Market focus remains on US-Iran conflict

Peter Iosif, ACA, MBA IronFX

USD wobbles amid conflicting fundamentals

The USD remained stable, with markets focusing on the US-Iran conflict and worries for inflationary pressures. In the UK, May’s employment data were better than expected providing support for the GBP. On a political level, the appointment of Andy Burnham as the new UK PM seems to have had a favourable effect on the markets. Former defence secretary John Healey was appointed as the new finance minister, yet the PM seems to be taking a hands-on approach on the economy.

US equities rebound after yesterday’s losses

All three major US equity market indexes ended their first day of the week lower. On a fundamental level, the ongoing war in Middle East, produces fresh worries for inflationary pressures and enhances market expectations for the Fed to remain hawkish weighing on US equities. Also, market worries for possible overvaluations in the Tech sector tend to remain an issue, while the earnings season tends to provide headlines with General Motors, Novartis and 3M publishing their reports today.

Oil prices dip in anticipation of negotiations

Oil prices dipped lower yesterday and during today’s Asian session as they remain caught in conflicting fundamentals. On the one hand the ongoing US-Iran strikes and the threat of Yemen’s Houthis applying a naval blockade on Saudi Arabia, enhance market worries and lift oil prices, yet on the other, intensifying mediation for a restart of the US-Iran negotiations weigh on oil prices.

Bitcoin bulls find their confidence

Bitcoin was lifted beyond the psychological threshold of $65k yesterday. The move despite not being wide as such, provided optimism to crypto traders, after weeks of a relative inactivity. It should be noted that the move came amidst renewed spot BTC inflows, a relative easing of geopolitical tensions, and signals of institutional buildup, all possibly shifting the market sentiment.

Other highlights for today

Today we get UK’s employment data for May and Germany’s ZEW indicators for July, while later on we note the release of the US API weekly crude oil inventories figure. In tomorrow’s Asian session, we get from Japan the trade data and Chain Store sales, both being for June.

Charts to keep an eye out

EUR/USD remained in a sideways motion between the 1.1470 (R1) resistance line and the 1.1350 (S1) support level. We maintain a bias for a sideways motion of the pair within the corridor formed by the R1 and the S1. Supporting our expectations is the RSI indicator which remains near the reading of 50 implying a rather indecisive market. Also the Bollinger bands narrowed signalling less volatility for the pair which in turn may allow the sideways motion to continue. Should the bears take over, we may see EUR/USD breaking the 1.1.1350 (S1) support line and start aiming for the 1.1210 (S2) support level. Should the bulls be in charge, we may see EUR/USD breaking the 1.1470 (R1) resistance line and start aiming for the 1.1575 (R2) level.

BTC/USD rose yesterday breaking the 65000 (S1) resistance line, now turned to support. Given the rise of the crypto’s price action and the RSI indicator, which signals an intensifying bullish market sentiment, we adopt a bullish outlook and intend to keep it as long as the upward trendline guiding the crypto remains intact. Should the bulls maintain control, BTC/USD could aim if not near the 69460 (R1) resistance line. Should the bears take over, we may see BTC/USD’s price action, breaking the 65000 (S1) support line, continue to break also the prementioned upward trendline signaling an interruption of the upward movement and aim if not breach the 61450 (S2) support level.

EUR/USD daily chart

Support: 1.1350 (S1), 1.1210 (S2), 1.1065 (S3).
Resistance: 1.1470 (R1), 1.1575 (R2), 1.1685 (R3).

BTC/USD daily chart

Support: 65000 (S1), 61450 (S2), 57870 (S3).
Resistance: 69460 (R1), 74200 (R2), 78170 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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