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Will BoE save the pound? GBPUSD has been trading lower on Thursday, at fresh 7-month lows around 1.3125. The pair remains under pressure mainly due to strength in the US dollar which received a boost recently from the hawkish Fed. The pound has lost the important support area 1.3150 and remains vulnerable to further losses. Today, the Bank of England policy meeting will be in focus. The central bank could drive the sterling even lower or open the way to a corrective recovery from oversold territory. Should the regulator confirm that the Q1 growth slowdown was temporary, it will be a bullish sign for the pound. The pair could even rally if Carney shows a greater willingness to hike rates in H2 2018. However, such a scenario is probably too optimistic as the monetary authorities will likely express a more cautious tone. A potentially neutral rhetoric may leave the pound virtually unfazed. But from the technical point of view, the pair has a recovery potential as it has been trading at very attractive levels for the bulls to get into the game. The immediate resistance lies around 1.3180. On the downside, the 1.31 figure is now the key support. A break below will open the way to a deeper downtrend.
by HelenRush
Policy divergence pressures euro EURUSD dipped to late-May lows in the 1.1530 area on Tuesday amid a widespread risk aversion that fuelled the dollar demand. The pair has recovered partially since, but continues to trade with a bearish bias and remains vulnerable to further losses in the short term. Despite the downside pressure on the single currency has eased somehow, and global investors have mostly shrugged off the trade-war fears for now, the downside risks in the pair still persist. The main reason behind the bearish outlook is the monetary policy divergence between the ECB and the Fed. Should the ECB officials confirm the dovish tone today, EURUSD could return to the previous lows and go even lower if Fed’s Powell will sound hawkish. The technicals also point to the downside risks as the tone remains bearish as long as the pair is trading below the 1.18 threshold. The euro needs to get back above this level to regain the upside bias and try to derail the downtrend which remains in place. The immediate support comes at 1.1530.
by HelenRush
USDJPY: the bearish potential is limited The USDJPY pair has accelerated its decline on Tuesday amid the increasing risk-off sentiment as an escalating trade war between the US and China continues to hurt investor enthusiasm. The price dropped from last week’s highs close to the 111.00 mark, down to one-week lows around 109.50. Against the background of widespread risk aversion, the Japanese currency could rise further in the short term, as global markets will likely remain under pressure today, digesting another aggressive signal from the US as Trump has threatened new 10% tariffs on another $200B of Chinese imports. China responded by accusing the US of "blackmail". The obvious signs of a major escalation of the trade dispute boost safe-haven demand. But in the bigger picture, the pair’s downside potential looks rather limited as the greenback remains in a bullish trend fortified by recent Fed’s hawkish rhetoric. So, as soon as the dust settles once again, the price will likely stage a rebound from more attractive levels for buyers. Meanwhile, in the short term, USDJPY may fall further. The immediate downside target comes around the 109.20 area.
by HelenRush
Brent: it’s all about OPEC meeting Crude oil prices are attempting to stage a corrective rebound on Monday after a dip to fresh two-month lows earlier in the day. Brent has extended the recent decline to $72,10 where it received a support and staged a recovery. However, the bullish momentum remains too timid to open the way to a more pronounced rise from the current levels, with the $74 area is the key upside hurdle at this stage. Market participants continue to wonder how aggressively the OPEC+ countries will increase production, and whether the exporters will manage to come to a consensus at all, as the largest producers including Russia and Saudi Arabia call for a rise in output, while some other countries insist on keeping the current quotas unchanged, citing fears of oversupply and another plunge in prices. Against this inconsistent backdrop, Brent will likely remain volatile in the coming days, expecting the cartel’s verdict. Amid a lack of consensus, the bearish risks prevail in the market, and we still could see fresh lows in the nearest future. Should the price challenge the $72 level, the next psychological target of $70 will get into the game.
