Author: Ali B.

A day before, the U.S. dollar was also supported by the Philly Fed Manufacturing Index, which surged to 27.5 from the expected -23.0. The C.B. Leading Index for May also supported dollar when came in as 2.8% against the .4%. Today, the eyes will remain on the Canadian economic events and E.U. economic summit. Overall, the price action will be driven by the technical levels today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.12045 after placing a high of 1.12611 and a low of 1.11854. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair followed its previous day’s trend and posted losses for 3rd consecutive day on Thursday amid risk-off market sentiment and bleak economic data. The pair extended its losses and dropped to its lowest level near 1.11800 since June 3.

The bearish trend of EUR/USD was supported by the increased demand for the U.S. dollar, which made it strong across the board. U.S. dollar was higher on Thursday amid its safe-haven status, which was buoyed by the multiple factors. The safe-haven market sentiment was supported by the increased fears of coronavirus second wave after the U.S. & China reported an increased number of infection cases from some parts of their country.

The U.S. dollar was also supported by the Philly Fed Manufacturing Index, which surged to 27.5 from the expected -23.0. The C.B. Leading Index for May also supported dollar when came in as 2.8% against the .4%.

However, the losses of EUR/USD were limited after the release of Unemployment Claims from the U.S. that surged to 1.508M against the 1.3M forecasts.

From the Eurozone side, at 13:03 GMT, the Italian Trade Balance in April showed a deficit of 1.16B against the expected surplus of 4.88B. Poor than expected Trade Balance from Italy weighed heavily on the single currency Euro as the difference between expected and actual value was very large.

Despite poor than expected jobless claims, the U.S. dollar index, which measures the U.S. value against a basket of six currencies, rose to 97.4 level. Increased dollar stressed the demand for EUR/USD, and hence, pair fell for 3rd consecutive day.

Furthermore, the European Central Bank issued another trillion million euros to strengthen the economies from the coronavirus pandemic. The offer made by the Central Bank to commercial banks of its ultra-cheap three years loan was taken up by 742 banks on Thursday. Bloomberg reported that a total of 1.31 trillion euros of offers were taken by the banks, which were in line with the predicted range of 1.2T – 1.5T euros.

These loans were carrying below zero interest rates, which means ECB was paying the lenders to lend to households and business people to bolster the economic recovery from the pandemic and cushion the losses.

Daily Support and Resistance

• R3 1.1462
• R2 1.1408
• R1 1.1336

Pivot Point 1.1282

• S1 1.1211
• S2 1.1156
• S3 1.1085

EUR/USD– Trading Tip

On Friday, the EUR/USD pair is trading with a bearish bias, holding below the descending triangle pattern, which can lead EUR/USD prices towards 1.1164 level. On the higher side, the pair may find resistance at 1.1219 level, which is extended by the downward trendline that can be seen on the hourly timeframe. Besides, the leading indicators are mixed; for example, the RSI is suggesting a selling bias, while the MACD is indicating a bullish bias. However, the 50 EMA is in support of selling. Therefore, we can look for selling trade below 1.1219 level today. 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.2407 after placing a high of 1.25667 and a low of 1.24014. Overall the movement of GBP/USD pair remained bearish throughout the day. The GBP/USD pair dropped on Thursday and extended its losses for 3rd consecutive day on the back of dovish commentary from BoE and Brexit uncertainties.

On Thursday, the BOE held its monetary policy meeting in which it left the rates unchanged at 0.10% but increased the Quantitative Easing package by100 Billion Pounds. Bank of England dropped its expectations for the U.K.’s economic contraction for Q1 and Q2. In its previous meeting, the Bank of England anticipated that the economy would shrink by 27% in Q1 and Q2. But in the latest meeting on Thursday, BoE issued its expectation for GDP to contract by 20% in the first half of 2020.

The Governor of BoE, Andrew Bailey, said on Thursday that Britain’s economy was recovering a bit faster than Bank thought in the previous month. It could be due to decreased lockdown measures; however, the labor market was mostly providing negative data.

Bailey told reporters that BoE announced an increase of 100 billion pounds around $124 billion in its bond-buying program, but it also slowed the pace of purchases. He added that BoE had plans to stretch its 745 billion pounds bond-buying program. Bailey repeated his previous comments on negative interest rates that they were an option for the Bank as the issue was complex, but given the situation, when banks could afford bond-buying and another stimulus, taking borrowing cost below zero was not going to happen.

The Bank of England also said that it would take further necessary actions to support the economy and boost inflation towards its 2% target.

On Brexit front, the European Union’s Chief executive, Ursula von der Leyen, said on late Wednesday that there would be no post-Brexit trade deal without a level playing field, including everything from state aid to labor to environmental interests. She said that the Bloc would do everything to secure a deal by the end of 2020, but it will not compromise its core values.

