larger economic recessions as tightening monetary policies to curb inflation show no signs of stopping.
Markets are concerned about a sudden rise in interest rates, as larger-than-expected rate hikes in the UK and Norway have supported the USD. Fed Chair Jerome Powell stated last Thursday that the Fed will adjust rates cautiously from now on, but ruled out the possibility of an "early rate cut."
[
EURUSD ]The Vice President of the European Central Bank, Luis de Guindos, stated that the ECB is entering the final stage of its tightening cycle, dependent on data.
He emphasized that monetary policy and its effects will help reduce underlying inflation and the important consideration is the impact on wages and labor costs. If the second-round effects become complicated, monetary policy will have to do more, and fiscal policy will also play a role in curbing inflation. Additionally, weaker-than-expected PMI data from France and Germany has raised concerns about a recession. The significant decline in the Eurozone's services PMI highlights the continuous impact of high labor costs and tightening monetary conditions.
On the daily chart, EUR/USD sharply declined on Friday to test the upper channel boundary (a) and is now recovering above the 0.382% Fibonacci retracement level. However, the possibility of a price increase is threatened by the broken trendline (b), and for EUR/USD to have enough potential for an increase, it needs to hold above the trendline (b) confirmed by the resistance level at 1.09457.
Key technical levels for EUR/USD are as follows:
Support: 1.08678
Resistance: 1.09230 - 1.09457
[
USDJPY ] The Japanese Yen is facing added pressure as the central bank maintains an extremely accommodative stance, causing further disadvantages for Vietnamese labor exports to Japan. Despite being in Vietnam, we can still hear the complaints when Vietnamese workers in Japan have their hopes for a Yen recovery dashed.
Data on Friday showed that Japan's core consumer inflation exceeded expectations in May, with fuel costs rising at the fastest pace in 42 years. This puts pressure on the Bank of Japan to gradually withdraw its massive stimulus package.
On the daily chart, USD/JPY remains stable, maintaining its upward price channel and staying above the Fibonacci retracement level of 0.618% and the EMA21 moving average. Breaking the upper edge of the channel could lead to further price increase, targeting the horizontal resistance at 145.050.
In the bigger picture, USD/JPY shows potential for price growth and is influenced by the following technical levels:
Support: 142.517 - 139.600
Resistance: 145.050
[
GBPUSD ] The British pound is under pressure due to increasing expectations that the UK economy may enter a recession after the Bank of England raised interest rates significantly last week to combat prolonged high inflation.
Despite a slight decline on Friday, GBP/USD is still trending upwards with price action around the trendline and above the previously broken ascending channel, supported by the 0.236% Fibonacci retracement level. As long as GBP/USD remains above the 0.382% Fibonacci retracement level and the EMA21 moving average, there is potential for further price increase. However, if the support at the 0.382% Fibonacci level is broken, the next target for a decrease would be the 0.618% Fibonacci level.
Important technical levels are as follows:
Support: 1.26830 - 1.27241
Resistance: 1.28533
General macro picture (
DXY )US business activity hit a three-month low in June, with slowing growth in the service sector and deepening contraction in manufacturing. However, overall economic growth in Q2 remained modest, despite concerns that the Federal Reserve's rate hikes in the past year would trigger a recession and sharp decline in production. Service sector activity, however, barely increased as total demand declined for the first time since January.
Friday's data was released shortly after a series of major central banks worldwide increased interest rates, exceeding expectations. This has heightened the risk of larger economic recessions as tightening monetary policies to curb inflation show no signs of stopping.
Markets are concerned about a sudden rise in interest rates, as larger-than-expected rate hikes in the UK and Norway have supported the USD. Fed Chair Jerome Powell stated last Thursday that the Fed will adjust rates cautiously from now on, but ruled out the possibility of an "early rate cut."
[
EURUSD ]The Vice President of the European Central Bank, Luis de Guindos, stated that the ECB is entering the final stage of its tightening cycle, dependent on data. He emphasized that monetary policy and its effects will help reduce underlying inflation and the important consideration is the impact on wages and labor costs. If the second-round effects become complicated, monetary policy will have to do more, and fiscal policy will also play a role in curbing inflation. Additionally, weaker-than-expected PMI data from France and Germany has raised concerns about a recession. The significant decline in the Eurozone's services PMI highlights the continuous impact of high labor costs and tightening monetary conditions.
On the daily chart, EUR/USD sharply declined on Friday to test the upper channel boundary (a) and is now recovering above the 0.382% Fibonacci retracement level. However, the possibility of a price increase is threatened by the broken trendline (b), and for EUR/USD to have enough potential for an increase, it needs to hold above the trendline (b) confirmed by the resistance level at 1.09457.
Key technical levels for EUR/USD are as follows:
Support: 1.08678
Resistance: 1.09230 - 1.09457
[
USDJPY ] The Japanese Yen is facing added pressure as the central bank maintains an extremely accommodative stance, causing further disadvantages for Vietnamese labor exports to Japan. Despite being in Vietnam, we can still hear the complaints when Vietnamese workers in Japan have their hopes for a Yen recovery dashed.Data on Friday showed that Japan's core consumer inflation exceeded expectations in May, with fuel costs rising at the fastest pace in 42 years. This puts pressure on the Bank of Japan to gradually withdraw its massive stimulus package.
On the daily chart, USD/JPY remains stable, maintaining its upward price channel and staying above the Fibonacci retracement level of 0.618% and the EMA21 moving average. Breaking the upper edge of the channel could lead to further price increase, targeting the horizontal resistance at 145.050.
In the bigger picture, USD/JPY shows potential for price growth and is influenced by the following technical levels:
Support: 142.517 - 139.600
Resistance: 145.050
[
GBPUSD ] The British pound is under pressure due to increasing expectations that the UK economy may enter a recession after the Bank of England raised interest rates significantly last week to combat prolonged high inflation.Despite a slight decline on Friday, GBP/USD is still trending upwards with price action around the trendline and above the previously broken ascending channel, supported by the 0.236% Fibonacci retracement level. As long as GBP/USD remains above the 0.382% Fibonacci retracement level and the EMA21 moving average, there is potential for further price increase. However, if the support at the 0.382% Fibonacci level is broken, the next target for a decrease would be the 0.618% Fibonacci level.
Important technical levels are as follows:
Support: 1.26830 - 1.27241
Resistance: 1.28533
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