TVC:UKOIL
by HelenRush
Euro is licking its wounds, remains vulnerable The EURUSD pair nosedived to two-week lows following the dovish ECB statement on Thursday. The price has challenged fresh lows in the 1.1543 area earlier today but faced support and since has recovered some ground. During the early European hours, the euro is attempting to get back above the 1.16 threshold. Despite the pair has stopped bleeding, the euro remains vulnerable as the dovish outlook for rates in the euro zone reduces the appeal of the currency. By the way, following yesterday’s central bank rhetoric, Deutsche Bank pushed back its ECB rate hike forecast to September 2019. This contrasts with the bold tone by the Fed as the regulator now expects for hikes this year instead of three. Against this background, the EURUSD outlook looks more bearish now, and should the incoming euro area and US economic data continue to diverge, the price could deepen its bearish trend, while rallies will likely attract sellers. In the short term, the pair needs to regain the 1.16 mark at least, though it won’t change the overall bearish picture significantly for the time being. The immediate important resistance now comes around 1.17, where the 20-DMA lies.
by HelenRush
EURUSD: what to expect from ECB Today’s ECB meeting will undoubtedly will be a crucial one, despite the regulator isn’t going to bring any actual changes to its current monetary policy. Despite the economic picture in the euro zone doesn’t warrant a hawkish rhetoric, the recent comments by a number of central bank members point to its readiness for QE removing, probably till the end of this year. The euro is prepared for a more aggressive regulator tone, but the question is whether it will be enough to fuel a speculative demand. The buck, for example, failed to stage a rally overnight despite the Fed has brought a so-called hawkish hike. It was in part due to the fact that such an outcome had been priced in already. Therefore, the EURUSD pair could fail to confirm the rebound above the 1.18 threshold and may even suffer a decline as the strategy “buy the rumor, sell the fact” could come into play should the monetary authorities announce the expected QE end date. A spike during the initial reaction may bring the pair above the 1.1840 area.
by HelenRush
Gold: focus on Fed Spot gold remains under a bearish pressure after yesterday’s drop. The yellow metal has been trading below the key $1,300 mark since early-June and still doesn’t show any signs of a sustained recovery as market focus has shifted from geopolitics to the upcoming FOMC meeting. The Fed rhetoric could affect the overall sentiment in the global financial markets and the dollar dynamics as well. Should the regulator hint at four tare hikes this year, the greenback will rise across the board amid growing market expectations. For the precious metal, this scenario would be bearish and could intensify the downside pressure. Gold still looks unattractive for bulls, despite the price has been trading close to 2018 lows. This reflects the market mood as the dollar remains within the uptrend despite its impetus has abated recently. And the potential “hawkish” Fed may fuel the USD demand today. In this case, gold will likely challenge the intermediate support around $1,290 and test the $1,297 level, depending on the degree of the expecte dollar’s bullishness.
TVC:GOLD
by HelenRush
USDJPY needs to confirm recovery The greenback has regained some ground since the start of the week, mostly due to yen’s significant retreat ahead of today’s US-North Korea summit. Trump has described the meeting with Kim as honest, direct and productive, but he highlighted that sanctions on North Korea will remain in effect and noted that the two leaders will probably need a second summit. The dollar continues to trade with a timid bullish bias ahead of the key US CPI data which may affect market expectations ahead of the two-day FOMC meeting that concludes Wednesday. The USD bulls hope that the monetary authorities will hint at a more aggressive tightening this year. Should today’s inflation numbers surprise to the upside, the buck will get support across the board in the short term. The USDJPY pair is trading around the 110.00 mark and needs to confirm a break above this psychological level to proceed with the ongoing recovery. The immediate resistance comes at 110.50, while the key support is around 109.00. The price is currently oscillating close to the 200-DMA marginally above 110.00.
by HelenRush
EURUSD underpinned ahead of ECB meeting The EURUSD pair has regained the bullish impetus on Monday, with the price is testing the 1.18 once again. The euro is underpinned by bullish expectations ahead of this week’s ECB meeting, even as US-EU trade tensions persist. The pair remains above the 20-DMA but will hardly dare to jump to 1.20 and above any time soon as traders will likely be cautious ahead of the two major central banks’ decisions. The ECB is expected to deliver the date of QE end and will also provide its latest forecasts for economic growth and inflation. The risk for the single currency is that the market expectations may already be rather high after the recent signals from the central bank officials. So if Draghi shows a rather cautious rhetoric, the euro may fall the victim of profit taking and give up some of its previous gains. In this case, EURUSD will get back below the 20-DMA at 1.1730 and will derail the 1.17 mark again. But we also should remember that the pair will have to digest the Fed meeting results first, as the dollar is also vulnerable, despite the widely expected rate hike in the US.
