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EUR/USD -15/07/2022-• Pair remains under bearish pressure • After a successful break of the previous support level at 1.0340, parity level was reached • Levels sub parity exposed as fundamentals still point to the downside • A clear break of parity level exposes 0.96 figure • The latter served as a support back in 2022 where the pair bottomed before starting a massive rally • Will the 2002 scenario repeat itself in 2022 ? • If that is the case, the next range would be 0.96-1.03 • Bulls need to bring the pair back above the 1.0340 level to turn the odds in their favor • FED-ECB policy divergence is still in play as markets are now pricing in a 100 bps move at the next FOMC meeting.
by RamziAbouAbdallah-CMT
EURUSD - CHOPPY!EURUSD CPI print came out higher, we had bearish movement of EUR but we covered that before end of the day and now re-testing those support lows again break of these area then yes we have further bearish movement and I expect the next support areas to come swiftly in control BUT if we stay above these support areas and re-test out of those highs I expect short term bullish movement. Keep in mind the fundamentals: FEDs soon to go on black out and we have ECB next week. Now ECB they always behind, lag very much they do but could they do 1 hike rate? I mean sure recession is on the table can't really rule that out globally so overall we could be choppy until clear direction of ECB but overall DXY looks over done and when you keep an eye on 10's etc on yields it's inverting overall and that's where you've seen recession trade idea which was on my week ahead out look that can be seen via my trading view account links on YT - I stated very clearly CRUDE WTI its a recession trade, goes down less demand etc. Patience is key! TJ
by Trade_Journal
Euro above parity by a threadIt is looking like July 2022 could be a memorable month for the euro, but unfortunately not for the right reasons. EUR/USD is within a whisker of dropping below parity with the US dollar for the first time since 2002 and the risk of a break below parity below in the coming days remains high. In the North American session, EUR/USD is trading at 1.008, down 1.00%.  The euro, along with all the other majors, is seeing red against the US dollar today. The markets have reacted to the surprisingly strong non-farm payroll report on Friday, as the June gain of 381 thousand surpassed the May reading of 336 thousand and easily beat the consensus of 240 thousand. The unemployment rate remained steady at 3.6%, while wage growth grew by 0.3%. The solid employment report has raised expectations of another 75bp hike by the Fed at the end of July. A 75bp move will substantially widen the Europe/US rate differential, which is contributing to the euro's sharp descent today. The ECB holds its policy meeting six days ahead of the Federal Reserve, on July 21st. This meeting will likely mark the lift-off for ECB rate hikes, with another increase expected in September. The ECB has been scrambling to catch up to the inflation curve, as it badly misjudged the staying power of high inflation. ECB interest rates are in negative territory, and a modest 0.25% hike, the most likely scenario at the July meeting, may not do much to boost the euro, although perhaps the perception that the ECB is finally tightening will provide some support to the ailing currency. On Tuesday, Germany releases ZEW Economic Sentiment. The index has been mired in negative territory for months, indicative of strong pessimism about the economic outlook. In June, the index came in at -28.0 and this is expected to worsen to -40.0 in July. EUR/USD is putting strong pressure on support at 1.001, just above parity. Below, there is support at 0.9849 There is resistance at 1.0124 and 1.0221
by OANDA
EUR/USD Approaching Multiyear Technical & ECB Intervention LevelStocks are doing quite well despite a recession risk which is in focus lately as CB is hiking rates despite the economic downturn in the last few months. But it seems that word “recession” is not in FED’s vocabulary now, and this may not be change so soon after today's NFP numbers came out above expectations, so FED will stick with hawkish policy. ECB is also trying to follow the FED and fight the inflation, which is a “must” as EURUSD moves towards parity and is currently trading at a 20-year low. We must keep in mind that a weak currency in the eurozone is making inflation even worse when you are a net importer. So I think that inflation can come down faster if the currency would be stronger. From an Elliott wave perspective we see pair trading in a higher degree complex correction down from 2008 high, now possibly in late stages with price approaching 78.6% Fib. level that comes in around parity. Technically I assume that Eur can be much higher in years ahead, but the question is what will be the catalyst; Higher EUR interest rates? Ukraine-Russia solution? Downturn of the USD? Maybe foreign exchange interventions? None of us can answer this question at the moment but technically I think that 1:1 Eur vs Usd is clearly an interesting level. However, I think if EURUSD pair moves below parity the ECB intervention may happen. The last time they acted alone was back in 2000 when EURUSD was trading around 0.9000. So firstly, they will try to bring down inflation with higher rates, but then I think intervention is also an option, especially if pair would approach that same 0.9000 level. Trade well, Grega
