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Market Update by Solidecn.com


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EUR USD, investors expect inflation data in the EU
The European currency is trading with a slight slowdown after yesterday's strong growth, caused by investors' reaction to the wage increase in the EU in the first quarter by 2.70% from 1.50%, but today's data will have a key impact on the dynamics of the instrument. In the middle of the day, Eurostat will publish May's CPI, which estimates inflation, and the monthly increase could be 0.8% against the 0.6% shown in April, and the growth will remain around 8.1% YoY. As for the core consumer price index, which does not consider food and fuel prices, analysts do not expect positive dynamics and expect the value to remain at the April level of 3.8%.

After three days of being near the year's highs, around 105 in the USD Index, Quotes of the American currency reversed downwards and rolled back to 104 against the backdrop of disappointing data on the US labor market. Initial Jobless Claims amounted to 229K, which exceeds the quoted market expectations of 215K, and the total number of citizens receiving payments from the state consolidated at 1.312M compared to 1.309M last week. Investors drew attention to a significant decrease in the index of manufacturing activity from the Philadelphia Fed in June to –3.3 points from 2.6 points in May.

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The trading instrument moves within a narrow downward channel, approaching the support line. Technical indicators maintain a global sell signal: indicator Alligator's EMA oscillation range downwards, and the AO oscillator histogram has formed another down bar in the sell zone.

Resistance levels: 1.0630, 1.0778 | Support levels: 1.0377, 1.0151

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USD JPY, development of a new upward momentum
After a correction to 131.40, the pair USD JPY starts a new upward momentum with the target at 135.50 amid investor disappointment in the policy of the Bank of Japan. Today the regulator decided to leave the interest rate unchanged at –0.10%. At a subsequent press conference, department head Haruhiko Kuroda said it was appropriate now to maintain the current strong monetary easing to support the economy, which is needed for profitable companies to benefit from the poor yen and get a boost in capital expenditures, higher wages and a strengthening trend from income to expenses. It, in turn, should boost inflation to the 2.00% target. The Bank of Japan will continue to closely monitor the impact of the yen on the economy and prices and, in the event of a sharp change in the situation, will be ready to respond accordingly.

The Japanese authorities intend to create a specialized headquarters, the main task of which will be to monitor the market and combat the rise in the cost of living of the population and rising inflation in the country against the backdrop of rising energy costs and the weakening yen. Hirokazu Matsuno, Secretary General of the Cabinet of Ministers of Japan, noted that experts would also assess the impact of tightening the American regulator's monetary policy parameters and, in particular, the increase in the interest rate to 1.75% on the national economy. It is noted that the anti-crisis body will begin work on June 21.

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It is likely that in the long term, the growth of the USD JPY pair will continue to 139 and 141 since, from a fundamental point of view, the US dollar will strengthen due to the tightening of the monetary policy of the US Federal Reserve and the increase in interest rates.

The long-term trend is upward. After the test of key support around 131, a new impulse began, which was to renew the weekly high around 135.5. In case of breakdown, the positive dynamics will continue to 139. According to the RSI indicator, there is a divergence on the chart, leading to a technical correction in the medium term.

The medium-term trend is upwards. This week, the traders tested the key trend support 131.63–131.29, after which the price began to rise to the high of the week in the 135.50 area, and zone 3 (137.10–136.72) will become its next target.

Resistance levels: 135.50, 139, 141 | Support levels: 131.40, 126.50, 124.08

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NZD USD, technical analysis

H4
On the four-hour chart, at the level of 0.6224, a "bullish" Inverted Hammer candlestick analysis pattern is formed, which is a signal for a price reversal at the bottom. The "bullish" trend in the asset is also confirmed by the appearance of the Engulfing Pattern, which indicates that, most likely, the asset has reached the bottom and is currently forming a reversal. A more likely scenario for further movement of the NZD USD quotes is an uptrend towards the resistance level of 0.6476, overcoming which will allow the "bulls" to head higher to the zone of 0.6709–0.6986. An alternative scenario is possible if the support level of 0.6224 is overcome with the target of 0.5931–0.5694.