by HelenRush
GBPUSD: CPI and BoE intentions in focus The GBPUSD pair is trading marginally lower on Friday, with widespread risk aversion has put the high-yielding currency under some pressure, while the greenback is licking its wounds after a bearish move earlier this week. The price failed to hold above the 1.34 threshold and turned red on the day, challenging the 20-DMA before the opening bell on Wall Street. Meanwhile, the pound was unfazed by some interesting comments by BoE’s Ramsden who noted that persistently high inflation above the 2% target level creates a risk of failure of the MPC to meet its remit. In other words, one of the most cautious BoE members in fact highlighted the need for further rate hike down the road to combat the overshooting CPI. Against this backdrop, next week’s inflation report will be important for GBPUSD as higher consumer prices will drive the sterling north across the board on the back of increase pricing in for an August hike. Therefore, after a corrective retreat, the price could resume the ascent and get back to the 1.35 area.
by HelenRush
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Brent stuck below 20-DMA Crude oil prices have recovered marginally on Wednesday, with Brent managed to keep above the $74,50 area and finished at $75,73. The immediate resistance comes at $76 – a break above will confirm some easing of a downside pressure. However, in the bigger picture, the bearish risks still persist, and the 20-DMA around $77,50 is unlikely to be challenged any time soon. The local rebound was mainly due to the reports that Venezuela is considering force majeure on oil exports. The potential stoppage in deliveries from a major OPEC producer has eased oversupply fears as US officials ask the cartel to increase production. By the way, Saudi Arabia’s Aramco has raised its crude oil prices for Asian buyers to the highest since 2014, citing threats to rival suppliers. This step has also supported Brent. In the short term, the market will likely remain focused on Venezuela but this won’t be enough to alleviate concerns over the possible OPEC production increase amid the non-stop rise of activity in the US shale oilfields. Shale production reached 10.8 million bpd last week, coming closer to the 11 million mark.
TVC:UKOIL
by HelenRush
Euro welcomes ECB QE exit talks EURUSD has appreciated marginally yesterday, with the bullish bias remains intact on Wednesday. The latest rise in the single currency could be attributed to some relief in Italy as the new Prime Minister Conte highlighted that his country has no plans to leave the euro zone. The additional upside pressure came amid ECB QE exit talk. It was reported that the central bank could discuss the end of its quantitative easing program during the next policy meeting next week. Some hawkish comments by ECB members added to bullishness today. In particular, Hansson said higher rates are possible before mid-2019, while Bundesbank head Jens Weidmann expressed hope that inflation to gradually return to levels compatible with target. Against this backdrop, EURUSD jumped to May 23 highs around the 1.1760 area and is attempting to derail the 20-DMA. ECB hopes may drive the pair further north in the short term, but considering the dismal economic numbers from euro area this year, there are no significant arguments for a more aggressive approach to ECB policy normalization. As such, rising expectations on this front may play against the euro bulls eventually as the central bank will hardly sent a clear hawkish signal to the markets during the upcoming meeting.
by HelenRush
EURUSD lacks upward momentum The EURUSD pair staged a marginal recovery on Monday but failed to close above the 1.17 threshold, and the trading looks neutral today. The recent rebound was mainly due to a local dollar weakness as well as the squeeze of euro shorts opened during the Italian political crisis. The market continues to cheer the formation of a new government in the country. However, the political issues in Italy may yet put some pressure on the single currency down the road as the future relationships of the populist government with the EU look uncertain. Moreover, the dollar could regain strength amid the increasing rate hike expectations. Despite the recent US jobs report failed to fuel a rally in the USD, the figures themselves confirm that the economy is rather healthy to withstand a more aggressive tightening by the Fed. Against this backdrop, euro still looks vulnerable to further losses even as the currency shows some recovery signs lately. EURUSD needs a decisive break above 1.17 in order to challenge the 20-DMA in the 1.1750 area. As long as the pair remains below this moving average, the downside risks prevail in the short-term charts.
by HelenRush
USDJPY: dollar sellers may return The USDJPY pair finished the week with only marginal losses as the greenback has trimmed the previous decline on Friday, due to a spectacular US jobs report. The price has refreshed one-week highs in Asia today, but the bullish impetus fails to gain momentum ahead of the 14- and 20-DMAs in the 109.70-109.80 area. Despite the short-term technicals have improved recently, the pair’s upside bias is in question. On the other hand, the US economic figures signal a healthy GDP growth and therefore suggest that the Fed may pick a more aggressive tightening path down the road, which is a bullish factor for the buck. On the other hand, the threat of a trade war between the US and other countries, that has increased over the last few days, point to the prospect of yen buying amid the potential risk aversion in the global markets. Moreover, the BoJ has cut the size of JGBs buying and the market started to price in the upcoming tapering in Japan. As such, the pair may soon switch back into a bearish mode, especially considering the dollar’s inability to make a clear break above the mentioned local resistance that is standing on the way to 110.00.