Daily Support and Resistance

• R3 1.2695
• R2 1.2632
• R1 1.2529

Pivot Point 1.2465

• S1 1.2362
• S2 1.2298
• S3 1.2195

GBP/USD– Trading Tip

On Friday, the GBP/USD is trading at a level of 1.2430, holding right below support to become a resistance level of 1.2480. The pair is in the oversold zone now, and we may see a slight bullish correction until 1.2465 and 1.2485. But below this, the odds of selling will remain high, and it can lead Sterling lower towards the next support area of 1.2350 level. The RSI and 50 periods of EMA are suggesting a selling bias today. Let’s consider taking selling trades below 1.2450 today.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 106.969 after placing a high of 107.127 and a low of 106.655. Overall the movement of USD/JPY pair remained flat but slight bearish throughout the day. The USD/JPY painted a fresh three day low at 106.65 after a short-lived rise toward 107.1 in the beginning session. Japanese Ye was amongst the best performer currencies on Thursday on the back of lower U.S. yields and mixed sentiment.

The U.S. dollar data showed mixed results as jobless claims exceeded the expectations and weighed on the U.S. dollar, but the Philly Fed Manufacturing Index jumped and supported the U.S. dollar.

At 17:30 GMT, the Philly Fed Manufacturing Index for June reported as 27.5 against -23.0. The Unemployment Claims for last week were reported as 1.508M against the expected 1.3M. At 19:00 GMT, the C.B. Leading Index for May surged to 2.8% against the expected 2.4% and supported the U.S. dollar. The U.S. Dollar Index (DXY) surged above 97.44 level and posted weekly high. While U.S. stocks posted losses where Dow Jones was down by 0.15%, and S&P 500 was down by 0.27%.

An FOMC member Loretta Mester gave a speech on Thursday where she said that Fed and Fed longer than expected the road to economic recovery would have to provide additional and continuous support by being very easy on the monetary policy till 2023. The dovish comments exerted downside pressure on the U.S. dollar and ultimately to USD/JPY pair on Thursday.

Some reports suggested Beijing has succeeded in containing the virus after the renewed cases emerged due to ease of lockdown restrictions. Apart from Beijing, many states of America and other countries also send reports about rebuilt virus cases.

The hopes for V shape recovery for the global economy also faded away as the development of the vaccine was needed for that which only can increase the confidence of people against the virus spread.

However, the increased tensions between China & India and North & South Korea on their disputed borders also kept the USD/JPY pair under pressure.

Daily Support and Resistance    

• R3 108
• R2 107.82
• R1 107.57

Pivot Point 107.39

• S1 107.14
• S2 106.96
• S3 106.71

USD/JPY – Trading Tips

The USD/JPY is trading at 106.914 level as it continues trading sideways in a wide trading range of 107.620 – 106.630. It failed to break above an immediate resistance level of 107.580. This level is working as resistance for USD/JPY, and the 50 periods EMA is also prolonging strong resistance at 107.580 zones while immediate support lingers nearby 106.600. The USDJPY bearish trend can trigger a sell-off unto the next support level of the 106.017 level today. Let’s wait for the USD/JPY to test the 107.650 level before entering a sell in the USD/JPY. 

Good luck! 

On the news side, the CPI figures from the U.K. and Canada will be in focus. These may impact the GBP and Canadian related pairs today. Besides, a major focus will remain on the Fed Chair Powell Testimony, while he isn’t expected to do any change with an interest rate, but the recent series of positive data can make dollar bullish.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.12637 after placing a high of 1.13532 and a low of 1.12276. Overall the movement of the EUR/USD remained bearish throughout the day. After touching a daily high of 1.1353 during the European trading hours, the EUR/USD pair reversed its run in the second half of the day and ended its day with losses. The pair moved into a consolidation phase after dropping 100 pips on Tuesday and posted a daily low below 1.1228.

Furthermore, the rising Treasury bond yields during the American session gave strength to the U.S. dollar after the release of U.S. economic data. The Dollar Index also rose along with the Wall Street Journal. The main indexes if WSJ opened a sharp higher and made the market move higher.

From the European side, at 10:59 GMT, the German Wholesale Price Index (WPI) showed a decline of 0.6%against the expected decline of 1.0% and supported Euro. At 11:00 GMT, the German Final CPI came in line with the expectations of -0.1% in May.

At 14:00 GMT, the ZEW Economic Sentiment index also rose to 58.6 from the expected 53.4 and supported Euro. The German ZEW Economic Sentiment also surged to 63.4 from the expected 60.0. During European trading hours, EUR/USD surged above 1.1353 level due to better than expected macroeconomic data release.

Meanwhile, the U.S. economic docket released the U.S. Retail Sales data for May on Tuesday, showing that the Retail Sales in May increased by 17.7% against the expected 5.5% and supported the U.S. dollar. The stronger U.S. dollar dragged the pair EUR/USD towards its daily lows. The U.S. Dollar Index rose by 0.4% on the day near 97.01, and the 10-year U.S. Treasury bond earned around 3.7% near 0.75%.

After the release of U.S. economic data, the EUR/USD pair started to follow and then remained depressive throughout the day. Jerome Powell, the Chairman of Federal Reserve, commented on the data and said that the Sales figure showed an increase in demand. However, Powell stressed that full economic recovery was uncertain until the public had confidence that the COVID-19 pandemic had controlled.

