Daily F.X. Analysis, June 24 – Top Trade Setups In Forex – Focus on Technical Side!

On the news front, the market will be focusing on the German Business Climate figures along with Crude Oil Inventories. Overall the impact of these events is expected to be muted; therefore, our focus should be on the technical side of the market.

Economic Events to Watch Today 

 

 

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EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.13085 after placing a high of 1.13484 and a low of 1.12329. Overall the movement of the EUR/USD pair remained bullish throughout the day. On Tuesday, the EUR/USD currency pair spiked above 1.13400 level, highest since June 16. The pair was up with 155 pips from the previous day’s low on the broad-based U.S. dollar weakness.

The U.S. dollar index, which measures the value of the U.S. dollar against the basket of six currencies, lost the gains of the previous five days in only two days and was down to 96.39 level, the lowest since June 11.

The U.S. dollar’s weakness came in after a new stimulus package from U.S. congress was announced by the U.S. Treasury Secretary Steve Mnuchin on Tuesday. Mnuchin also said that despite the rising number of coronavirus cases in some states of America, renewed lockdown would not be imposed.

Another reason behind the EUR/USD pair’s uptick was better than expected and robust macroeconomic data from the Eurozone about PMI.

 At 12:15 GMT, the French Flash Services PMI for June exceeded the expectations of 44.9 and came in as 50.3 and supported Euro. The French flash manufacturing PMI for June also surged to 52.1 against the expected 46.1 and supported Euro on Tuesday. At 12:30 GMT, the German Flash Manufacturing PMI increased to 44.6 from the forecasted 41.5 in June. The German Flash Services PMI exceeded expectations of 41.7 for June and came in as 45.8 and supported Euro.

At 13:00 GMT, the Flash Manufacturing PMI for the whole Eurozone came in better than expected as 46.9 against 43.8. The Flash Services PMI for whole bloc also supported the Euro when it was reported as 47.3 against the forecast of 40.5 and supported single currency Euro. The PMI from the Manufacturing and Services sector boosted in Europe and provided strength to the single currency Euro, which added gains in the EUR/USD pair.

On the other hand, from the American side, the Flash Manufacturing PMI from the United States was released at 18:45 GMT, which showed that Manufacturing activity in the U.S. dropped in June, and index came in as 49.6 against the expected 50.0 and hence, weighed on U.S. dollar.

The weak U.S. dollar added further in the gains of EUR/USD on Tuesday and pushed the pair above the 1.3400 level.

Daily Support and Resistance

• R3 1.1479
• R2 1.1414
• R1 1.1361

Pivot Point 1.1297

• S1 1.1244
• S2 1.118
• S3 1.1127

EUR/USD– Trading Tip

The EUR/USD pair is facing double top resistance at 1.1345 level, and below this, the EUR/USD has solid odds of staying bearish until 1.1266 level. Conversely, a bullish breakout of the 1.1345 level can extend buying until the next target level of 1.1415 level. While the bearish breakout of 1.12500 can lead EUR/USD prices towards 1.1230 and 1.1205. Besides, the leading indicators are mixed; for example, the RSI is suggesting a selling bias, while the MACD is indicating a bullish bias. Let us look for buying trades over the 1.1297 level today. 

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GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.25209 after placing a high of 1.25317 and a low of 1.24317. Overall the movement of GBP/USD pair remained bullish throughout the day. GBP/USD pair rose above 1.2500 level and posted gains for 2nd consecutive day on Tuesday on the back of weak USD and strong British Pound after the release of PMI data. Another factor involved in the surge of GBP/USD pair was the plan set out by Britain on how it will regulate the city after Brexit.

On Tuesday, the finance minister of the U.K., Rishi Sunak, said that Britain’s government intends to regulate Europe’s biggest financial sector by making reforms to maintain the soundness of capital markets and managing future risks.

The U.K. left E.U. in January, and it will no longer be required to follow Europe’s financial rules after December when the transition period will end. Sunak said that Britain’s government would tailor the E.U. Capital rules for insurers known as Solvency II after Brexit. The U.K. lawmakers have long criticized the Solvency II rules as too inflexible, and the government intends to start to review it in autumn.

Besides tailoring the rules for the insurance sector, Britain will also make existing retail customer disclosure rules. Sunak showed concern and said that Britain would come under more pressure outside the E.U. to lee pots financial sector globally competitive. The EU is the biggest export customer of the U.K.’s financial services, and an enduring future relationship with the E.U. will help the U.K. maintain its role globally.