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D1
The daily chart shows the formation of a Double Bottom price pattern, which is a reversal. In addition, a confirming signal is the formation of a Bullish Candle at the support level of 0.6224, which indicates the prevailing "bullish" power. The reversal is also confirmed by the formation of a Hammer Pattern indicating that buyers have taken control of the market and intend to raise the price in the range of 0.6476–0.6986.

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Support levels: 0.6224, 0.5931, 0.5694 | Resistance levels: 0.6476, 0.6709, 0.6986

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USD CAD - May high update
The US dollar continues to strengthen due to the policy of the US Federal Reserve aimed at tightening the parameters of the national monetary policy, and USD CAD is trading around 1.2995.

Last week, the regulator decided to raise the interest rate by 75 basis points to 1.75%, as a result of which the US dollar strengthened against the Canadian currency and updated the May high at 1.3065. US Federal Reserve Chairman Jerome Powell confirmed the authorities' readiness to fight the highest inflation in the last 40 years and said that the changes made will increase the attractiveness of the national currency and increase the number of transactions nominated in it. Also, the authorities will continue to monitor the global economic situation, and, if necessary, will again adjust the rate upward at the next meeting at the end of July.

Meanwhile, the Canadian dollar is declining following oil prices: WTI Crude Oil lost 7.7% last week and it looks like the negative dynamics will only intensify. Today, the General Administration of Customs of the People's Republic of China presented a report that notes a record increase in imports of "black gold" from the Russian Federation: the figure reached 8.42 million tons, exceeding the April value by 25%, while the volume of supplied liquefied gas amounted to 400 thousand tons, which is 56% higher than in May last year. Analysts believe that the displacement of Saudi Arabia from the list of leaders among energy suppliers became possible against the backdrop of the implementation of the Russian authorities' discount policy in the sale of oil.

The tightening of monetary conditions by the US Federal Reserve acts as a catalyst for the upward movement of the US dollar, as a result of which USD/CAD may rush to 1.3360 after the breakdown of the resistance level of 1.3065. Thus, there is a high probability that the trading instrument will continue to strengthen in the long term.

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The long-term trend is upward. Last week, the May high was updated at 1.3065 and if the price fixes above it, the next buy target will be at 1.3157. Strong levels, from which new long positions can be considered, formed in the area of 1.2950 and 1.2860.

The mid-term trend changed to an uptrend last week, when the target zone 1 (1.2766 – 1.2745) was broken out and the target zone 2 (1.2985 – 1.2963) was reached, above which the traders will try to consolidate this week. If successful, the growth of the trading instrument will continue with the target in the area of the target zone 3 (1.3212 - 1.3189). The key trend support is shifting to the levels of 1.2856 – 1.2835.

Resistance levels: 1.3065, 1.3157, 1.336 | Support levels: 1.2950, 1.2860, 1.2525

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USD CHF, the pair is trading within a wide range of 1.004 – 0.956
Last week, the Swiss National Bank unexpectedly raised interest rates by 50 basis points to –0.25% for the first time in seven years, which caused the USD CHF pair to fall to 0.9650. Officials, led by Chairman Thomas Jordan, also spoke of the possibility of further tightening monetary policy and added that they would remain "active" in the foreign exchange market. Meanwhile, inflation in Switzerland continues to rise: the producer price index for May increased by 0.9%, and the upward trend is likely to continue, as a result of which the regulator will raise rates at the next meetings, which in the medium term can strengthen the Swiss franc.

However, the long-term trend in the USD CHF pair remains upward. After the test of 1.0040 and the buyers' inability to break through it, the price went into a correction and is currently testing the support level of 0.9650. If traders hold this level, the asset will continue to grow with the target at the month's high, and in case of a breakdown, a correction is expected with the target at the key support of the trend at 0.9560.

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The medium-term trend is downwards, and within its framework, the trading instrument has broken through the target zone 3 (0.9710 – 0.9699). The next sell target is zone 4 (0.9601–0.9591). Last week, the asset corrected to the key trend resistance area of 0.9738–0.9728, held by market participants. As a result, the USD CHF pair is now falling with the first target around last week's low of 0.9622.