On Wednesday, European traders will look forward to the release of the Consumer Price Index from Europe, and later in the day, Powell’s testimony will continue for the second day of the semi-annual monetary policy report.

Daily Support and Resistance

• R3 1.1462
• R2 1.1408
• R1 1.1336

Pivot Point 1.1282

• S1 1.1211
• S2 1.1156
• S3 1.1085

EUR/USD– Trading Tip

The EUR/USD is trading at 1.1340, having violated the double top resistance level of 1.1280 level. The extension of a bullish trend can lead the EUR/USD prices further higher until the next target level of 1.1330 level. The MACD and RSI are suggesting bullish bias in the pair, and this bullish bias can help traders to capture a quick buy trade over 1.1270 level today until the next target level of 1.1380, only if 1.1330 gets violated. While support stays at 1.1280 and below this, the next support will stay around 1.1267. 

GBP/USD – Daily Analysis

The GBP/USD closed at 1.25722 after placing a high of 1.26873 and a low of 1.25524. Overall the movement of GBP/USD pair remained bearish. The pair in its earlier trading hours on Tuesday moved higher and followed the previous day’s trend and surged to 1.26800 level on the fresh hopes about Brexit negotiations. However, the gains were changed into losses after the concerns related to the second wave of coronavirus infections rose and strengthened the safe-haven U.S. dollar against its main rivals like GBP.

The pair rose on Monday and earlier Tuesday after the optimism surrounding Brexit talks emerged. The U.K. & E.U. committed to approaching the next meeting with new energy and aimed to avoid an unorderly exit from the bloc in December. The Unemployment Rate from the U.K. supported the surge in GBP on Tuesday. The unemployment rate in the U.K. during April decreased from 4.7%of expectations to 3.9% and supported Pound.

However, the pair GBP/USD started to move in the opposite direction after the release of Claimant Count Change that was closely watched by the investors on Tuesday. In May, 528.9K jobless benefits claims made in Great Britain against the expected 405.3K that depressed the GBP and dragged the pair GB/USD with itself.

The U.S. dollar also remained stronger across the board due to multiple factors. One included the better than expected U.S. economic data release included Retail Sales. The Retail Sales in May increased to 17.7% from the expected 5.5% and supported the U.S. dollar.

The strength of the U.S. dollar further dragged the currency pair. The GBP/USD down that day. The fresh concerns about the second wave of coronavirus in China led towards the renewed emergency lockdown after the increasing number of coronavirus cases in Beijing was another reason behind the strength of the safe-haven U.S. dollar on Tuesday was 

The downfall of the GBP/USD pair could also be attributed to the political front where no news came out of the recent round of talks between PM Boris Johnson and E.U. commission.

Later in the week, the Bank of England rate decision will also release in which another massive increase in quantitative easing is expected. There are chances of some talks about negative interest rates by Governor Bailey, given the upside-down condition of the market.

Daily Support and Resistance

• R3 1.2794
• R2 1.2741
• R1 1.2659

Pivot Point 1.2606

• S1 1.2524
• S2 1.2471
• S3 1.2388

GBP/USD– Trading Tip

The GBP/USD is trading at a level of 1.2580, holding right above a next support level of 1.2550. Continuation of a bullish trend requires the cable to break above 1.2585 level first. The 50 periods EMA is weighting on Sterlin gat 1.2585 level while the RSI and MACD are holding in the bearish zone. Although they are very close to crossover into the bullish zone, so we should wait for a bullish breakout before taking a buy trades. By the way, a bullish breakout of 1.2585 level can extend to buying until the next target level of the level of 1.2685, while bearish breakout of 1.2545 level can lead Sterling to be lower towards 1.2475. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 107.314 after placing a high of 107.639 and a low of 107.210. Overall the movement of the USD/JPY pair remained flat throughout the day. The USD/JPY pair remained range bound and did not give any specific movement on Tuesday as the market mood was mixed due to mixed fundamentals.

The Bank of Japan kept its monetary policy steady on Tuesday and signaled that it had taken enough steps in support of economic growth. BoJ has stuck with its view that the economy will gradually recover from the pandemic. BoJ, in its monetary policy meeting, increased the nominal size of its lending packages for cash strapped firms to $1 trillion from about $700 billion announced last month.

The increased lending program from Japan added strength to the Japanese Yen and dragged the pair USD/JPY on Tuesday. While the Chairman of Federal Reserve Jerome Powell warned on Tuesday that the U.S. economy was facing a deep downturn with significant uncertainty about the time and strength of a recovery. He was worried that the longer the recession would last, the worse the damage would be on the job market and businesses.

Powell, in his testimony to Congress, stresses that the Fed was committed to using its all financial tools to lessen the economic damage from the coronavirus crisis. But he was concerned and said that until the public was satisfied that the virus has been contained, the chances for a full recovery were unlikely. He also warned that a downturn for a longer period could impose severe damage, especially to low-income workers who already have been hit hardest.