Furthermore, the negotiators of Britain and the E.U. have hit by a new obstacle to secure a trade deal after clashing over 70 billion euros worth of subsidies to E.U. farmers by Brussels. The E.U. negotiating team led by Michel Barnier was accused in the latest round of talks of trying to stop the U.K. government from defending British farmers from cut-price European imports.

On the data front, at 13:30 GMT, the Flash Manufacturing PMI from Great Britain for June came in as 50.1 against the expected 45.2 and supported British Pound. The Flash Services PMI for June from the U.K. also surged to 47.0 from the forecasted 39.1 and helped British Pound to gain traction.

The better than expected U.K. Preliminary Manufacturing & Services PMI data provided strength to British Pound on Tuesday, which lifted GBP/USD pair above 1.2500 level. On the other hand, from the U.S. Side, the Flash Manufacturing PMI for June was dropped to 49.6 from the expected 50.0 and weighed on the U.S. dollar. The weak U.S. dollar added in the gains of GBP/USD on Tuesday.

Daily Support and Resistance

• R3 1.2378
• R2 1.2369
• R1 1.2357

Pivot Point 1.2348

• S1 1.2337
• S2 1.2327
• S3 1.2316

GBP/USD– Trading Tip

The GBP/USD is trading bullish at a level of 1.2512, holding right above 50 periods of EMA, which is likely to extend support at a level of 1.2510. On the downside, the GBP/USD may find support around the value of around 1.2445, and the continuation of a selling trade can lead Sterling prices to be further lower until 1.2378 level. The MACD and RSI are expending a mixed bias, as the MACD is holding in a selling zone, while the RSI holds in a buy zone. The recent formation of neutral candles over 1.2510 support level is suggesting indecision among traders. Therefore, we should look for selling trades below 1.2470 and buying trades 

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USD/JPY – Daily Analysis

The USD/JPY pair was closed at 106.534 after placing a high of 107.220 and a low of 106.071. Overall the movement of USD/JPY remained bearish throughout the day. The USD/JPY pair in early trading hours in Asian session surged above 107.200 level after White House advisor Peter Navarro clarified his statement that the phase one deal was over. Navarro issued a clarification stating that his comments had been taken widely out of context.

On Monday, Navarro said that the trade deal was over, and markets went on a roller coaster after this statement; however, right afterward, he issued a clarified statement which was then backed by the U.S. President himself. U.S. President also provided further assurance after his clarification that the phase-one deal was still intact to avoid any confusion.

U.S. dollar gained after that clarification but failed to post gains in the European session after the strong PMI data from Europe, which made the U.S. dollar weak. U.S. dollar came under pressure, and the pair USD/JPY starting to move in a downward trend. The U.S. Dollar Index was down 0.45% near 96.56 level on Tuesday, which exerted more pressure on the U.S. dollar. Greenback seemed to face high selling pressure after the release of U.S. economic data.

At 5:30 GMT, the Flash Manufacturing PMI from Japan for June dropped to 37.8 against the forecasted 39.5 and weighed on Japanese Yen. However, at 10:00 GMT, the Bank of Japan Core CPI for the year came in as 0.0% against the expected -0.1% and supported the Japanese Yen.

On the U.S. side, at 18:45 GMT, the Flash manufacturing PMI for June came in as 49.6 against the expected 50.0 and weighed on the U.S. dollar. The Flash Services PMI came in line with the expectations of 46.7.

At 18:59 GMT, the Richmond Manufacturing Index for June was up to 0 from expectations of -3 and supported the U.S. dollar. At 19:00 GMT, the New Home Sales in May were recorded as 676K against the expected 637K and supported the U.S. dollar.

The poor than expected PMI data, even after the reopening of economies from all states of America, gave a high selling pressure on the U.S. dollar.

The U.S. dollar’s selling bias was further supported by the latest comments from U.S. Treasury Secretary Steve Mnuchin, who said on Tuesday that U.S. Congress would issue more stimulus in July to overcome the pandemic crisis. This depicted the U.S. economy’s weakness, and hence, the U.S. dollar suffered and dragged the USD/JPY pair with itself below 106.100 level on Tuesday.

Daily Support and Resistance    

• R3 107.13
• R2 107.05
• R1 106.94

Pivot Point 106.85

• S1 106.74
• S2 106.65
• S3 106.54

USD/JPY – Trading Tips

The USD/JPY traded bearishly to break out of the descending triangle pattern, supporting the pair around 106.800 level. On the lower side, the support level can be seen at 106.400, and violation of this could trigger sell-off until 106 level. The breach of the descending triangle pattern suggests selling bias, but before this, we can expect upward movement in the market until 106.800. Let’s consider taking sell trades below 106.800 level today. 

Good luck!