USD/JPY reached new highs at levels around 137 on Wednesday. Economists at Commerzbank expect the pair to extend its substantial rise.
Japan’s June inflation data unlikely to lift the yen
“It seems unlikely that the June inflation data, due for publication tomorrow, will change this decade-long phenomenon.”
“I merely want to point out that the causes of lowflation in Japan were clearly different from those in the rest of the G10. And as a result, the fact that lowflation is over in most countries is not a reason to assume that the same will happen in Japan.”
FX option expiries for June 30 NY cut at 10:00 Eastern Time, via DTCC, can be found below.
- EUR/USD: EUR amounts
- 1.0400 301m
- 1.0500 338m
- 1.0750 473m
- 1.0865 707m
- 1.0900 606m
- USD/JPY: USD amounts
- 133.00 245m
- 135.00 260m
- 136.00 225m
- USD/CHF: USD amounts
- 0.9600 360m
- 0.9800 250m
- USD/CAD: USD amounts
- 1.2635 261m
- 1.2650 274m
- 1.2700 303m
- 1.2750 1b
- 1.3000 555m
- EUR/GBP: EUR amounts
- 0.8255 425m
- 0.8650 652m
- 0.8825 548m
EUR/CHF is trading below parity. Economists at Commerzbank expect the Swiss franc to continue its appreciation dynamic.
Violent EUR/CHF volatilities expected
“If EUR/CHF levels below parity are accepted by the SNB without intervention, FX traders are likely to take that as an invitation to increase the pace of appreciation. Until the SNB has to intervene with CHF sales after all. Then there should be another jump upward.”
“In the end, violent EUR/CHF volatilities are likely to be the result.”
“I expect increasing CHF appreciation dynamics for the next few days. You can also put it this way: The market should now sound out the SNB pain threshold on the EUR/CHF downside. That's just how the market works when a central bank sets unclear limits for exchange rates.”
- WTI pares the biggest daily losses in a week inside a bullish chart pattern.
- Pullback from 200-SMA, bearish MACD signals challenge buyers.
- Bears need validation from $106.40, RSI hints at gradual recovery.
WTI crude oil prices consolidate the week’s biggest daily loss while picking up bids to $108.70 heading into Thursday’s European session.
The black gold dropped the most in over a week the previous day while stepping back from the 200-SMA. However, the support line of a one-week-old bullish trend channel triggered recovery moves earlier in the day.
That said, the bearish MACD signals challenge the upside momentum, suggesting the need for an upside break of the 38.2% and 50% Fibonacci retracement levels of June 08-22 downside, respectively around $108.85 and $111.25, to recall the buyers.
Even so, the 200-SMA level of $112.25 will precede a convergence of the stated channel’s upper line and 61.8% Fibonacci retracement, near $113.60, to challenge the commodity’s further upside.
Meanwhile, pullback moves should break the channel’s support line, close to $108.00 by the press time, to tease WTI sellers.
Though, multiple levels marked since June 20, between $107.00 and $106.40, could challenge the quote’s further downside before highlighting the monthly low of $101.17 for oil bears.
Overall, WTI remains in the recovery mode but the upside momentum has multiple speed breakers.
WTI: Four-hour chart
Trend: Further upside expected
- German Retail Sales arrived at -3.6% YoY in May vs. -2.0% expected.
- Retail Sales in Germany stood at 0.6% MoM in May vs. 0.5% expected.
Germany's Retail Sales rose by 0.6% MoM in May versus 0.5% expected and -5.4% last, the official figures released by Destatis showed on Thursday.
On an annualized basis, the bloc’s Retail Sales came in at -3.6% in May versus -2.0% expected and -0.4% booked in April.
The euro is little changed on the mixed German data. At the time of writing, the major trades at 1.0457, adding 0.18% on the day.
About German Retail Sales
The Retail Sales released by the Statistisches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales. The changes are widely followed as an indicator of consumer spending. The positive economic growth is usually anticipated as "bullish" for the EUR, while a low reading is seen as negative, or bearish, for the EUR.
- Declining 20- and 50-period EMAs add to the downside filters.
- The RSI (14) has shifted into the bearish range of 20.00-40.00.
- EUR/USD may re-test June’s low after violating the critical support of 1.0433.
