Market News Report - 16 June 2024
The euro and Japanese yen were the biggest losers in the past week, facing losses against several currencies exceeding 1%. Both markets declined based on their expected short and long-term outlooks.
The British pound also lost some ground recently, aligning with a few fundamentals. Of course, there are other interesting developments to observe to begin yet another week in the ever-liquid forex market.
Market Overview
Below is a brief technical and fundamental analysis breakdown for all major currencies.
US dollar (USD)
Short-term outlook: weak bearish.
Building on the prior week's Non-Farm Payrolls, the US dollar benefitted from positive inflation figures.
https://www.tradingview.com/x/EkJ2mr6Q/
Meanwhile, the Dixie or dollar index fooled many traders. It first broke the major resistance discussed last week, and just as it looked to test the previous support, it made a new high, breaking the resistance at 105.742.
So, the next resistance target is at 106.490, while the support lies far below at 104.257. In short, DXY looks more bullish than bearish.
Long-term outlook: weak bearish.
Despite the technicals, the long-term outlook is 'weak bearish.' This is based on the Fed keeping the interest rate unchanged last week and the potential for the central bank to cut it at least once this year. The latest inflation data also went against the greenback.
However, positive changes to upcoming news, such as retail sales, could strengthen the dollar.
Euro (EUR)
Short-term outlook: weak bearish.
The euro still feels the effects of the recent interest rate cut by the European Central Bank, along with negative inflation data.
https://www.tradingview.com/x/d5eWsCWO/
The euro closed the week by breaking two support levels, confirming this short-term outlook. So, we should expect this market to test the nearby support at 1.06494. Meanwhile, it is a considerable distance from the resistance at 1.08524. Thus, the euro is likelier to test the former than the latter.
Long-term outlook: weak bearish.
The long-term outlook remains the same from the last few weeks, thanks to worsening inflation, a poor Gross Domestic Product, and the rate cut. With no high-impact news to anticipate this coming week, the bias must be bearish until new significant changes occur.
British pound (GBP)
Short-term outlook: bearish.
The British pound suffered from lacklustre economic data concerning unemployment and Gross Domestic Product (GDP). Moreover, the Bank of England (BoE) has left the interest rate unchanged since November 2023 and asserted that they must be dovish for some time.
https://www.tradingview.com/x/3HEdsviu/
The technical analysis aligns with this outlook. GBP broke the recent support (at 1.26866) discussed in last week's report. There are multiple resistance points of reference after this level. However, the key one lies far ahead at 1.24457. Meanwhile, the critical support lies at 1.28606
Long-term outlook: bearish.
The new Bank of England's bank rate (or interest rate) will be the most anticipated event happening on Thursday. The consensus is for the central bank to keep the rate unchanged or potentially cut it.
Still, we should expect surprises, such as the upcoming year-on-year inflation data the day prior, where the BoE remains confident of reaching its target.
Japanese yen (JPY)
Short-term outlook: weak bullish.
While the Bank of Japan kept interest rates unchanged last week, STIR (short-term interest rate) markets indicate a rate hike next month. Lower US Treasury yields, which usually offer a bullish JPY, would also be a catalyst.
https://www.tradingview.com/x/BP39ltAy/
Despite this outlook, the Japanese yen was technically among the biggest losers. Having breached the recent key resistance, all eyes will be on the next target at 160.233. This is significant as it would be an all-time high and a 'line in the sand' for the Bank of Japan.
On the other hand, the key support is far below at 154.546.
Long-term outlook: weak bullish
As with the short term, the anticipated rate hike would provide JPY with an upside. Additionally, it would also be declining Treasury yields. Finally, any intervention or active involvement of Japan's Ministry of Finance through selling the dollar to buy the yen is also worth considering.
Australian dollar (AUD)
Short-term outlook: weak bullish.
The interest rate linked to the Aussie has remained at 4.35% since November last year. Furthermore, the Reserve Bank of Australia (RBA) has revised its inflation forecasts higher.
The Australian dollar shares an interesting correlation with China. Data indicating growth in this region (stimulus, new infrastructure projects, solid economic data, etc.) should boost the former.
https://www.tradingview.com/x/8jYtGR2X/
Technically, things are pretty interesting for the Aussie. We see a range amid an uptrend, along with a false break at last week's key resistance area (then 0.66986). The new support to watch is now 0.67043, while the key support lies not far below at 0.65580.
Long-term outlook: weak bullish.
Aussie traders will have keenly diarised the RBA interest rate on Tuesday. The central bank will likely keep the rate unchanged or raise it, which would benefit the currency. Still, the Australian dollar is exposed to slow economic growth in other countries.
New Zealand dollar (NZD)
Short-term outlook: weak bullish.
