EUR/USD: Risk off dominates, but investors remain cautious
|EUR/USD Current Price: 1.1285
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Risk aversion dominated the first half of the day, although sentiment improved after Wall Street's opening, with US stocks and oil rising. The risk off environment weighed on Asian and European equities and safe havens gold and Japanese yen extended their gains. The American dollar extended its rally against its European rivals and the EUR/USD pair traded as low as 1.1231, but later bounced up to 1.1302, being unable to settle above the critical figure. The lack of macroeconomic releases, added to the upcoming risk events later this week, keeping most major pairs within limited intraday ranges.
The EUR/USD pair holds near the mentioned 1.1300 level, but is overall looking bearish, as in the 4 hours chart, the rally stalled right below a sharply bearish 20 SMA, whilst the technical indicators have corrected oversold readings reached earlier in the day, before turning flat within bearish territory. The EU will release its April´s production data this Tuesday, while in the US it will be the turn of Retail Sales, which may bring some action to the pair, although the most likely scenario is that investors remain in cautious mode ahead of the FED's announcement next Wednesday. Should the pair settle above 1.1295, the 38.2% retracement of the May's decline, the downside risk will be limited, with scope then to advance up to 1.1385.
Support levels: 1.1250 1.1215 1.1170
Resistance levels: 1.1295 1.1340 1.1385
EUR/JPY Current price: 119.80
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The EUR/JPY bounced from a fresh over 3-year low established at 108.99 at the beginning of the day, but remains unable to regain the 120.00 mark. The Japanese yen outperformed its major rivals, underpinned by safe-havens' demand, and mixed data coming from China, which sparked concerns over the economic recovery in the world's second largest economy. Now trading around the 119.80 level, the daily chart shows that the pair has been steadily posting lower lows and lower highs, suggesting that the downward potential is still strong, and if spite of the intraday recovery. Shorter term, the 1 hour chart shows that the technical indicators have recovered to positive territory after being in oversold territory, but lack directional strength at the time being, whilst the 100 and 200 SMAs have accelerated their declines well above the current level. In the 4 hours chart, the technical indicators are resuming their declines within negative territory, and following an upward corrective movement from oversold levels, also maintaining the risk towards the downside.
Support levels: 119.80 119.30 118.80
Resistance levels: 120.40 120.80 121.25
GBP/USD Current price: 1.4203
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Much of the ongoing risk aversion across the FX board is being blamed on the Pound, and the upcoming Brexit referendum. New polls released this Monday showed that the "leave" vote is ahead of the "remain" resulting in the GBP/USD plummeting to 1.4114 against the greenback during the London session, from where it jumped up to 1.4327, only to close the day around the 1.4200. As mentioned before, these wild intraday moves are likely to become the new normal until June 23rd, although the downside remains favored. The UK will release its PPI and CPI data this Tuesday, generally expected to have improved from their previous readings. If the data misses, the pair could test the 1.4000 figure. As for the intraday technical picture, the 1 hour chart shows that the price is now a few pips above its 20 SMA, whilst the technical indicators have turned sharply lower within positive territory, and are about to cross their mid-lines towards the downside. In the 4 hours chart, the technical indicators have also turned strongly lower, but within negative territory and after correcting extreme oversold readings, also supporting some further declines for this Tuesday.
Support levels: 1.4190 1.4150 1.4115
Resistance levels: 1.4250 1.4290 1.4330
USD/JPY Current price: 106.20
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The USD/JPY pair plummeted to 105.71, its lowest in over a month, fueled by safe-havens' demand as local share markets lost over 3.5% this Monday. The pair however, trimmed part of its daily losses at the beginning of the US session, recovering up to 106.57, where selling interest re-surged. Now holding a few pips above the 106.00 figure, the pair will likely continue under selling pressure, although with the FED and the BOJ scheduled to have their economic policy meetings this week, large movements shouldn't be expected. Short term, the 1 hour chart shows that the Momentum indicator recovered above its 100 level, but also that the price is below its 100 SMA, currently around 106.70, whist the RSI indicator turned south below its mid-lines, favoring some additional declines for this Tuesday, particularly on a break below 105.90, the immediate support. In the 4 hours chart, technical indicators are turning modestly lower within bearish territory, whilst the price remains far below its moving averages, in line with the shorter term outlook.
Support levels: 105.90 105.50 105.00
Resistance levels: 106.20 106.60 106.00
AUD/USD Current price: 0.7390
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The Aussie edged modestly higher against it American rival, although the pair failed to settle above the 0.7400 figure, despite several intraday attempts. The Australian dollar benefited from gold's gains, as spot advanced up to $1,287.13 a troy ounce, but the negative mood among investors limited the antipodean currencies' gains. After starting the week with a holiday, Australia will release its consumer inflation expectation for June during the upcoming hours. Poor inflation figures where behind the RBA's surprise rate cut, and the almost 600 pips decline in the AUD/USD pair last May, meaning that, if current expectations are below market's forecast, the pair may plummet on speculation about an August rate cut. From a technical point of view, the intraday outlook is neutral, as in the 1 hour chart, the price is hovering around a horizontal 20 SMA while the technical indicators lack directional strength around their mid-lines. In the 4 hours chart, the pair developed below its 20 SMA, whilst the technical indicators are turning modestly lower within negative territory, supporting additional declines on a break below 0.7360, the immediate support.
Support levels: 0.7360 0.7325 0.7270
Resistance levels:0.7410 0.7450 0.7490
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