The EUR/USD pair has displayed a poor rebound after hitting a low of 1.0433 in the Asian session. The asset is attempting to sustain above 1.0450. However, the overall trend is bearish as the asset surrendered its psychological support of 1.0500 on Wednesday.
The shared currency bulls are attempting to defend the two-week-old crucial support of 1.0444, recorded on June 17. The trendline placed from Tuesday’s high at 1.0606 will act as a major resistance for the eurozone bulls.
The 20- and 50-period Exponential Moving Averages (EMAs) at 1.0463 and 1.0494 respectively are declining, which adds to the downside filters.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more downside ahead. Investors should not initiate aggressive shorts now as the RSI (14) is attempting to 40.00, which may turn the asset sideways.
The greenback bulls could strengthen further if the asset drops below Thursday’s low at 1.0433. An occurrence of the same will drag the asset towards June 14 low at 1.0397. A slippage below June 14 low will expose the asset to more downside levels of the Jun 15 low at 1.0359.
On the flip side, a decisive move above June 22 low at 1.0469 will drive the asset towards Wednesday’s high at 1.0535, followed by Tuesday’s high at 1.0606.
EUR/USD hourly chart
The UK economy expanded 0.8% on quarter in the first quarter of 2022, confirming the 0.8% growth reported in the first readout and meeting forecasts of 0.8%, the final revision published by the Office for National Statistics (ONS) showed Thursday.
The annual figures showed that the UK GDP rose by 8.7% in Q1 vs. 8.7% previous and 8.7% expected.
Meanwhile, the Current Account data for the first quarter of 2022 came in at GBP-51.7B vs. GBP-39.8B expected and GBP-7.3B previous.
As of writing, GBP/USD is holding higher ground near 1.2150, 0.18% up on the day.
Gold Price was knocked down to its lowest level since mid-June at $1,812. As FXStreet’s Dhwani Mehta notes, the yellow metal remains exposed to downside risks.
XAUUSD awaits US PCE inflation for a sustained move lower
“The Core PCE inflation is seen easing to 4.7% YoY in May vs. 4.9% previous. Softer core figures could suggest that inflation is peaking, prompting investors to believe that Fed could go slow on its tightening cycle. Thus, gold could attract fresh demand in line with expectations or below forecasts reading, as it would down the dollar alongside the yields.”
“Wednesday’s low of $1,1812 could offer immediate support to bulls, below which the June 15 low of $1,808 will be under threat, as a breach of the $1,800 mark remains on the table.”
“Any upside attempt would need buyers to recapture the pennant support turned resistance, now at $1,824. Acceptance above the latter will fuel a decent bounce towards the $1,836 area.”
Considering preliminary readings from CME Group for crude oil futures markets, traders scaled back their open interest positions by around 3.5K contracts after two consecutive daily pullbacks on Thursday. Volume, instead, went up for the second session in a row, now by almost 30K contracts.
WTI now retargets $114.00
Wednesday’s corrective downside in prices of the WTI was against the backdrop of diminishing open interest, which is indicative that extra losses appear not favoured in the very near term. That said, the commodity could attempt another visit to the weekly high at $114.00 per barrel.
- USD/TRY picks up bids to mild gains, pares weekly losses.
- Turkish Parliament passes $53 billion supplementary budget to battle inflation.
- Fears of recession escalate as global central banks stay ready for aggressive rate hikes.
- Turkish trade numbers, CBRT Minutes and the US PCE Price Index will be important to watch for fresh impulse.
USD/TRY consolidates weekly losses around 16.67 heading into Thursday’s European session. In doing so, the Turkish lira (TRY) pair ignores the Turkiye’s supplementary budget approval, as well as the US dollar’s pullback, amid inflation and economic slowdown fears.
“Turkiye's parliament approved an 880 billion lira ($52.73 billion) supplementary budget,” Turkish Finance Minister (FinMin) Nureddin Nebati said late on Wednesday per Reuters. Turkish FinMin Nebati also mentioned the objective for such a step as to cover the rising costs of a currency slide, soaring energy prices and rampant inflation.