by ew-forecast
2
Euro slide continuesThe month of July has been an unmitigated disaster for the euro - with only three trading sessions in the books, EUR/USD has declined a staggering 2.73%. Earlier in the day, the euro dropped to 1.0186, its lowest level since December 2002. The euro appears headed for parity with the US dollar, a psychologically significant level. The economic outlook in the eurozone is not an encouraging one. Inflation surged to 8.1% in May, surpassing the April record of 7.4%. A peak in inflation remains elusive, and the ECB is way behind the inflation curve - the central bank hasn't raised interest rates yet, which are in negative territory. Even so, a lukewarm eurozone economy means that raising rates poses the risk of a recession. The energy situation has been deteriorating, as sanctions against Russia have led to counter moves in which Moscow has reduced its gas exports to Europe, which could result in an energy shortage this winter. If Russia reduces oil or gas exports to Europe, prices will soar and this could cause a severe economic downturn. A strike by Norwegian oil and gas workers on Tuesday threatened to exacerbate the situation. The Norwegian government has stepped in and ended the strike, but investors remain nervous as the eurozone's energy situation could become precarious. Today's data out of the eurozone showed some improvement but did little to raise risk sentiment. Germany's Factory Orders rose 0.1% in May, up from -1.6% in April but still a negligible gain. It was a similar story for eurozone retail sales, which came in at 0.2% in May after a -1.4% read in April. On Thursday, Germany releases Industrial Production for May, which is expected to slow to 0.7%, down from 0.4%. EUR/USD faces resistance at 1.0124. Below, there is support at 1.0075 There is resistance at 1.0221 and 1.0324
by OANDA
EUR/USD -29/06/2022-• Trend is still bearish despite latest rally • The pair broke below the rising wedge; a bearish pattern, drawn on the chart yesterday and closed below it, reinforcing the bearish picture • Also, descending trend line since Feb 2022 still acts as resistance, today near 1.06 • Horizontal resistance highlighted in gray color (around 1.08) is a major resistance to be watched • As long as the pair is trading below those resistance levels, it is highly likely that we will see lower prices in the coming days/weeks • Bears had a successful engulfing bearish candle today and are targeting YTD lows at 1.03 followed by 1.02 and parity • Recession fears, Russia-Ukraine war, FED-ECB policy gap supports the bearish picture
Short
by RamziAbouAbdallah-CMT
Out of resistance comes strengthSince we last covered Euro Dollar in our Timing is everything! piece, the pair has traded lower, playing out exactly to our assessment and hitting both of our price targets. However, things have changed quite a bit ever since. Inflation has skyrocketed in the EU and the ECB seems ready to start playing catch-up on rate hikes. Looking at the charts, the Euro Dollar pair has been trading in a triangle pattern with prices bouncing off the support multiple times but failing to breakthrough. The 1.0400 level seems to mark the longer-term resistance, which has been tested multiple times but held strong. We see these as confirmation of a strong resistance. With prices close to the resistance now, we favor the long side in the short term and expect the pair to make its way to the top of the triangle. Entry at 1.04880, stops at 1.03575. Target at 1.0630. Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
CME:6E1!Long
by inspirante
Euro slides as inflation jumpsThe euro is sharply lower on Friday and is currently trading just above the 1.04 line, down 0.76%. Eurozone CPI for June was higher than expected, at 8.6% YoY. The estimate stood at 8.4% and inflation rose sharply from the May reading of 8.1%. This marked a record-high. There was better news from the core reading, which dropped marginally to 3.7% YoY, down from 3.8% in May. Investors have given the inflation data a thumbs-down today and sent the euro tumbling ahead of the weekend. With inflation continuing to accelerate and the ECB revising downwards its growth forecast, the spectre of stagflation in the bloc remains very real. The ECB is no doubt dismayed that inflation was higher than expected, but it's unclear if the record-high CPI release will be enough to deliver a supersize 0.50% hike for its lift-off next month. At this week's ECB forum, ECB head Lagarde talked tough and downplayed concerns over a recession, but there are plenty of dark clouds hovering above the eurozone economy. High inflation, weak growth and the energy crisis with Russia mean that there is certainly good reason to be concerned about a significant downturn in the eurozone economy. In the US, there are worrying signs that the economy is weakening. US Personal Spending fell to 0.3%, down from 0.6% (0.4% exp.). Inflation appears to be declining slowly and the labour market is in solid shape. CME's FedWatch is putting the likelihood of a supersize 0.75% rate increase at 75%, as markets expect the Fed to remain aggressive against inflation. Can a recession be avoided? Fed Chair Powell is saying all the right things in downplaying concerns about the "R" word, but many market participants have their doubts and feel that the US economy will not be able to avoid a recession. .