Daily Support and Resistance    

• R3 108
• R2 107.82
• R1 107.57

Pivot Point 107.39

• S1 107.14
• S2 106.96
• S3 106.71

USD/JPY – Trading Tips

On Wednesday, the USD/JPY continues to follow previously discussed technical levels. The Japanese pair is trading sideways as it failed to break above an immediate resistance level of 107.580. This level is working as resistance for USD/JPY, and the 50 periods EMA is also prolonging strong resistance at 107.580 zones while immediate support lingers nearby 106.600. The bearish trend in the USD/JPY pair can trigger a sell-off unto the next support level of the 106.017 level today. Let’s wait for the USD/JPY to test the 107.650 level before entering a sell in the USD/JPY. 

Good luck! 

 On Monday, the fears of the renewed spread of virus grew after the U.S. reported more than 2 million coronavirus cases as of June 12, and the infection cases were reported from the most populous states of America. The high level of new infections was reported from California, Texas, and Florida, which raised the possibility of a new wave of COVID-19 and prompted risk aversion.

Risk appetite increased the demand for the U.S. dollar across the board as the bar for renewed restrictions of lockdown raised. Federal Reserve has already announced that the road to economic recovery will be longer than expected, which indicated more need for stimulus packaged from governments.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.12563 after placing a high of 1.13403 and a low of 1.12124. Overall the movement of the EUR/USD pair remained bearish throughout the day. At 11:45 GMT, the French Final CPI for May came in as 0.1% against the expected 0.0% and supported Euro. At 13:00 GMT, the Italian Quarterly Unemployment Rate came in as 8.9% against the expected 8.8% and weighed on Euro. At 14:00 GMT, the Industrial Production in April was declined by 17.1% against the forecasted decline of 19.0% and weighed on Euro.

Poor than expected macroeconomic data from Eurozone weighed on shared currency Euro and dragged the pair EUR/USD to one week’s lowest level near 1.1212. On the other hand, the greenback was stronger on Friday, and the U.S. Dollar Index (DXY) jumped to 97.15 level. The strength of the U.S. dollar also added to the downfall of the EUR/USD currency pair at the ending day of the week.

From the American side, at 17:30 GMT, the Import Prices in May were surged by 1.0%, which were previously forecasted to increase by 0.6% and supported the U.S. dollar. At 19:00 GMT, the Prelim UoM Consumer Sentiment increased to 78.9 from the anticipated 75.0 in June and supported the U.S. dollar. The Prelim UoM Inflation Expectations decreased to 3.0% from previous months’ 3.2% in June and supported the U.S. dollar. After better than expected data from the American side, the pair EUR/USD was further dragged down towards its six day’s lowest level.

Furthermore, the Commissioner President of the European Union, Von der Leyen, will meet the Prime Minister of the United Kingdom, Boris Johnson, on Monday to revive the talks related to the post-Brexit deal. So far, there hasn’t been much progress on a free-trade agreement between U.K. & Brussels while there is not much time left to extend the deadline for a deal till end-2020.

However, on Thursday and Friday this week, the E.U. leaders will meet to discuss the proposed recovery fund to overcome the economic damage caused by the pandemic. All members except the Frugal Four I,e Netherland, Austria, Demark, and Sweden, support the recovery fund. All member’s acceptance is needed for the recovery fund to succeed, and any delay will be a major setback for the shared currency Euro.

Daily Support and Resistance

• R3 1.1293
• R2 1.1275
• R1 1.1263

Pivot Point 1.1245

• S1 1.1233
• S2 1.1215
• S3 1.1203

EUR/USD– Trading Tip

The EUR/USD pair is trading at 1.1260 level, having entered into the oversold zone. Today, we can expect bullish correction until 1.1270 and 1.1290 levels, which marks 50% and 61.8% Fibonacci retracement levels. Below these levels, the EUR/USD pair can show selling bias again as the 50 EMA can pressure the pair for selling. On the lower side, support continues to hold around 1.12250 and 1.1208.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.25414 after placing a high of 1.26533 and a low of 1.24735. Overall the movement of GBP/USD pair remained bearish throughout the day. The GBP/USD pair was dropped to its lowest of 8 days on Friday due to mediocre than expected economic data release and U.S. dollar strength. At the ending day of the week, British Pound dropped against the U.S. dollar after the British GDP contracted by a quarter year-on-year in April.

At 11:00 GMT, the Gross Domestic Product (GDP) in April from the United Kingdom was dropped to -20.4% from the expected -18.6% and weighed on GBP. The Manufacturing Production for April also dropped to negative 24.3% from the expectations of -15.0% and weighed on British Pound.

The Industrial Production in April was dropped to -20.3% against the forecasted -15.0% and added in the weight of British Pound. However, at 11:02 GMT, the Goods Trade Balance for April showed a deficit of 7.5B against the forecasted deficit of 11.0B and supported Pound.

At 11:03 GMT, the Construction Output in April was recorder to decline by 40.1% against the forecasted 240% decline and weighed on British Pound. However, the Index of Services was declined by 9.9% against the expected decline of 10.6%.

At 13:30 GMT, the Consumer Inflation Expectations for the United Kingdom were dropped to 2.9% for this quarter from 3.0% of the previous quarter. At 18:08 GMT, the Institute of Economic and Social Research (NIESR) Estimate for GDP in May was -17.6% against the previous months’ -10.3%. At 18:30 GMT, the C.B. Leading Index for April was dropped by 2.9% from the previous month’s 1.2%.