On a different page, the US Dollar Index (DXY) retreats to 104.99 while snapping a two-day rebound at the highest levels in a fortnight. The greenback’s losses appear linked with the fresh uptick in the US Treasury yields. the US 10-year Treasury yields snap a two-day downtrend as the key bond coupons rebound from the weekly low to 3.10%, up one basis point (bp) by the press time.
Even so, downbeat prints of the US stock futures and fears that the inflation woes will last longer, which in turn could trigger a recession, seem to propel the USD/TRY prices. Recently, the first major US bank to call the recession, namely Deutsche Bank, signaled that the US inflation could keep disappointing the Fed as the policymakers expected a gradual reduction in price pressure.
On Wednesday, the major central bankers’ readiness to battle inflation, even at the cost of short-term economic slowdown. The moves raised concerns over the recession and gain more attention of the USD/TRY traders amid multi-year high Turkish inflation and President Recep Tayyip Erdogan’s rejection of rate hikes.
Moving on, Turkish trade numbers for May and Minutes of the latest Central Bank of Republic of Turkiye (CBRT), when the rates remain unchanged, will be important for the USD/TRY traders. Above all, the US the Core Personal Consumption Expenditure (PCE) Price Index, expected 0.4% MoM versus 0.3% prior, will be an important catalyst to watch for short-term directions.
Unless providing a daily close below an upward sloping support line from late December 2021, around 16.58 by the press time, USD/TRY remains on the buyer’s radar.
- Aussie bulls have defended the demand zone in a range of 0.6850-0.6867.
- The RSI (14) has reclaimed the 40.00-60.00 range, which signals a responsive buying action.
- The trendline placed from 0.7070 will act as a major hurdle for the pair.
The AUD/USD pair has witnessed a firmer rebound after failing to sustain below 0.6860. A responsive buying action has driven the asset strongly above 0.69000. However, a mild correction has turned the asset sideways.
On an hourly scale, aussie bulls have attracted some significant bids after testing the critical demand zone placed in a narrow range of 0.6850-0.6867. A responsive buying action has been witnessed, which strengthened the asset to attack the 50-period Exponential Moving Average (EMA) at 0.6898. While, the 200-period EMA at 0.6930 is still higher than the asset, which indicates that the long-term trend is still down.
Meanwhile, the Relative Strength Index (RSI) (14) has reclaimed the 40.00-60.00 range, which signals that the aussie bulls are no weaker now.
It is worth noting that trendline placed from June 16 high at 0.7070, adjoining Tuesday’s high at 0.6965 will continue to act as major resistance for the counter.
The aussie bulls could lift the asset price higher if the major overstep Wednesday’s high at 0.6965. This will drive the asset towards the psychological resistance at 0.7000, followed by June 13 high at 0.7035.
On the flip side, the aussie bulls could lose their grip if the asset drops below June 23 low at 0.6868. This will drag the asset towards May 12 low and the round-level support at 0.6829 and 0.6800 respectively.
AUD/USD hourly chart
- EUR/GBP keeps the previous day’s pullback from fortnight high, pressured around intraday low.
- Multiple SMAs, ascending trend line from mid-May joins steady RSI to keep buyers hopeful.
- Weekly resistance line adds to the upside filters.
EUR/GBP remains depressed around 0.8615 heading into Thursday’s European session, extending the previous day’s pullback from a two-week top below 21-SMA.
Given the bearish MACD signals and the cross-currency pair’s break of immediate SMA, the EUR/GBP prices are likely to drop towards the 100-SMA level of 0.8590.
However, an ascending trend line from May 17, near 0.8565, joins a steady RSI to keep the pair buyers hopeful.
Even if the quote drops below 0.8565 support, the 50% Fibonacci retracement of the May-June upside and the 200-SMA, respectively near 0.8560 and 0.8550, will challenge the EUR/GBP bears before giving them control.
Meanwhile, the 21-SMA level of 0.8621 guards the quote’s immediate recovery ahead of the 23.6% Fibonacci retracement level of 0.8645.
Following that, an upward sloping resistance line from the last Thursday, at 0.8668 by the press time, could act as the last defense of the EUR/GBP sellers.
In a case where the pair rises past 0.8668, the odds favoring a run-up towards the 0.8700 and then to the monthly high of 0.8721 can’t be ruled out.
EUR/GBP: Four-hour chart
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