by OANDA
EUR/USD Pushes Higher As ECB Forum Gets Underway The EUR/USD pair pushed higher on Monday and closed with gains for the second session in a row as the greenback weakened across the board. The pair reached a daily high of 1.0614 but failed to consolidate above 1.0600 and pulled back during the New York session. At the time of writing, the EUR/USD is trading around 1.0580, up 0.25% on the day. The euro moved higher, underpinned by the rise in German yields, while the greenback exhibited weakness across the board despite the advance in US yields. Wall Street indexes had a positive start but then turned south and closed in the red. Market participants continue to assess the impact of monetary policy on employment and growth as major central banks have embarked on contracting cycles. Meanwhile, the European Central Bank Forum on Central Banking got underway in Portugal, with the main focus on Wednesday’s policy panel that will feature ECB, BoE and Fed leaders. From a technical perspective, the EUR/USD holds a slightly positive short-term bias according to the daily chart, although the inability to establish itself above 1.0600 is a sign of momentum lacking. If the euro manages to break above the psychological level, it would face key resistance at a descending trendline coming from February’s highs, currently around 1.0650. A rise past this trendline would improve the pair’s short-term outlook. On the other hand, the immediate support level is seen at daily lows in the 1.0550 area, followed by the 1.0500 mark and then the 1.0470 zone.
by Alex_Boltyan_FXAnalyst
Selection is not dead - and who said Growth ever was?INVESTMENT CONTEXT Lithuania limited railway cargo transit across its territory from Russia to Kaliningrad; Russia dubbed the move as "openly hostile" Russia overtook Saudi Arabia as China’s biggest supplier of crude oil. Russian crude exports to China surged 55% in May Turkey, Sweden and Finland met to discuss Turkey's opposition to the Nordic countries bid to join NATO French President Emmanuel Macron lost parliamentary majority as the country's far-right regained momentum after the Presidential elections held last April European Commission President Ursula von der Leyen warned against the bloc's "backsliding" into coal as the continent tries to weave itself off Russian gas Terra/LUNA project staff were banned from flying as South Korean authorities deepen investigations on LUNA's demise PROFZERO'S TAKE It's hard to look at the EU without feeling something disruptive is about to happen. The bloc's inflation rate is not too far from that of the U.S. (8.1% vs. 8.6%, respectively) - yet the ECB's base rate, even after the 25bps hike earlier in June, is still negative by 25bps, while the Fed is already pricing cash at 150bps. The Fed has stopped sustaining fixed income markets by not rolling over USD 30bn Treasury bonds and USD 17.5bn MBS per month - the ECB tried to walk down the same path, only to face backlash from traders which sent interest rates on the weakest countries (Greece, Italy and Spain) to fresh highs. And as Russia curtails natural gas supplies, the countries that are most exposed to energy security - notably including Germany and Italy - scramble to diversify the energy mix, stumbling upon the harsh reality that coal will attract criticism from environmental groups (and voters) while LNG supplies need re-gasification plants - whose dearth won't be made up for until 2024. Nigel Bolton, BlackRock's co-Chief Investment Officer, said on June 20 he saw "extreme valuation opportunity in European banks". ProfZero would really, sincerely like to share the same optimism - or opportunism Speaking of Europe - after dismissing blockchain assets as "worth nothing" (and therefore badly needing regulation, in a rare moment of pure pneumatic vacuum of logics), ECB President Christine Lagarde said "While the correction in asset prices has so far been orderly, the