The poor-than-expected macroeconomic data from Great Britain exerted negative pressure on British Pound and dragged the pair to its one week’s lowest level below 1.2500 level.

Apart from negative macroeconomic data, the uncertainty surrounding Brexit also weighed on British Pound on Friday ahead of the PM Boris Johnson’s video conference with European Council President Charles Michel, European Commission President, Ursula von der Leyen and European Parliament President David Sassoli on Monday.

The lack of progress in Brexit talks with Brussels and the calls to review the policy options, including negative interest rates by BoE has also been lagging in the recovery of Pound. Ahead of the BoE meeting, it has already been confirmed on Friday that U.K.’s economy has contracted by 20.4% in April. This means that BoE will likely announce further easing in its policy next week. The current purchase plan of BOE comprises 200 Billion GBP, which is likely to extend further in the next meeting.

Furthermore, the latest round of talks with Brussels failed to deliver any significant progress in the post-Brexit trade deal, which has raised the odds for a no-deal exit from the E.U. As the transition period will expire on January 1, 2021.

On the other hand, from the American Side, the Prelim Consumer Sentiment from the University of Michigan increased in June to 78.9 from the expected 75.0 and supported the U.S. dollar. The U.S. dollar was already strong in the market, and after this release, it exerted even more pressure on the GBP/USD pair.

Daily Support and Resistance

• R3 1.2593
• R2 1.2568
• R1 1.2538

Pivot Point 1.2512

• S1 1.2482
• S2 1.2456
• S3 1.2426

GBP/USD– Trading Tip

The GBP/USD pair is trading with a bearish bias at a depth of 1.2470, following a downward channel extending resistance around the value of 1.2540. On the 4 hour timeframe, the Cable has entered the oversold zone as we can see the RSI and MACD both were holding below 20 and below 0 levels, respectively. On the lower side, the Cable may find initial support at a level of 1.2385 after the violation of 1.2455 level. On the higher side, the GBP/USD prices may find resistance at 1.2543 area today. Let’s consider sell positions below 1.2450 level. 

USD/JPY – Daily Analysis

The USD/JPY was closed at 107.353 after placing a high of 107.552 and a low of 106.583. Overall the movement of USD/JPY remained bullish throughout the day. The USD/JPY gained strength after posting losses for the previous four consecutive days. The stronger U.S. dollar and negative macroeconomic data release from Japan might have added in the strength of this pair USD/JPY.

At 9:30 GMT, the Revised Industrial Production from Japan in April was declined by 9.8% against the forecasted 9.1% and weighed on Japanese Yen and moved the pair USD/JPY in the upward direction on Friday.

The brighter market sentiment due to come back of risk appetite in the market after the possibility of renewed lockdowns increased due to increased fears over the second wave of coronavirus outbreak.

The fears of the renewed spread of virus grew after the U.S. reported more than 2 million coronavirus cases as of June 12, and the infection cases were reported from the most populous states of America. The high level of new infections was reported from California, Texas, and Florida, which raised the possibility of a new wave of COVID-19 and prompted risk aversion.

Risk appetite increased the demand for the U.S. dollar across the board as the bar for renewed restrictions of lockdown raised. Federal Reserve has already announced that the road to economic recovery will be longer than expected, which indicated more need for stimulus packaged from governments.

However, the U.S. Dollar Index was up to 97 levels on Friday, and the strength of the U.S. dollar pushed the USD/JPY pair above 107.5 level.

Another factor aiding in the U.S. dollar’s strength was better than expected macroeconomic data from the USA. At 19:00 GMT, the Prelim Consumer Sentiment from the University of Michigan (UoM) surged to 78.9 in June from the expected 75.0 and supported the U.S. dollar. The Import Prices in May also increased by 1.0% from 0.6% of forecast and supported the U.S. dollar. The Prelim UoM Inflation expectation in June was reported as 3.0%.

Daily Support and Resistance    

• R3 107.93
• R2 107.75
• R1 107.54

Pivot Point 107.36

• S1 107.15
• S2 106.97
• S3 106.75

USD/JPY – Trading Tips

The USD/JPY pair fell sharply after violating the upward channel, which supported the pair around 107.500. For now, this level is working as resistance for USD/JPY. The 50 periods EMA is also extending strong resistance at 107.650 area while immediate support stays around 106.600. The bearish trend in the USD/JPY pair can trigger a sell-off until the next support level of the 106.017 level today. Let’s wait for the market to test the 107.650 level before entering a sell in the USD/JPY today. 

Good luck! 

On the news front, the market will be focusing on the Eurogroup meeting, which is usually held in Brussels and attended by the Eurogroup president, Finance Ministers from euro area member states, the Commissioner for economic and monetary affairs, and the President of the European Central Bank. The agenda will be to discuss upcoming policies considering the economic slowdown driven by the coronavirus. Besides, the U.S. Unemployment Claims will also remain in the highlights today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.13753 after placing a high of 1.14222 and a low of 1.13214. Overall the movement of the EUR/USD pair remained bullish throughout the day. The EUR/USD pair rose to its three months highest level on Wednesday after the Federal Reserve’s monetary policy decision. The currency pair crossed the level of 1.1400 on the back of broad-based U.S. dollar weakness that day.