Resistance levels: 1.0040, 1.012 | Support levels: 0.9650, 0.956

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USDJPY - The probability of a downward correction remains
The USD JPY pair is trading around 135.11. The asset failed to break the resistance level of 135.5, which suggests the development of a downward correction. Last Friday, the Bank of Japan decided to leave interest rates unchanged at –0.10%. Earlier, representatives of the regulator have repeatedly announced their intention to adhere to the course of ultra-soft monetary policy to increase household spending and stabilize the labor market. Now the focus of investors is on the minutes of the meeting on the monetary policy of the central bank, which will be published on Wednesday. Considering the latest changes, inflation in Japan was 2.5% YoY, and the base indicator reached 2.1%, which is above the target level of 2.0%. Traders want to know how long the current approach to monetary policy will last and when to expect a move to tighten.

As for the US dollar, the likelihood of its appreciation remains against the backdrop of the policy pursued by the US Federal Reserve. On Friday, the department's chairman, Jerome Powell, reaffirmed his determination to contain inflation, which peaked in the last 40 years, and declared his readiness to continue adjusting interest rates further.

After the technical correction, the next target for the USD JPY pair quotes will be 139 and 141.

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The long-term trend is upwards. Now the price is trading below the resistance level of 135.5, which implies the possibility of opening short positions with the target at 131.4 but in case of its breakout, the positive dynamics will continue to 139.

The medium-term trend remains upwards. Last week, traders unsuccessfully tested the key trend support 131.63–131.29, as a result of which an increase in the number of open long positions was recorded, the target of which is to renew the high of the last week and then move to zone 3 (137.09–136.72).

Resistance levels: 135.5, 139, 141 | Support levels: 131.4, 126.5, 124.08

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USDCHF, consolidation pending new drivers
The sharp rise in the Swiss franc was due to the decision of the Swiss National Bank to raise interest rates by 50 basis points at once to –0.25% for the first time since 2007. According to officials, this measure is designed to maintain control over the growth of the national currency, as well as curb inflation, which is rapidly overcoming the Central Bank's target levels of 2%, being at around 2.4%. In addition, the financial authorities announced the possibility of similar measures in the future. According to updated forecasts, the Swiss National Bank expects inflation at 2.8%, next year prices may slow down to 1.9%, and only in 2024 will drop to 1.6%. Previously, the regulator expected 2.1%, 0.9% and 0.9%, respectively.

Today, the focus of investors will be on statistics from the US on Redbook Retail Sales Index for the week ended June 17, as well as data on Existing Home Sales for May. Current forecasts suggest that sales will decline by 0.2% after a sharp decline of 2.4% last month.

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In the D1 chart, Bollinger Bands are reversing horizontally. The price range is slightly narrowing, staying spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). The indicator is about to test the zero level for a breakdown. Stochastic, having approached its lows, reversed into the horizontal plane, reacting to the appearance of ambiguous dynamics in the ultra-short term.

Resistance levels: 0.97, 0.9762, 0.9847, 0.99 | Support levels: 0.9618, 0.954, 0.9459, 0.94

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AUD USD - Technical analysis

H4
On the four-hour chart above the level of 0.6901 there is a "bullish" Engulfing Pattern, which signals a price reversal at the bottom, as well as a Bullish Belt Hold pattern, explaining that the buyers attempted to counterattack, but the "bears" seized the initiative, which became a driver for the decline in instrument quotes. At the moment, the most likely scenario is with an uptrend from the support level of 0.6841 to the resistance area of 0.7048, overcoming which will allow the "bulls" to move higher into the range of 0.7270–0.7581. An alternative scenario may be relevant if the buyers fail to hold the support level of 0.6841: then the price may fall down to the level of 0.6539.

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D1
On the daily chart, there is a formation of a Double Bottom price pattern. An additional signal for a reversal may be the formation of a large Bullish Candle above the support level of 0.6841, which is also a Bullish Belt Hold pattern. Next is the formation of another Bullish Belt Hold pattern, which is similar to the Piercing Pattern of the reversal at the bottom. In the current situation, it is possible to retest the level of 0.6841, from where the instrument may bounce to the resistance level of 0.7048, with its subsequent overcoming and the price recovering to the zone of 0.7270–0.7581.

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Support levels: 0.6841, 0.6693, 0.6539 | Resistance levels: 0.7048, 0.7270, 0.7581

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NZD USD - New Zealand dollar remains under pressure
The New Zealand dollar is actively falling during morning trading, testing the level of 0.6265 for a breakdown. NZD USD is updating local lows from June 16, reacting to the recovery in demand for the "safe" US dollar, as well as to the aggravation of the geopolitical situation after the Lithuanian authorities announced restrictions on the transit of Russian goods to the territory of Kaliningrad.

