Daily Market Analysis from ForexMart

Euro has the potential to rise but it is not easy to reach

The Euro currency is trying to rise again, taking advantage of the weakening of the US currency. However, experts are worried that these efforts will end unsuccessfully.

Throughout the previous week, the euro was behind the dollar, which reacted sensitively to any nuances of the market. Such changes in the USD dynamics include the May report on US employment. It can be noted that the national currency started to slip after its publication, and the euro tried to take advantage of the situation, but it failed to noticeably rise. According to current macroeconomic data, the number of jobs outside of agriculture increased by 559 thousand last month in American, and the economy recorded an influx of workers. The improvement in the economic situation has been facilitated by health gains resulting from large-scale vaccination against COVID-19, and strong fiscal incentives. However, there is a question recently about their curtailment, which was raised by Fed representatives.

Economists believe that the euro's further dynamics will be influenced not only by the Fed's actions but also by the ECB's monetary policy strategy. They think that with the strengthening of the "hawkish" tone on the part of the regulator, the euro will start losing positions. If the representatives of the Governing Council of the ECB slow down the pace of buying up state bonds under the PEPP program, then the indicated currency will begin to decline.

The continuation of the current trend contributes to the growth of the EUR/USD pair. Its nearest target is the level of 1.2300. On the morning of, June 7, the main currency pair was trading near the 1.2163 mark, trying to reach 1.2200, but failed.

According to experts, the bullish mood in the EUR/USD pair may increase in the current situation, if a strong resistance level near the level of 1.2167 is broken. If so, the pair will open the way to the round level of 1.2200, and to 1.2212 and 1.2258 in the future. The next barrier for the EUR/USD pair will be the level of 1.2300, which can be reached anytime soon.

Gold price rises, eagerly awaiting Thursday's news

On Tuesday, the value of the main precious metal shows an increase amid expectations by market participants for inflation data in the United States.

Thus, the price of August gold futures on the Comex New York Stock Exchange increased by 0.1% - up to $1900.7 per troy ounce. Meanwhile, the July contract for silver slipped 0.24% to $27.95 an ounce.

Until the end of this week, market participants will evaluate the statistics on inflation in America, which will appear on Thursday. Analysts predict that consumer prices in the United States rose 4.7% on an annualized basis in the past month, following a 4.2% rise in April.

Against the background of the inflationary issue, investors are even more worried about the fate of gold. It is obvious that the tightening of monetary policy by the US Federal system will stimulate the strengthening of the dollar. In turn, a strong dollar has traditionally been an overwhelming factor for the value of gold, making it less attractive to holders of alternative currencies.

As for the results of trading on Monday, gold futures reported growth against the background of the weakening of the US dollar.

Thus, the US national currency fell against most major currencies, while the ICE US dollar index sank 0.2%.

As a result, August gold futures increased by 0.4% - to $1,898.80 per ounce, July silver contracts also increased by 0.4% - to $28.02 per ounce, which was the highest since Wednesday.

Simplified wave analysis and forecast for GBP/USD and AUD/USD on June 9

GBP/USD

Analysis:
The upward trend in the main pair of the British pound sets the direction of the trend since the spring of last year. A correction is formed in the wave structure. The price is located in the area of the intermediate resistance zone. The incomplete wave from May 10 has the form of a shifting plane. Its ascending section from June 4 has a reversal potential.

Forecast:
Today, the price of the pair expects a general lateral movement vector. After a likely attempt to put pressure on the resistance zone, you should wait for a reversal, and the price moves down to the lower border of the price corridor.

Potential reversal zones
Resistnce:
- 1.4200/1.4230
Support:
- 1.4100/1.4070

Recommendations:
Trading on the British pound market today is possible only in the framework of individual trading sessions with a reduced lot. Purchases of the pair are more promising.