by HelenRush
Brent: downside risks remain Crude oil prices set for a weekly gain but look indecisive amid the directional market on Friday. Brent failed to stage a recovery yesterday, with the price has settled around the 20-DMA after a brief spike above $79. Market participants have already digested the latest signals from OPEC. The cartel promised to remain committed to the existing deal, which prevented prices from further decline. The risk of another wave of profit taking remains however. The US shale producers continue to pump record volumes, with the levels of shale oil production are getting closer to 11 million bpd. Should today’s Baker Hughes report signal further rise in the drilling activity, the bearish pressure could intensify, despite the inventories declined substantially last week. From the technical point of view, a daily close above the $78 threshold is needed to bring the $80 level back in the game. Chances for such a scenario are rather low at this stage as the market obviously lacks both impetus and fresh drivers for now, while the Baker Hughes release is a local bearish risk for prices.
TVC:UKOIL
by HelenRush
Gold needs to confirm recovery Gold is trading mostly in a recovery mode this week, with the price is getting closer to challenging the 200-DMA at $1,307 once again. The metal closed above the $1,300 threshold yesterday, which open the way to further rebound in the short term. On Thursday, gold is up 0.30% on the day so far. The reason behind a better tone around the precious metal is the local dollar weakness which came amid a spectacular euro recovery due to easing political tensions in Italy. Weaker-than-expected US GDP and ADP employment data also added to the bearish pressure on the buck which remains on the defensive today. Against this backdrop, the metal has a chance to confirm the recovery, should the greenback proceed with its bearish bias. This scenario could be implemented if the dollar remains under pressure and accelerates the retreat, should the US PCE index come in lower than expected. However, in the longer term, the yellow metal remains vulnerable to downside risks.
TVC:GOLD
by HelenRush
EURUSD: the relief is temporary The euro came under intense pressure amid the political crisis in Italy which fueled fears of euro break-up and sent the Italian bond yields strongly higher. EURUSD found support just above 1.15 on Tuesday and is attempting to stage a local recovery during the early European hours. The pair reached 1.1580 so far and may rise further in the short term as Italian yields are back down from highs and the greenback retreats as well. The overall bearish trend in the EURUSD pair is intact and will likely continue amid the political woes in the third-largest euro zone economy. But some local factors may bring a relief to the single currency in the coming days. The eurozone inflation numbers are due tomorrow, and the core CPI may come in at +1.0% y/y, up from the +0.7% y/y in April. Should the report bring bullish signals, the single currency could show a more pronounced recovery. But the downtrend won’t be derailed as long as the political situation in the euro region remains uncertain, and the dollar demand in place. In this context, Friday’s US NFP employment figures will be important as strong wages data may put the euro under pressure again.In this scenario, EURUSD may challenge the key 1.15 mark.
by HelenRush
Gold: downside risks persist Gold remains within a bearish trend, though the recovery attempts have become more pronounced lately amid some corrective signals from the greenback. On the other hand, the rebound prospects still look timid and limited as the precious metal remains below the key moving averages and has derailed the important $1,300 psychological level. The dollar continues to trade higher against majors, with the currency looks set for additional gains this week, should the incoming US data confirm the strength of the country’s economy. The key releases include CPI, GDP, and NFP employment figures. Ahead of these releases, gold will hardly dare to stage a meaningful recovery amid the lingering downside risks. In the short- and medium-term, the yellow metal will likely remain under pressure, and the technicals confirm the bearish picture for now. However, should the price manage to keep above the $1,290 area, the overall pressure on gold will ease partially. The immediate resistance comes at $1,300. A daily close above the 200-DMA at $1,306 is needed to open the way for a local rebound.