The Fed left its interest rates unchanged at 0-0.25% on Wednesday and projected a contraction of 6.5% this year along with the unemployment reaching 9.3% for this year. Furthermore, the bank has shown its commitment to support the credit flow to household and business by increasing its Treasury security purchases.

Though negative interest rate was not expected from the Fed but taking the pledge to keep the interest rates at low near zero until market participants did not expect 2022, this moved the investors to sell the U.S. dollar, which in turn gave a push to EUR/USD pair.

Adding in the upward movement of EUR/USD pair on Wednesday was the poor than expected economic data from the U.S. At 17:30GMT, both CPI & Core CPI readings from the U.S. came in as -0.1% against the expected 0.0% during May and exerted pressure on the U.S. dollar. AT 23:00 GMT, the Federal Budget Balance showed a deficit of 398.8B against the expected deficit of 580.0B and weighed on the U.S. dollar.

The broad-based U.S. dollar weakness pushed EUR/USD pair above 1.1400 level on Wednesday. While the U.S. Dollar Index also fell to 3 months low against its rival currencies. U.S. stocks also turned negative and posted losses on Wednesday.

On the other hand, at 11:45 GMT, the French Industrial Production was dropped by -20.1%against the expected -10.0% during April and weakened Euro. Furthermore, On Wednesday, the European Commission said that Russia and China were running targeted influence operations and disinformation campaigns in the European Union and its neighborhood and also around the globe.

Daily Support and Resistance

• R3 1.1522
• R2 1.1473
• R1 1.1422

Pivot Point 1.1372

• S1 1.1321
• S2 1.1271
• S3 1.122

EUR/USD– Trading Tip

The EUR/USD continues to trade sideways in a narrow trading range of 1.1400 – 1.1348 level, and right now, it seems to test the lower boundary of this range. On the lower side, the next target level appears to be 1.1270. Currently, the pair is facing immediate support around 1.1340 level, and closing of candles above this level may lead the EUR/USD prices to further lower towards 1.1400. The 50 EMA is also suggesting a bullish bias for the EUR/USD pair as the pair has closed a Doji candle right above the EMA. On the higher side, a violation of 1.1400 resistance can lead to EUR/USD prices until 1.1465. Odds of bullish bias remains solid today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.27457 after placing a high of 1.28130 and a low of 1.27060. Overall the movement of GBP/USD pair remained bullish throughout the day. The currency pair GBP/USD continued its bullish trend for the 10th consecutive day and maintained its bullish streak on Wednesday on the back of the latest monetary policy decision by Federal Reserve.

On Wednesday, the U.S. Fed announced its monetary policy decision in which it held its interest rates on the same level near zero and did not go for negative interest rates. However, the Fed also announced to hold the interest rates at the same level until the end of 2022. Federal Reserve also announced that over the coming months, it would increase the holdings of Treasury securities and agency residential and mortgage-backed securities at the current level to support the credit flow to households and businesses. This all was decided to sustain smooth market functioning and defend the U.S. economy.

Additionally, the Open market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will keep a close eye on market conditions to adjust its plans as needed.

The DXY fell off from 96 levels and was down by 0.5% on Wednesday, the dovish statement from Fed weighed on the U.S. dollar and hence, GBP/USD pair reached near 3-months highest level.

On the other hand, Brexit trade negotiations did not go well between the U.K. and Brussels, and the U.K. wanted to reach an agreement with the E.U. this year. There are no chances of even any progress in trade talks with the deadline to seek an extension coming closer day by day.

According to the boss of the U.K.’s most influential business group, the CBI, U.K.’s economy was not ready to withstand the additional disruption of no-deal Brexit. The furlough scheme and grants will end at once, and then thousands of businesses and millions of jobs will likely hit the water. A CBI member, Carolyn Fairbairn, said that British firms do not have the resilience to cope with leaving the European Union without any deal after the losses of the coronavirus crisis.

On Wednesday, GBP/USD prices rose above the level of 1.27710 but dropped below it and continued moving in a confined range. The surge in prices was due to the broad-based U.S. dollar weakness after the Fed’s statement and economic data release. At 17:30, The CPI & Core CPI for May from the U.S. showed a decline of 0.1% against the expected 0.0% and weighed on the U.S. dollar. The weak dollar pushed GBP/USD pair on the higher level.

Daily Support and Resistance

• R3 1.2912
• R2 1.2863
• R1 1.2804

Pivot Point 1.2755

• S1 1.2696
• S2 1.2647
• S3 1.2588

GBP/USD– Trading Tip

The GBP/USD pair is trading with a bearish bias at 1.2650 level ever since it has violated the upward channel on the lower side. On the 4 hour timeframe, the Cable has closed a strong bearish engulfing candle, which suggests a dominance of sellers in the market as this can trigger selling until 1.2625 level. Immediate support can be found around 1.2625, while a breakout of this can trigger more selling until the next support level of 1.2582 level. Let’s look for selling trades below 1.2690 level today. 