AUD/USD

Analysis:
The chart has been dominated by bullish momentum since last year. Since February 25, the price has been forming a horizontal correction along the lower border of the strong resistance zone. The unfinished part of this wave has been reported since May 10. In its structure, the middle part is nearing completion.

Forecast:
In the first half of the day, you can expect a flat nature of the movement, with an upward vector. By the end of the day, in the area of the calculated resistance, there is a high probability of a reversal and the beginning of the price move down.

Potential reversal zones
Resistance:
- 0.7770/0.7800
Support:
- 0.7700/0.7600

Recommendations:
Trading on the Australian dollar market today can only be successful within the intraday. It is recommended to sell the instrument from the resistance zone.

American stock market closed in the red

Food manufacturer Campbell Soup Co. in the 3rd quarter of 2021 fiscal years, which ended on May 2, reduced net profit and revenue, and also worsened the annual forecast. On this news, the company's share price fell 6.5%.

The world's largest express delivery service United Parcel Service said it expects to increase its annual revenues to $ 98-102 billion by 2023. Last year, UPS revenues were $ 84.6 billion. According to FactSet's forecast, in 2021 it will reach $ 93.68 billion. , in 2023 will reach $ 99.92 billion. Nevertheless, the company's shares fell by 4.2%.

Wendy's Co., the third largest fast food chain in the United States, plunged 12.7% after jumping nearly 30% a day earlier. Stifel analysts downgraded their recommendations to Hold from Buy.

Target Corp. lost 1.3% in a day, despite the fact that the retailer announced an increase in quarterly dividends by almost a third, to 90 cents per share.

Caterpillar, one of the world's leading manufacturers of road construction and mining equipment, also increased its quarterly dividend by 8% to $ 1.11 per share. However, the shares of this company also fell in price by the results of the session by 2.3%.

Regeneron Pharmaceuticals Inc. was the leader of the recovery among the companies whose stocks are included in the calculation of the S&P 500. (+ 3.1%), Fox Corp. (+ 2.9%), Biogen Inc. (+ 2.9%).

The most significant rise in quotations among the securities included in the Dow Jones was shown by Merck & Co. Inc. (+ 2.3%), Johnson & Johnson (+ 1.4%) and Amgen Inc. (+ 1.1%).

At the same time, the strongest decline in value was recorded in the securities of Travelers Cos. (-1.2%), American Express Co. (-1.5%) and JPMorgan Chase & Co. (-1.3%).

The US Federal Reserve has previously said inflationary pressures are temporary as the economy continues to recover from the crisis caused by the COVID-19 pandemic. However, the acceleration in the rate of rise in consumer prices is causing concern for analysts and traders.

As a result, the market continues to trade in a fairly narrow range in anticipation of inflation data, while the indices remain close to record levels.

Simplified wave analysis and forecast for USD/JPY and AUD/USD on June 14

AUD/USD

Analysis:
A bullish trend dominates the Australian dollar major market. A correction has been developing along the lower border of the strong reversal zone since February. The unfinished section counts down from May 10. In the structure of this wave, the middle part is nearing completion in the form of shifting planes.

Forecast:
Today, the pair's price is expected to flat in the price corridor between the nearest counter zones. After an attempt to put pressure on the support, a reversal and an increase in the rate to the resistance area is likely.

Potential reversal zones
Resistance:
- 0.7750/0.7780
Support:
- 0.7690/0.7660

Recommendations:
Today, trading on the pair's market is only possible in separate sessions with a fractional lot. As a result, purchases of the pair are more promising.

USD/JPY

Analysis:
The ascending wave sets the direction of the short-term trend of the main pair of the Japanese yen from January 6. A stretched descending plane has been forming in its structure since the beginning of March. All price movements of the last two months do not go beyond this wave.

Forecast:
On the next day, the full completion of the upward movement vector, the formation of a reversal, and the beginning of the price move down are expected. The calculated support shows the lower limit of the expected daily course of the pair.