risk of a further and possibly abrupt fall in asset prices remains severe". ProfZero concurs with Madame Lagarde - absent energy security and supply strategy, foggy monetary policy (to tighten or not to tighten?) and a much feared fragmentation of borrowing costs already happening, traders are having it good shorting European assets. If only there was a strong Regulator... In the opinion of ProfZero, the market-wise breadth of June 13's collapse has a deeper structural meaning, and could in fact contain cues on portfolio construction to cross summer season: (i) Markets are not done pricing a recession, nor the Fed's and the ECB monetary policy. After the 50bps rate hike on May 5, the S&P 500 and Nasdaq plunged 3.56% and 4.99%, respectively; after the 75bps rate increase on June 15, the indexes nosedived 3.27% and 4.08%, respectively. The Fed is meeting four more times this year; current expectations are for 75bps flat increases at each meeting. Should inflation fail to be absorbed in the economy, calling for more rate increases, equities would bear the brunt of the selloffs, (ii) Investors are starting to see Value as fairly priced - possibly signaling the beginning of reversal on commodity stocks, especially in the energy space. At the same time, Growth is not dead. Apple (AAPL), Alphabet (GOOG) and Microsoft (MSFT) dropped less than 5% on average in the last month, compared to almost 15% by Occidental Petroleum (OXY), Petrobras (PBR), and Shell (RDS.A), (iii) It is still too early to construct risk positions. A clear trough has not been touched and even a touted recession has not materialized. No clear industrial path has emerged from the bear market; and without such, longs are but reckless positions. No time to cry; no time to risk either
CME:BTC1!
by ProfZero
EUR/USD Stabilizes Above 1.0500, Braces For July LiftoffThe EUR/USD pair advances slightly at the weekly opening in the absence of relevant economic data and showing limited reaction to the statements of several members of the European Central Bank Governing Council, including president Christine Lagarde. At the time of writing, EUR/USD is trading around 1.0515-20, 0.2% above its opening price, having hit an intraday high of 1.0545 during the European session. In her statement before the European Parliament, Lagarde said the bank plans to raise the policy rate by 25 points next month, while she also left the door open for another hike in September. Furthermore, Lagarde declined to comment on any details of the ECB's new bond-buying tool while stressing that fighting fragmentation is a precondition for the success of the monetary policy. She also said conditions are in place for further economic growth in the region. Meanwhile, in the United States, the stock and bond markets remain closed this Monday in observance of the Juneteenth holiday. The dollar, measured by the DXY index, trades lower which, coupled with a new advance in 10-year German Bund yields, has favored the European currency's gains. Looking ahead, Fed Chairman Jerome Powell's testimonies to Congress on Wednesday and Thursday will be key events of the week. From a technical point of view, the EUR/USD pair maintains a neutral bias in the short term, although the long-term outlook remains bearish. The daily RSI shows a positive slope, still below its midline, while the MACD prints decreasing red bars, which could signal a continuation of the upward correction in the coming days. On the upside, the 20-day moving average offers immediate resistance at the 1.0620 area, followed by the psychological level of 1.0700, which is reinforced by a downtrend line drawn from the February highs, and then the 1.0770 zone. On the other side, immediate support is seen at the 1.0450 area, followed by the 1.0400 psychological level. A break below this latter would pave the way to retest the cycle low of 1.0349. Then, the next support could be found around 1.0300.