TVC:GOLD
by HelenRush
Oil market digests signals from OPEC Brent crude continues to bleed on Monday after profit taking has accelerated late last week, with the price dropped to three-week lows around $74,50. Oil attracted buyers on a dip and has recovered slightly early Monday but remains in the red as output concerns still linger. Steep losses in the market were fuelled by Saudi Arabia and Russia. The two top producers are discussing raising oil output by 1 million bpd in the second half of the year to make up for losses in the countries like Iran and Venezuela. Despite the OPEC+ efforts helped to balance the global market, traders concern that increasing supplies may derail the process of further tightening and cease the rally in prices. Fresh US data added to the bearishness as Baker Hughes data showed the drillers added 15 rigs last week, to 859, the highest level since March 2015. This is a clear sign that US production will continue to rise even further. Brent will likely remain under pressure as long as the market prices in the potential increase in OPEC production. This week’s fresh US inventory and production data could add to the bearishness, should the numbers continue to increase. In the short-term, prices need to confirm recovery above $75 in order to regain the 20-DMA at $77.
TVC:UKOIL
by HelenRush
Brent at risk of deeper correction Crude oil prices fell over 1% on Thursday and continue to correct lower ahead of the weekend. Brent crude is challenging the psychological support of $78, trading at nine-day lows just above $77. After the price derailed the $78 level, the short-term technical outlook has worsened further. The latest sell-off came amid concerns that OPEC may wind down output cuts amid expectations over reducing supplies from Iran and Venezuela as a result of tight US sanctions. Russia and Saudi Arabia have already signaled that this issue will be discussed at the upcoming June summit in Vienna. Amid these speculations, supply concerns that sent the prices to 3.5-year highs recently, may ease as well. Against this backdrop, Brent could continue its bearish correction down the road, especially in case of further signals about the upcoming lifting the OPEC output. The continued rise in US shale drilling and production activity may add to the downside pressure. Besides, profit taking looks attractive at current levels. As such, oil will likely lose the $77 figure in the short term, with the immediate bearish target is now at $76,50.
TVC:UKOIL
by HelenRush
Dips in USDJPY are a buying opportunity The Trump administration has launched an investigation into car imports that could result in new US tariffs. Against this backdrop, the risk aversion has intensified and therefore fueled demand for safe haven assets. The Japanese yen is the main beneficiary in such environment, with the USDJPY pair has slipped from multi-month highs at 111.40, down to ten-day lows around 109.30. Global stock markets turned negative amid a tighter trade rhetoric from Washington, including the lingering doubt on US-North Korea summit. As long as riskier assets remain in the red, the yen will continue to appreciate, despite the overall bullish trend in the greenback. However, as the Fed continues to tighten, and the economic fundamentals remain solid, the dollar will stay on the offensive in the longer term. As such, the ongoing downside correction is seen as a buying opportunity with the prospects for another attack of the 111.00 threshold. In the short term, the pair will likely remain under pressure, though the buck looks attractive already around 109.00.
by HelenRush
FOMC minutes wont’ deter USD bulls The greenback is back on the offensive across the board except for the yen and the Swissy which are in demand amid a broad risk aversion on the back of negative Trump’s comments on trade negotiations with China. The dollar resumed its ascent after a recent mild correction, and the bulls seem to be ready for another attack. The short-term direction in USD pairs will depend on euro zone, UK, and US PMI data. But the key focus today is the release of the FOMC meeting minutes. The central bank is expected to express optimism over the economic growth and inflation. But the market expectations may be overheated as investors were lately pricing in a more aggressive tightening by the Fed this year. So there is a risk of disappointment, should the tone of the minutes come less hawkish than expected. Even so, this scenario will hardly derail the overall bullish tone around the buck. EURUSD failed to stage a recovery above 1.18. In the medium term, the pair could lose the 1.17 support and go down to the next important area of 1.1660. The immediate downside pressure will ease in case of a rebound above the local resistance of 1.1830.
by HelenRush
Dollar bullish trend remains intact The broad US dollar rally was halted yesterday, and the currency remains under a mild pressure on Tuesday. US 10-year Treasury yields hit one-week low of 3.05% today, down almost 8 basis points from the 7-year high of 3.128% reached last week. The correction both in yields and the greenback looks logical from the technical point of view, as the buck is overbought at fresh 2018 highs. Nevertheless, the impetus within the ongoing retreat looks limited and doesn’t derail the overall bullish trend that started in mid-April. The EURUSD pair has jumped above the 1.18 threshold, but lacks the bullish impulse to regain further ground. However, should the single currency break above the local resistance of 1.1850, the immediate bearish pressure will ease somehow in the short term. The overall picture remains negative, with the dollar bullish trend remains intact. The upcoming Fed meeting minutes due on Wednesday could become a fresh catalyst for USD bulls, should monetary authorities send hawkish signals to the markets.
by HelenRush
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