Potential reversal zones
Resistance:
- 109.80/110.10
Support:
- 109.30/109.00

Recommendations:
Trading the yen today is possible within the intraday, with a reduced lot. There are no conditions for purchases on the market. It is recommended to track sell signals in the area of the calculated resistance.

Stock Asia is trading without a single dynamic

As a result of the next meeting of the leadership of the American Central Bank, in addition to the traditional statement on the rate and volume of asset redemption, economic forecasts will be published, as well as expectations regarding further dynamics of interest rates.

Experts believe that the Fed will not give signals about plans to gradually reduce the volume of redemption of bonds earlier than in August-September this year.

At the same time, a dot plot - that is, a chart that reflects the individual expectations of the Fed's Board of Governors and the heads of the Federal Reserve Banks regarding interest rates - could show that all 18 central bank leaders expect at least one rate hike in 2023.

According to Marcella Chow, global markets strategist at JPMorgan Asset Management, at some point ignoring inflation concerns will no longer convince investors, so the focus will be on what the Fed says about its expectations for economic growth, inflation and interest rates.

The Japanese Nikkei 225 Index climbed 1.01% by 8:37 GMT + 2.

Among the leaders of the increase in quotations are shares of Eisai Co. (+ 6.2%), NEC Corp. (+ 4.9%) and Taiyo Yuden Co. (+ 3.9%).

Market value of consumer electronics manufacturer Sony Group Corp. growing 1.4%, semiconductor manufacturer Advantest Corp. rises by 1.8%.

The leaders of the decline are J. Front Retailing Co. (-2.9%), Kajima Corp. (-2.6%) and IHI Corp. (-2.4%).

The price of securities investment and technology SoftBank Group Corp. fell 0.2%, Asia's largest apparel retailer Fast Retailing Co. decreased by 0.2%.

The Chinese Shanghai Composite Index dropped 0.75% by 8:42 GMT + 2, while Hong Kong's Hang Seng lost 0.71%.

The most significant losses during trading on the Hong Kong Stock Exchange were incurred by the shares of the restaurant chain Haidilao International Holding (-4.2%), the manufacturer of power tools Techtronic Industries Co. (-3.5%) and biologics manufacturer Wuxi Biologics (Cayman) Inc. (-3.2%).

Consumer electronics manufacturer Xiaomi Corp. down 0.4%, one of the key players in the PRC's Internet services Meituan fell 1.6%.

The leaders of growth were shares of the manufacturer of electric vehicles BYD Co. (+ 4.5%), which produces traditional cars Geely Automobile Holdings (+ 3.4%) and China Mengniu Dairy Co., the largest dairy producer in the country. (+ 2.5%).

Internet giants Tencent Holdings and Alibaba (NYSE: BABA) Group Holding gained 0.6%.

The South Korean Kospi index rose by 0.15% by 8:57 GMT + 2.

Capitalization of one of the world's largest chip manufacturers Samsung Electronics Co. increased by 0.4%, another industry representative SK Hynix Inc. rose 1.2%.

The price of shares of the automaker Hyundai Motor Co. dropped 0.2%, Kia Corp. practically do not change in price.

Australian indicator S & P / ASX 200 added 0.96% by 8:57 GMT + 2.

Representatives of the Reserve Bank of Australia (RBA) came to the conclusion that it is too early to consider the issue of curtailing the bond buyback program, according to the minutes of the June meeting of the Australian Central Bank.

As a result of the June meeting, the RBA kept the base interest rate at a record low level of 0.1% per annum, as most economists believed. At the same time, the leadership of the Central Bank confirmed its commitment to maintaining a super-soft monetary policy at least until 2024, when inflation is expected to return to the 2-3% range.

The market value of the world's largest mining companies BHP Group and Rio Tinto rose 0.6% and 1.5%, respectively.

Oil rises continuously on the back of the news from the USA and Europe

Today, the world oil market demonstrates steady growth following a spectacular rise in the past week and a general three-week increase against the background of an improvement in the global situation.