by Alex_Boltyan_FXAnalyst
SharktoothINVESTMENT CONTEXT U.S. stocks dropped sharply on growing fears of recession. S&P 500 dropped 3.27% on June 16, recording its steepest weekly decline (more than 6%) since March 2020 To calm the fears of a new debt crisis in EU, the ECB is reportedly structuring a specific bond-buying program specifically aimed at supporting its most indebted economies Turkey maintains its opposition to Finland and Sweden joining NATO For the first time since 2007 the Swiss National Bank raised its policy rate by 50bps Russia increased the cut of natural gas supply to Italy to 35%, sending TTF up 25% U.S. mortgage rates at 5.78% hit the maximum since 2008, causing new home constructions to fall by 14.4% in May Blockchain assets are dragged by investors shunning risk assets across the board. BTC is repeatedly testing USD 20k strong resistance, seen by some analysts as "critical" before a raft of leveraged trades get margin-called, potentially causing position defaults PROFZERO'S TAKE On June 16, ahead of the market open, ProfZero called the feeble rebound of June 15 a "dead cat's bounce" - nothing different from what happened on May 6, two days after the Fed announced a 50bps interest rate increase: after an initial relief trade, market engaged a steep sell-off, one that brought Nasdaq from 12.9 to 11.4k within a week. Until markets will have embraced the deep rooting of the current disruption; will have stopped looking at Regulators for cheap and quick fixes, and will have started to work on structural solutions on energy and food - ProfZero argues we are bound to trade in a nervous, sharktooth, lose-lose type of environment It is not "are we holding 20k on BTC?" that should be asked. Rather: "what for is it worth paying 20k?"
CME:BTC1!
by ProfZero
Does the Fed matter?INVESTMENT CONTEXT Markets are weighing a possible 75bps rates hike at today's FOMC meeting. Were the Fed to follow suit on traders' expectations, it would be the steepest tightening since 1994 Traders price 255bps rate hikes from the Fed in its five remaining meetings this year China's central bank refrained from cutting the interest rate to protect yuan from policy divergence with the U.S. Freeport LNG announced its Texas assets will remain offline until September, and recover to full operations only in early 2023. Freeport LNG represents 10% of European seaborne energy supplies Russia plans to reduce capacity of gas supply on Nord Stream pipeline by 40% The U.S. extended till December 5 (instead of June 24) the validity of the license "authorizing transactions related to energy" to Russian entities under sanctions Coinbase (COIN) will shed a fifth of its staff amidst the rout in blockchain assets. COIN shares are down 85% from IPO price tag PROFZERO'S TAKE While ProfOne ponders whether monetary policy is really the right place to look at to solve a crisis which is wholly industrial in nature, ProfZero keeps reminding that fixed income markets have taken for granted for too long the support from Central Banks. To see Italy now trying to roll over its debt without the safety net laid by the ECB will be a thing to behold - hopefully, only for positive reasons Russia pulling the plug on gas while the U.S. quietly offers the means to avoid a much-spooked default; the channels of diplomacy are apparently running on a real low profile - but with what endgame in mind? While speaking at the TechCrunch Sessions on June 15, Bill Gates characterized cryptocurrencies and NFTs as a market driven by sentiment. “As an asset class, it’s 100% based on the greater fool theory - that somebody’s going to pay more for it than I do”, he argued. Indeed, the faith of blockchain asset holders is being put to test - just as much as in March 2020 or in the ICO crash of 2017. Even through this, ProfZero sticks by its mantra: always look at the fundamentals. While hype has definitely played a role ever since the infancy of the blockchain industry, the merits of the technology are there to be seen - if in doubt, ask any trader how a transaction is processed, and how many operational risks are taken at each and every step. Also Mr. Gates' understanding of NFTs leaves ProfZero dubious: the market of fine arts has left dusty auction houses and brought artists closer to investors, while beyond that, tokenization is nothing but the zeitgeist of the post-consumeristic era. Is this a call to BTC to USD 1mln (like Microstrategy's Michael Saylor reiterated recently)? Absolutely not. It is a call - to stay focused on the only thing that matters - value PROFONE'S TAKE Markets are waiting for today's decision of Federal Reserve about the next step of its rates-rising campaign. Hedge fund manager Bill Ackman said the Fed could help restore market confidence if it raises rates by 75bps today and in July - yet he also advised that 100bps would be better. On a markedly wilder note, investment manager Jeffrey Gundlach urged the Fed to take rates to 3% in one go - today. Amidst such notorious opinions, ProfOne's question is - does the Fed really matter? Actual inflation is one of fundamentals (energy and food); in May the Congressional Budget Office (CBO) forecasted inflation to cool to 2.7% only in 2023, implying that by the end or 2022 we may expect the figure to settle hardly lower than 5%. As argued also by ProfZero, this crisis is different from 2008 or 2020 - it is a crisis of the very industrial system that has been working for the last 20 years. Certainly monetary policy can and is providing already its contribution. But finance can't magically restructure energy, food and technology supply chains built in decades. There was a time when Wall Street was thought to make money just by waving its magic wand; the Great Financial Crisis brought that sorcery show to an end. Hopefully, we won't repeat the same mistake again
CME:BTC1!