Additional pressure on the positions of the trading instrument was exerted by rather weak macroeconomic statistics from New Zealand. Westpac Consumer Survey in Q2 2022 fell from 92.1 to 78.7 points, while analysts expected it to rise to 100 points. Global Dairy Trade index declined 1.3% after gaining 1.5% in the prior period, with only a 0.1% downward correction forecast. The volume of Exports from New Zealand in May rose from 6.16 billion to 6.95 billion dollars; however, against the backdrop of an increase in imports from 5.72 billion to 6.69 billion dollars, the trade deficit in May only increased from –9.29 billion to –9.52 billion dollars.

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Resistance levels: 0.63, 0.635, 0.64, 0.645 | Support levels: 0.6244, 0.62, 0.6156, 0.61

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GBP USD - rising inflation in the UK puts pressure on the pound
This week, the GBP USD pair attempted to grow, having risen to the area of 1.2323, but today it has lost its position due to the release of negative UK macroeconomic statistics.

The May CPI was 0.7% MoM, slightly higher than the forecast (0.6%), and reached 9.1% YoY, which is a forty-year high. Fuel and food prices increased the most, while the population's purchasing power is declining. Last week, the Bank of England raised interest rates for the fifth time in a row, bringing them to 1.25% but so far, these actions have not had the desired effect. Inflation is increasing and, according to experts, by November, it will be able to exceed 11%, while the tightening of monetary policy increases the risks of a recession.

Under these conditions, the US currency looks more attractive, although the economic downturn due to the β€œhawkish” monetary policy of the US Federal Reserve also threatens this country. Today, the head of the regulator, Jerome Powell, will address the US Congress with a semi-annual report in which he can outline his vision of the immediate economic prospects and further actions of the department.

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Resistance levels: 1.2450, 1.2695, 1.2940 | Support levels: 1.2207, 1.1962, 1.1718
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GBPUSD - UK inflation hits 40-year high
The British pound is trading with multidirectional dynamics against the US currency, consolidating near the level of 1.2260. The day before, GBP/USD also closed with a minimal deviation from the opening levels of the daily session.

Investors are evaluating macroeconomic data from the Office for National Statistics, released yesterday, which reflected an increase in consumer price growth in May: the figure reached 9.1%, which is a record since 1982. The negative dynamics is due to the rapid increase in tariffs for electricity and raw materials in general, which have set a high since 1985, adding 22.1% to the cost against the background of the escalation of the military conflict in Ukraine. At the same time, the monthly inflation rate slowed down from 2.5% to 0.7%, and the Core CPI for the same period decreased from 6.2% to 5.9%, which turned out to be even slightly better than market forecasts of a reduction to 6.0%. In turn, the Retail Price Index in May showed an increase of 11.7%, accelerating from 11.1%, while the forecasts suggested an increase of only up to 11.4%; on a monthly basis, the indicator slowed down from 3.4% to 0.7%, while the market expected a decline to 0.5%. At the same time, according to officials of the Bank of England, consumer price growth may reach 11% by October, exacerbating the crisis in the cost of living for British families. An increase in the interest rate for the fifth time in a row to 1.25% has not yet had the desired effect on the economy, only increasing the risks of a recession. In turn, inflation, taking into account the costs of homeowners for housing maintenance, increased to 7.9% from 7.8% a month earlier.

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Today, investors are waiting for the publication of statistics on business activity from S&P Global for June. Forecasts suggest that Manufacturing PMI will show a decrease from 54.6 to 53.7 points.