USD/JPY – Daily Analysis

 The USD/JPY pair was closed at 107.123 after placing a high of 107.872 and a low of 106.987. Overall the movement of the USD/JPY pair remained bearish that day. AT 4:50 GMT, the Core Machinery Orders from Japan for April dropped to -12% against the expected -7.5% and weighed on Japanese Yen. The PPI for the year from Japan was declined by 2.7% against the expected decline of 2.4% and exerted pressure on JPY.

On the other hand, at 17:30 GMT, the CPI and the Core CPI during May from the United States was dropped to -0.1% from 0.0% of expectations and weighed on the U.S. dollar. The Federal Budget Balance for April was declined by 398.8B against the expected 580.8B.

The poor than expected CPI & Budget data from the United States on Wednesday weighed on the U.S. dollar, which dragged down the USD/JPY pair with itself. Furthermore, the dovish statement from the Federal Reserve will keep its interest rates on hold at a level near zero until the end of 2022. U.S. economy was not in good condition, and the projections made by the Fed about the economic contraction this year was 6.5% and of unemployment to be raised by 9.3.

Fed reduced its interest rates in March to near zero amid coronavirus crisis and said that until the economy was back on track Federal Reserve has pledged to maintain low rates. Fed has provided trillions of dollars to its financial system, Treasury purchases to support business, state, and local governments. It also started a new program to lend to small, medium-sized firms. Wall Street, major indices such as the S&P 500 and Dow Jones Industrial Average were negative that day, and the U.S. dollar index also fell to fresh three months low against major currencies.

Daily Support and Resistance    

• R3 108.58
• R2 108.23
• R1 107.67

Pivot Point 107.33

• S1 106.77
• S2 106.43
• S3 105.87

USD/JPY – Trading Tips

The USD/JPY is trading sharply bearish below 107.100 level, having violated the upward trendline at 107.600. Below this, the pair has a great potential to go for a 107.08 level, while a bearish breakout of 107.082 can dip further until 106.770. On the 4 hour chart, the MACD, and RSI, both are holding in the selling zone, demonstrating that there’s further room for selling in the USD/JPY pair. Let’s consider taking selling trades below 107.33 today. Good luck! 

On the news front, it’s likely to be a busy day with most of the focus staying on the European Central Bank’s monetary policy meeting. ECB’s Main Refinancing Rate holds at 0%, and So far, the ECB isn’t expected to change it. However, we need to closely monitor the Press conference as the hawkish or dovish remarks from President Christine Lagarde can drive price action in the EUR/USD pair today. Besides, the dollar may stay supported ahead of the NFP figures coming out on Friday.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD currency pair continues to draw bids and hit above the new three-month high of 1.1370 marks as the investors continue to cheer the bigger-than-expected coronavirus emergency purchase program (PEPP) announced by the European Central Bank (ECB) on Thursday to boost the economic recovery. The ECB expanded PEPP by EUR600 billion. On the other hand, the broad-based U.S. dollar modest strength turned out to be one of the key factors that kept a lid on any additional gains in the pair, at least for now. The EUR/USD is trading at 1.1368 and consolidates in the range between the 1.1325 – 1.1377. However, the traders seem cautious to place any strong position ahead of the German Factory Orders.

At the data front, the German Factory Orders are scheduled to release at 06:00 GMT, which is expected to drop by 19.7% month-on-month in April, having fallen 15.6 in March. On an annualized basis, the industrial orders dropped by 7.4% in April. 

Despite the predictions of a sharper drop in the Factory Orders, the shared currency continues to draw bids, backed by the hopes of coronavirus emergency purchase program announced by the European Central Bank (ECB).

On the other hand, the IHS Markit’s German Purchasing Managers’ Index (PMI) for manufacturing was revised downwards to 36.6 in May from the preliminary figures of 36.8, even after it improving slightly from April’s 34.5. The Germany manufacturing sector continued to weaken last month, possibly due to the weakening demand triggered by the coronavirus pandemic. Manufacturing production was already down 7-8% from a peak in late 2017 even before the onset of the pandemic, and now that figure looks to be in the region of 25-30%,” IHS Markit reported.

The decline in the German Factory Orders by the big margin could push the EUR/USD currency pair lower below 1.1300. As well as, if the U.S. dollar takes bids on the worsening market mood, the currency pair extend further declines towards 1.1243 (5-DMA). For now, the traders are waiting for the U.S. NFP data tp drive market movement. 

Daily Support and Resistance

• R3 1.157
• R2 1.1466
• R1 1.1402

Pivot Point 1.1298

• S1 1.1233
• S2 1.113
• S3 1.1065

EUR/USD– Trading Tip

The EUR/USD continues to trade bullish around 1.1360, heading towards the next resistance level of 1.1450 level. The European Central Bank policy decision drove a recent jump in Euro, and now the U.S. NFP will be taking over the game during the U.S. session. So, we can expect EUR/USD to face a strong hurdle around 1.1450 level along with support level around 1.1247. The 50 EMA is suggesting bullish bias along with the MACD indicator, which is holding and forming histograms over the 0 level. Let’s look for buying positions above 1.1298 level today and selling below 1.1458. 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.25957 after placing a high of1.26331 and a low of 1.25005. Overall the movement of GBP/USD pair remained bullish throughout the day. The GBP/USD pair rose for the 6th consecutive day on Thursday and peaked since April 30 after posting 0.5% losses on that day. The GBP/USD pair first dropped and lost ground in early trading session but managed to find support and ended its day with a bullish bias.