by ProfZero
Surprise? What surprise?INVESTMENT CONTEXT S&P 500 and Nasdaq recorded their worst week since January, sliding 5.1% and 5.6%, respectively; Nasdaq compounded losses close just shy of 7% in 2 days (June 9-10) ECB plans to stop its bond-buying program to cool record-high inflation (8.1% reading in May). The gap between Italian and German 10-year bond yields hit 227bps, the highest since May 2020 At a security summit in Singapore, China’s defense minister Wei Fenghe accused the U.S. of interfering in Chinese internal affairs and confirmed that annexation of the “China’s Taiwan” is a historic mission Fuel prices in U.S. hit 40-years max and keep rising while shale production remains sluggish to heed calls to hike volumes Blockchain assets collapsed under U.S. inflation data and EU monetary policy. On June 13, BTC entered USD 25k area (18-month low), ETH plunged to 13-months low, and all Layer-1 altcoins lost about 20% value during the weekend in a sector-wide rout PROFZERO'S TAKE As anticipated on our June 8 Parlay, there are still significant pockets of volatility on the market to call the bottom. In particular, we reiterated that the uncertainty that then permeated the ECB monetary policy could disrupt the feeble sidelining trade engaged by equities in the previous weeks - and so it happened. ProfZero does not share the surprise of many operators - neither for U.S. inflation at 8.6%, nor for ECB potentially raising interest rates by 50bps in September. Instead, it may now be the time to appreciate greater clarity from the regulatory side; definitely not a Buy signal, but a better environment to express investment strategies Rout in blockchain assets called by ProfZero as early as May 11 - and potential for more falls. No time to play PROFONE'S TAKE On June 9, along with the 25bps interest rate hike scheduled for July, the ECB declared the end of bond-buying era ("whatever it takes", anyone?), thus intensifying the pressure on Southern European countries (Italy, Greece, Spain, Portugal) by sending their prospective borrowing costs higher. The gap between the Italian and German 10-year bond yields (considered as benchmark of eurozone market stress) reached 227bps, the highest level since May 2020, confirming the general market trend of investors avoiding risk assets in favor of safe havens. ProfOne argues Christine Lagarde's calls to avoid “fragmentation” in the continent's monetary policy is shaky, at best. For on one side it’s inherently contradictory to prevent non-homogeneity among the economies inside of EU, while on the other pursuing "selective quantitative tightening" would disparage the safety net around the continent's most virtuous economies. In yet another head-scratcher for traders, the debt crisis of November 2011-July 2012 looks set to resurface PROFTHREE'S TAKE Following ProfOne’s comments on the metals of the future, ProfThree has a lot to say on copper which is considered the key component on the road towards de-carbonisation. A recent 18% y-o-y plunge in copper exports from Chile (the world's largest producer) in May spooked traders given an already undersupplied market, judging by the critically low level of stocks at both LME and SHFE. In the fundamentals equation, ProfThree sees supply as fixed, since there is zero greenfield projects coming online for the foreseeable future, while those under discussion or development are mainly located in risky jurisdictions (Chile, Peru, Congo), putting even future supply under threat. At the same time, on the demand side there is ever growing demand from EV makers, as well as solar and wind mills producers. With that in mind, Profs are in full agreement about copper joining semiconductors and battery minerals (cobalt, nickel, lithium) in the list of the commodities of the future - each remarkable tainted by yet new supply-chain uncertainties
CME:BTC1!
by ProfZero