The Reserve Bank of New Zealand (RBNZ) is very much like the neighbouring RBA. While keeping rates the same, Governor Orr indicated a hike almost occurred. They also hinted last month that a rate hike would only "be meaningful if we thought inflation expectations were getting away on us again."
Like other central banks, the RBNZ is battling inflation and seeks to keep it at 2%.
https://www.tradingview.com/x/ezIblPbv/
It comes as no surprise that NZD mirrors the price action of AUD. This market also produced a false break at last week's support level (then 0.62155). The new key resistance level is now 0.62220, while 0.60888 is the key support.
Long-term outlook: weak bullish.
The hawkish stance suggested by the RBNZ is the key bullish catalyst. However, incoming data regarding the economy and labour will also play a role. Furthermore, the New Zealand dollar is also a risk-sensitive currency like the Aussie, which can also be detrimental.
Canadian dollar (CAD)
Short-term outlook: bearish.
After the recent rate cut two weeks ago, STIR markets show a 50/50 chance of the same next month. The Bank of Canada has also confirmed a dovish path.
https://www.tradingview.com/x/0RwsEgYC/
USD/CAD spanned almost the range between last week's key support and resistance areas. So, really, this market can go either way. The key support is at 1.36630, while the key resistance is at 1.37919.
Long-term outlook: bearish.
Besides the expected rate drops, the Canadian dollar is often sensitive to oil prices.
However, any rise in the latter regard can strengthen CAD, along with upcoming positive inflation, jobs and GDP data.
Swiss franc (CHF)
Short-term outlook: weak bearish.
STIR markets see a 76% chance of the Swiss National Bank cutting rates on Thursday. Furthermore, the chairperson Thomas Jordan recently hinted at intervention, where they would sell currencies like the US dollar and euro to strengthen their own.
https://www.tradingview.com/x/dzV2vo8l/
Surprisingly, USD/CHF hovers quite close to the key support at 0.88810 while being a considerable distance from the key resistance at 0.91582.
Long-term outlook: weak bearish.
Although high chances of a rate cut are bad news for the Swiss franc, SNB's willingness for intervention and geo-political risks may spell an upside for the currency.
Conclusion
The fundamental biases from last week's report remain the same for the current period. It will be interesting to see how the action unfolds on the charts, with high-impact news events to anticipate, like the interest rate decisions for GDP and AUD.
Understanding the fundamental and technical sides of trading in the simplest way possible is crucial in making well-informed decisions. That's the point of these reports by City Traders Imperium.
The British pound also lost some ground recently, aligning with a few fundamentals. Of course, there are other interesting developments to observe to begin yet another week in the ever-liquid forex market.
Market Overview
Below is a brief technical and fundamental analysis breakdown for all major currencies.
US dollar (USD)
Short-term outlook: weak bearish.
Building on the prior week's Non-Farm Payrolls, the US dollar benefitted from positive inflation figures.
https://www.tradingview.com/x/EkJ2mr6Q/
Meanwhile, the Dixie or dollar index fooled many traders. It first broke the major resistance discussed last week, and just as it looked to test the previous support, it made a new high, breaking the resistance at 105.742.
So, the next resistance target is at 106.490, while the support lies far below at 104.257. In short, DXY looks more bullish than bearish.
Long-term outlook: weak bearish.
Despite the technicals, the long-term outlook is 'weak bearish.' This is based on the Fed keeping the interest rate unchanged last week and the potential for the central bank to cut it at least once this year. The latest inflation data also went against the greenback.
However, positive changes to upcoming news, such as retail sales, could strengthen the dollar.
Euro (EUR)
Short-term outlook: weak bearish.
The euro still feels the effects of the recent interest rate cut by the European Central Bank, along with negative inflation data.
https://www.tradingview.com/x/d5eWsCWO/
The euro closed the week by breaking two support levels, confirming this short-term outlook. So, we should expect this market to test the nearby support at 1.06494. Meanwhile, it is a considerable distance from the resistance at 1.08524. Thus, the euro is likelier to test the former than the latter.
Long-term outlook: weak bearish.
The long-term outlook remains the same from the last few weeks, thanks to worsening inflation, a poor Gross Domestic Product, and the rate cut. With no high-impact news to anticipate this coming week, the bias must be bearish until new significant changes occur.
British pound (GBP)
Short-term outlook: bearish.
The British pound suffered from lacklustre economic data concerning unemployment and Gross Domestic Product (GDP). Moreover, the Bank of England (BoE) has left the interest rate unchanged since November 2023 and asserted that they must be dovish for some time.
https://www.tradingview.com/x/3HEdsviu/
The technical analysis aligns with this outlook. GBP broke the recent support (at 1.26866) discussed in last week's report. There are multiple resistance points of reference after this level. However, the key one lies far ahead at 1.24457. Meanwhile, the critical support lies at 1.28606
Long-term outlook: bearish.
