EUR/USD: modestly higher, upside still limited

EUR/USD Current price: 1.1096

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The American dollar traded softer across the board, as markets have  now completely absorbed the initial Brexit shock. As panic subsided, stocks edged strongly higher worldwide, whilst commodities gained on broad dollar's weakness. The foreign exchange market has continued trading on sentiment, following the positive mood of Asian trading, and still paying little attention to macroeconomic releases. In the meantime, the EU summit continued this Wednesday, with officials pushing the UK to activate the orderly exit mechanism as soon as possible, and the UK showing no rush to do so. 

In the data front, Germany released its May inflation figures, still close to zero. German headline inflation rose to 0.3% in June compared to a year before, and 0.1% compared to May. The GFK Consumer confidence survey, however, rose to 10.1 beating expectations of 9.8. In the US, personal income rose by 0.2% in May, whilst personal  spending surged by 0.4%. Housing data, however, disappointed, with pending home sales down by 3.7% in May after advancing steadily for three straight months.  

As for the EUR/USD pair, it reached a fresh weekly high of 1.1130, but was unable to settle above the 1.1110 level, the 38.2% retracement of Friday's slide, unable to confirm additional gains for the upcoming sessions. In the 4 hours chart, the price has been consolidating above a now flat 20 SMA at 1.1055, the immediate support, whilst the technical indicators lack directional strength within positive territory, limiting the downside, but without signaling a possible upward move. The pair has scope to extend its recovery up to the 1.1160/80 region, the 50% retracement of the mentioned decline and the post-Brexit highs, although further gains are unlikely at this point.

Support levels: 1.1055 1.1020 1.0970 

Resistance levels: 1.1130 1.1165 1.1200

EUR/JPY Current price: 113.96

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Despite improving risk sentiment, the Japanese yen posted modest declines against its major rivals, as panic may have eased, but remains in the background, whilst speculative interest has no intention to get rid of its yens. The EUR/JPY pair advanced up to 114.32 before retreating towards the 114.00 region, holding at the higher end of this week's range. Technically, the short term picture is neutral-to-bullish, as in the 1 hour chart, the Momentum indicator remains stuck around the 100 level, whilst the RSI indicator heads modestly lower around 58. In the same chart, the price is hovering around a bearish 100 SMA, still unable to confirm a break above it. In the 4 hours chart, the Momentum indicator heads higher above its 100 level, but the RSI holds flat around 48, whilst the 100 and 200 SMAs maintain strong bearish slopes far above the current level. Should the price extend beyond 114.60, the risk turns towards the upside, with chances then of a steady advance up to 115.45, the post-Brexit high. 

Support levels: 113.65 113.30 112.75 

Resistance levels: 114.60 114.95 115.45

GBP/USD Current price: 1.3450

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The GBP/USD pair rallied to a fresh weekly high of 1.3533 this Wednesday, with the Pound gaining on market's relief, but to remain weak in the foreseeable future. Mark Carney is expected to give a speech this Thursday, presumably about the Brexit referendum result and how the BOE will handle it. In the data front, the UK released some monetary figures, with the UK broad money, M4ex, increasing by £16.7 billion in May, compared to the average monthly increase of £6.9 billion over the previous six months. The three-month annualized and twelve-month growth rates were 5.2% and 4.9% respectively. Mortgage Approvals, came in at 67.00K from previous 66.21K, whist Consumer Credit surged to £1.503B, also beating expectations. For this Thursday, the kingdom has scheduled the release its final Q1 GDP data, expected to remain unchanged at 0.4%.  Nevertheless, the pair retreated almost 100 pips in the American afternoon, to settle below 1.3485, suggesting the upward corrective movement may be completed. In the 4 hours chart, the price is above a bearish 20 SMA, the Momentum indicator maintains its bullish slope, but the RSI indicator already turned south below its 50 level, anticipating additional declines on a break below 1.3430, the immediate support. 

Support levels: 1.3430 1.3390 1.3350 

Resistance levels: 1.3485 1.3530 1.3575

USD/JPY Current price: 102.62

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The USD/JPY pair traded around the weekly high set at 102.84 this Tuesday, but was mostly contained in a well-limited range, as the lack of interest in safe-haven assets pushed investors away from the cross. Data released early Wednesday, showed that Japanese  retail sales fell more than expected in May in a third straight month of annual declines, down by 1.9% in May from a year earlier. Adding to the JPY's bearish case was a strong comeback in worldwide stocks, and comments from Prime Minister  Abe, on mobilizing all available policy measures to boost local growth. The fact that the JPY refused to fall in this scenario, suggests that markets are still quite bullish in the currency, beyond risk sentiment. Technically, the pair presents a neutral-to-bearish stance, as in the 4 hours chart, the price keeps developing below its moving averages, whilst the RSI indicator holds flat around 47. The momentum indicator in the same time frame aims higher above its mid-line, but with no follow through in price, the upward potential remains limited, as long as selling interest keeps surging around 102.90.

Support levels: 102.50 102.00 101.60 

Resistance levels: 102.90 103.30 103.60

AUD/USD Current price: 0.7425

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The Australian dollar tracked stocks in their way higher, reaching 0.7456 against the greenback, to end the day a handful of pips below the level, which stands for the 38.2% retracement of this year rally. The Aussie was underpinned by a sharp recovery in oil and even gold prices, whist after the dust settled, market realized that the direct effects of a Brexit on the Australian economy are likely to be reduced, as the commercial relationship between both countries is quite small. From a technical point of view, however, the fact that the AUD/USD pair is unable to settle above the critical resistance is quite worrisome for bulls, and may see it retreating further during the upcoming hours. The downward scope according to the 4 hours chart is now limited, as the technical indicators have turned modestly lower, but remain within neutral territory, whilst the price is above the 20 SMA and 200 EMA, both around 0.7380/0.7400. A break below this region, should confirm a downward extension towards 0.7330 for this Thursday. 

Support levels: 0.7400 0.7370 0.7330 

Resistance levels: 0.7450 0.7500 0.7540