Resistance levels: 1.2328, 1.2400, 1.2457, 1.25 | Support levels: 1.2250, 1.2163, 1.2074, 1.2

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USD TRY - The lira consolidates near record lows
Experts believe that the rapid weakening of the lira is the result of President Recep Tayyip Erdogan's intervention in monetary policy, who insists on lowering interest rates even in the face of rapid inflation, which reached 73.5% in May. So, at the end of 2021, the rate was corrected from 19% to 14%, and, according to the country's leader, this policy will continue soon. It is a powerful driver of the decline of the national currency, the rate of which at the beginning of the week reached the December minimum around 17.3600. Today, the Central Bank of Turkey will announce a decision on the weekly repo auction rate, which has not changed since December 2021. The prospects for monetary policy remain uncertain: it is obvious that a sharp increase in the interest rate should not be expected, while the current measures to combat rising inflation are not enough. Also, rapidly declining foreign exchange reserves are putting pressure on the authorities: last week, they adjusted by 1B dollars and now stand at 7B dollars, forcing the authorities to swap with Saudi Arabia.

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Yesterday, at the opening of the daytime session, the US dollar showed an active decline but then quickly regained all lost ground with the support of the speech of the head of the US Federal Reserve, Jerome Powell, in the national Congress, which confirmed the regulator's commitment to the course of further tightening of monetary policy. At the same time, the official did not touch upon the topic of a possible economic recession, which still serves as a strong deterrent for the national currency.

Resistance levels: 17.4, 17.6, 17.75 - Support levels: 17.1, 17, 16.75, 16.6

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Amazon - The price may grow
On the daily chart, the third wave of the higher level (3) formed, and a downward correction developed as the fourth wave (4). Now, the formation of the fifth wave (5) has started, within which the first entry wave of the lower level i of 1 of (5) has formed, and a local correction has ended as the wave ii of 1.Β 

If the assumption is correct, the price of the asset will grow to the levels of 171.15–188.15. In this scenario, critical stop loss level is 101.

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AUD USD - the instrument is consolidating around 0.69
The Australian dollar shows corrective growth, winning back the losses of the previous two "bearish" sessions. The instrument is again testing the level of 0.6900 for a breakout, receiving support from the growth of corrective moods in the US currency. Investors are in a hurry to fix their profits, and also react to the publication of rather weak macroeconomic statistics from the US.

The data released the day before by S&P Global pointed to a drop in the index of business activity in the US Services sector from 53.4 to 51.6 points, while analysts had expected growth to 53.5 points. The Manufacturing PMI fell sharply from 57.0 to 52.4 points, which also turned out to be significantly worse than the market's expectations of a reduction to 56.0 points. The Composite PMI in June corrected from 53.6 to 51.2 points, while the forecast was at the level of 53.7 points.

Additional pressure on the markets yesterday was exerted by the speech of US Federal Reserve Chairman Jerome Powell in the US Senate, where the official again noted significant risks of expanding inflationary pressure within the country, recognizing the possibility of a recession due to the regulator's "hawkish" position. At the same time, the Fed intends to further tighten monetary policy, trying to return the Consumer Price Index to the target level of 2%.

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In Australia, against the background of a lack of energy obtained with the help of solar panels and wind generators, a fuel crisis is rapidly developing. Last week, the Australian Energy Market Operator (AEMO) announced it was suspending market and capping wholesale electricity prices until June 23 due to the impossibility of uninterrupted supplies to consumers. Due to the existing deficit, local companies had to buy oil and gas in the spot markets, which contributed to a sharp increase in costs. The government is ready to return to coal-fired infrastructure, as Australian Resources Minister Madeleine King said earlier, noting that the resumption of such enterprises will provide an additional 30% of energy capacity and improve the situation with the energy supply on the east coast.

Resistance levels: 0.695, 0.7, 0.705, 0.71 | Support levels: 0.69, 0.6849, 0.68, 0.675
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USD CAD - Technical analysis
Β 
H4
On the four-hour chart, in the range of 1.2873–1.3082, there is a long-term consolidation of the asset. A confirmation of the development of the "bullish" impetus is the formation of the Morning Star model at the support level of 1.2873, and the formation of the Hammer candlestick analysis reversal pattern at 1.2933 may serve as the next signal for a possible early start of an upward movement. The combination of these models suggests that buyers are actively strengthening their positions, preventing sellers from dropping the price below the important level of 1.2873. In this situation, a scenario with an uptrend to the resistance level of 1.3082 seems likely, and consolidation above it will allow the "bulls" to move into the range of 1.3419–1.3704. An alternative scenario is possible if the "bears" overcome the level of 1.2873: then the price may drop to the zone of 1.2472–1.2074.
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D1
On the daily chart, a potential trend continuation price pattern Bull Flag is forming. This was initiated by the formation of the Three Advancing White Soldiers candlestick pattern at 1.2472. At the moment, the uptrend continuation model Rising Three Methods at the level of 1.2933 has been indicated on the chart. Most likely, the asset will head higher to the resistance zone 1.3082–1.3704.
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Support levels: 1.2873, 1.2472, 1.2074 |Β Resistance levels: 1.3082, 1.3419, 1.3704
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AUD USD - the instrument is consolidating around 0.69
The Australian dollar shows corrective growth, winning back the losses of the previous two "bearish" sessions. The instrument is again testing the level of 0.6900 for a breakout, receiving support from the growth of corrective moods in the US currency. Investors are in a hurry to fix their profits, and also react to the publication of rather weak macroeconomic statistics from the US.