The new Bank of England's bank rate (or interest rate) will be the most anticipated event happening on Thursday. The consensus is for the central bank to keep the rate unchanged or potentially cut it.
Still, we should expect surprises, such as the upcoming year-on-year inflation data the day prior, where the BoE remains confident of reaching its target.
Japanese yen (JPY)
Short-term outlook: weak bullish.
While the Bank of Japan kept interest rates unchanged last week, STIR (short-term interest rate) markets indicate a rate hike next month. Lower US Treasury yields, which usually offer a bullish JPY, would also be a catalyst.
https://www.tradingview.com/x/BP39ltAy/
Despite this outlook, the Japanese yen was technically among the biggest losers. Having breached the recent key resistance, all eyes will be on the next target at 160.233. This is significant as it would be an all-time high and a 'line in the sand' for the Bank of Japan.
On the other hand, the key support is far below at 154.546.
Long-term outlook: weak bullish
As with the short term, the anticipated rate hike would provide JPY with an upside. Additionally, it would also be declining Treasury yields. Finally, any intervention or active involvement of Japan's Ministry of Finance through selling the dollar to buy the yen is also worth considering.
Australian dollar (AUD)
Short-term outlook: weak bullish.
The interest rate linked to the Aussie has remained at 4.35% since November last year. Furthermore, the Reserve Bank of Australia (RBA) has revised its inflation forecasts higher.
The Australian dollar shares an interesting correlation with China. Data indicating growth in this region (stimulus, new infrastructure projects, solid economic data, etc.) should boost the former.
https://www.tradingview.com/x/8jYtGR2X/
Technically, things are pretty interesting for the Aussie. We see a range amid an uptrend, along with a false break at last week's key resistance area (then 0.66986). The new support to watch is now 0.67043, while the key support lies not far below at 0.65580.
Long-term outlook: weak bullish.
Aussie traders will have keenly diarised the RBA interest rate on Tuesday. The central bank will likely keep the rate unchanged or raise it, which would benefit the currency. Still, the Australian dollar is exposed to slow economic growth in other countries.
New Zealand dollar (NZD)
Short-term outlook: weak bullish.
The Reserve Bank of New Zealand (RBNZ) is very much like the neighbouring RBA. While keeping rates the same, Governor Orr indicated a hike almost occurred. They also hinted last month that a rate hike would only "be meaningful if we thought inflation expectations were getting away on us again."
Like other central banks, the RBNZ is battling inflation and seeks to keep it at 2%.
https://www.tradingview.com/x/ezIblPbv/
It comes as no surprise that NZD mirrors the price action of AUD. This market also produced a false break at last week's support level (then 0.62155). The new key resistance level is now 0.62220, while 0.60888 is the key support.
Long-term outlook: weak bullish.
The hawkish stance suggested by the RBNZ is the key bullish catalyst. However, incoming data regarding the economy and labour will also play a role. Furthermore, the New Zealand dollar is also a risk-sensitive currency like the Aussie, which can also be detrimental.
Canadian dollar (CAD)
Short-term outlook: bearish.
After the recent rate cut two weeks ago, STIR markets show a 50/50 chance of the same next month. The Bank of Canada has also confirmed a dovish path.
https://www.tradingview.com/x/0RwsEgYC/
USD/CAD spanned almost the range between last week's key support and resistance areas. So, really, this market can go either way. The key support is at 1.36630, while the key resistance is at 1.37919.
Long-term outlook: bearish.
Besides the expected rate drops, the Canadian dollar is often sensitive to oil prices.
However, any rise in the latter regard can strengthen CAD, along with upcoming positive inflation, jobs and GDP data.
Swiss franc (CHF)
Short-term outlook: weak bearish.
STIR markets see a 76% chance of the Swiss National Bank cutting rates on Thursday. Furthermore, the chairperson Thomas Jordan recently hinted at intervention, where they would sell currencies like the US dollar and euro to strengthen their own.
https://www.tradingview.com/x/dzV2vo8l/
Surprisingly, USD/CHF hovers quite close to the key support at 0.88810 while being a considerable distance from the key resistance at 0.91582.
Long-term outlook: weak bearish.
Although high chances of a rate cut are bad news for the Swiss franc, SNB's willingness for intervention and geo-political risks may spell an upside for the currency.
Conclusion
The fundamental biases from last week's report remain the same for the current period. It will be interesting to see how the action unfolds on the charts, with high-impact news events to anticipate, like the interest rate decisions for GDP and AUD.
Understanding the fundamental and technical sides of trading in the simplest way possible is crucial in making well-informed decisions. That's the point of these reports by City Traders Imperium.
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citytradersimperium.com/
- Est. Since 2018.
- Up to 100% Profit Share.
- Balance Based Drawdown.
- 1-Step & 2-Step Funded Accounts.
citytradersimperium.com/
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