The selling bias in GBP was due to a lack of progress in the current round of Brexit negotiations on the future relationship. The 4th round of talks will end on Friday, and more chances for no-deal persists in the market as hopes for mutual concessions on fisheries and trade came and went throughout the talks.

However, the U.K. risk of falling to world trade organizations rule instead of having a deal with E.U. has been increased as BoE issued notice to be prepared for the worst-case scenario I,e no-deal Brexit. These fears amongst investors related t no-deal Brexit also kept the British Pound under pressure on Thursday and caused the early drop of GBP/USD pair.

Another factor involving in the downward movement of GBP/USD pair in the early trading session was the poor than expected Construction PMI from the U.K., which dropped to 28.9 in May from 29.5 of expectations and weighed on GBP.  

But in later sessions after the release of American economic data, the pair started to rise again and started following its previous day’s trend. At 17:30 GMT, the Unemployment Claims for last week were reported as 1.88M from the U.S. against the expected jobless claims as 1.82M and weighed on the U.S. dollar. The Revised Nonfarm Productivity for the quarter dropped to -0.9% against the forecasted -2.5% and weighed on the U.S. dollar. 

At 19:30 GMT, the Trade Balance also showed a deficit of 49.4B against the expected deficit of 41.5B in April and weighed on the U.S. dollar.

The weakness of the U.S. dollar on Thursday gave a push to GBP/USD, and it started to move in an upward trend again. On the other hand, racial tensions in the U.S. were calmed a bit after the three additional police officers involved in the murder of George Floyd were filed with charges. However, the unrest was primarily ignored by the market participants despite its potential impact on the U.S. elections.

Daily Support and Resistance

• R3 1.2787
• R2 1.271
• R1 1.2652

Pivot Point 1.2576

• S1 1.2518
• S2 1.2442
• S3 1.2384

GBP/USD– Trading Tip

On Friday, the GBP/USD continues trading bullish to reach at 1.2650 levels, having violated the triple top level on the 4-hour timeframe. The GBP/USD pair has formed an upward regression trend channel, which is supporting further buying in the Cable. 

Continuation of a bullish trend can lead to GBP/USD prices towards the next resistance level of 1.2690 level. Above this, the next resistance holds around 1.2765 level. Conversely, the support is likely to be found around 1.2605 and 1.2550 level today. Let’s look for buying over 1.2605 level ahead of NFP data today. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 108.899 after placing a high of 108.980 and a low of 108.420. Overall the movement of the USD/JPY pair remained bullish throughout the day. The USD/JPY pair extended its previous day’s gains and rose above 108.900 level pacing a high since April 9 on the back of increased risk appetite. The risk-on market sentiment weighed on safe-haven Japanese Yen and pushed the USD/JPY pair above multi week’s highest level.

The U.S. dollar index slipped to its three-month low level due to increased global risk sentiment after the hopes for faster recovery increased due to easing lockdown restrictions. The DXY fell to 97.19 low from 97.63 on the day. Despite the drop in the U.S. Dollar Index, the pair USD/JPY managed to post gains on the back of the strong U.S. equity market.

On the other hand, China’s headlines stopped buying U.S. farm goods and were proven false after the reports suggested that Chinese state-owned firms bought U.S. soybean cargo this week. This raised the optimism that US-China worries would become less. It was also supported by the comments from U.S. Senator Grassley, who said that the US-China trade deal was on track.

Meanwhile, at 17:15 GMT, the US ADP Non-Farm Employment Change for May showed a decline in the number of jobless people to 2.76M from the forecasted 9.0M and helped the U.S. dollar to gain traction. At 18:45 GMT, the Final Services PMI from the U.S. came in line with the expectations of 37.5. At 19:00 GMT, the ISM Non-Manufacturing PMI showed a surge to 45.4 from the expected 44.2 for May and supported the U.S. dollar. The Factory orders in April were declined by 13% against the expected decline of 13.7%. Let’s brace for the U.S. Nonfarm payroll data today. 

Daily Support and Resistance    

• R3 109.93
• R2 109.56
• R1 109.35

Pivot Point 108.98

• S1 108.76
• S2 108.4
• S3 108.18

USD/JPY – Trading Tips

On Friday, the USD/JPY bullish bias continues to drive buying to lead the pair towards 109.350 level. The USD/JPY pair is now breaking above 109.280 level, and above this, the next target is likely to be found around 110. The 50 EMA and MACD both are supporting the buying trend in the USD/JPY pair, and it can lead the USD/JPY prices further higher today. On the lower side, the support holds around 108.640, but the recent bullish engulfing candle and upward price action in the safe haven pair can drive further buying in the USD/JPY pair. Let’s look for buying over 109 levels today. All the best for today!