The data released the day before by S&P Global pointed to a drop in the index of business activity in the US Services sector from 53.4 to 51.6 points, while analysts had expected growth to 53.5 points. The Manufacturing PMI fell sharply from 57.0 to 52.4 points, which also turned out to be significantly worse than the market's expectations of a reduction to 56.0 points. The Composite PMI in June corrected from 53.6 to 51.2 points, while the forecast was at the level of 53.7 points.

Additional pressure on the markets yesterday was exerted by the speech of US Federal Reserve Chairman Jerome Powell in the US Senate, where the official again noted significant risks of expanding inflationary pressure within the country, recognizing the possibility of a recession due to the regulator's "hawkish" position. At the same time, the Fed intends to further tighten monetary policy, trying to return the Consumer Price Index to the target level of 2%.

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In Australia, against the background of a lack of energy obtained with the help of solar panels and wind generators, a fuel crisis is rapidly developing. Last week, the Australian Energy Market Operator (AEMO) announced it was suspending market and capping wholesale electricity prices until June 23 due to the impossibility of uninterrupted supplies to consumers. Due to the existing deficit, local companies had to buy oil and gas in the spot markets, which contributed to a sharp increase in costs. The government is ready to return to coal-fired infrastructure, as Australian Resources Minister Madeleine King said earlier, noting that the resumption of such enterprises will provide an additional 30% of energy capacity and improve the situation with the energy supply on the east coast.

Resistance levels: 0.695, 0.7, 0.705, 0.71 | Support levels: 0.69, 0.6849, 0.68, 0.675

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USD CHF -The US dollar remains under pressure
The US dollar shows a weak corrective growth, trying to recover from a moderate decline for almost the entire week. USD CHF is testing 0.96 for a breakout, remaining close to the local lows of June 3. The pressure on the positions of the US currency remains against the backdrop of the publication of weak macroeconomic statistics from the US the day before, which reflected a quite expected drop in business activity in the Manufacturing and Services sector in June, which turned out to be noticeably worse than analysts' expectations. At the same time, the Initial Jobless Claims for the week ended June 17 showed a slight decrease from 231K to 229K, which was only slightly higher than the expected 227K.

According to a study by The Wall Street Journal, 44% of experts assess the rapid decline of the US economy over the next year as the most likely scenario against the backdrop of current inflation, which has reached a 40-year high. In January, a similar poll showed a result of 18%. Among the main reasons for a possible recession are problems in supply chains, the rapid rise in prices for raw materials, as well as geopolitical tensions caused by the escalation of the military conflict in Ukraine. The negative scenario was also confirmed by Cleveland Fed President Loretta Mester, who noted that the return of the Consumer Price Index to the target level of 2.0% would be a slow process.

Today, investors will focus on statistics from the US on the dynamics of New Home Sales in May, as well as the Michigan Consumer Sentiment Index for June. No noteworthy statistics are expected in Switzerland today, but market participants are closely following the ongoing EU summit, which, among other things, discusses new measures of pressure on Russia in connection with a special military operation in Ukraine.

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On the D1 chart Bollinger Bands are reversing into the descending plane. The price range is expanding, while remaining spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, being in the oversold area, is trying to reverse upwards, which can be interpreted as a signal to corrective growth of USD in the ultra-short term.

Resistance levels: 0.9618, 0.97, 0.9762, 0.9847 | Support levels: 0.954, 0.9459, 0.94, 0.93

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