The main upward factor for the positive dynamics remains the prospects for demand for oil in developed countries, which is permanently increasing due to high rates of vaccination and the lifting of restrictive measures.

Thus, US residents began to actively return to work, gather in companies and visit crowded places. In addition, the average daily air traffic in the United States, for the first time since the beginning of the COVID-19 pandemic, has stepped over the level of 2 million passengers.

According to the forecasts of the International Energy Agency, world oil demand will return to the dock level by the end of next year. This year, according to IEA experts, demand will grow by 5.4 million barrels per day - up to 96.4 million barrels per day, and in 2022 - by 3.1 million barrels per day.

In its Friday report, the agency said that OPEC and its allies must increase oil production to ensure the required level of supply in world markets.

At the same time, analysts cite multiple positive news from North America and Europe that are opening after the pandemic quarantines as the reason for the bright growth of the oil market over the past week.

At the time of writing this material, the oil market is showing the following indicators: the price of August Brent oil futures on the London ICE Futures Exchange was at $73.35 per barrel, exceeding the previous session's closing level by 0.91%.

The cost of July contracts for WTI crude oil on the New York Mercantile Exchange NYMEX increased by 0.78% - $71.46 per barrel.

The Fed's rhetoric caused BTC to "stumble". Is its failure a short-term phenomenon?

The first cryptocurrency did not stay away from the main event of the current week – the meeting of the Federal Open Market Committee (FOMC). However, the decisions taken by the regulator tripped bitcoin, which demonstrated a downward trend.

On the evening of Wednesday, June 16, the main digital asset fell to $38,100, but later regained some losses. On the morning of Thursday, June 17, the first cryptocurrency was trading near $39,200, losing 2.8% over the past day. The driver of the sharp decline in bitcoin was the results of the June meeting of the US Federal Reserve. Recall that the US regulator kept the key rate at the level of 0-0.25% per annum, and also left low interest rates until the moment when the level of employment and inflation will be near the target 2%. At the same time, the Federal Reserve extended the program of asset repurchases in the amount of $120 billion per month.

The publication of the Fed report contributed to a noticeable decline in the stock and cryptocurrency markets. To date, the capitalization of the digital asset market has decreased by 2%. Experts are afraid of further subsidence, although they record minor signs of stabilization. Experts note a long-term medium-term correction for bitcoin, which continues to increase. According to analysts, the crypto market has tested the lower limits of the long-term trend in the BTC (near the support level of $34,972) and continues to recover. On the morning of Thursday, June 17, the BTC/USD pair was trading near $39,197, trying to expand the boundaries of the current range.

The market for virtual cryptocurrencies has repeatedly tried to turn upward, acting within the short-term trend. According to experts, the possibility of breaking the upper limit of this range ($43,402) is quite achievable. However, the implementation of this plan is difficult at the moment, although in the near future it is possible.

EUR/USD. Fed woke up the dollar

Markets reacted to the FOMC meeting as if they were genuinely surprised by the shifting of the federal funds rate hike from 2024 to 2023. Did investors really believe that the Fed would turn a blind eye to rising inflation and remain the most peaceful central bank in the world? If so, they were in for a serious disappointment, resulting in a 1.8% collapse in the EUR/USD over the course of two trading days.

To prevent the recurrence of the 2013 taper tantrum, the Fed promised to inform in advance of all changes in monetary policy. In fact, the Central Bank has let its guard down, and the fact that rates may be raised twice in 2023 has become a real thunderbolt for investors. Short positions on the US dollar began to collapse en masse, which led to the fall of the EUR/USD to the base of the 19th figure. The confidence of the market majority that the main currency pair will soon reach the level of 1.25 is gone, and Nordea predicts a fall in the euro to $1.15 by the end of the year against the background of the outperforming dynamics of US inflation over European inflation.

In my opinion, what happened was what should have happened. The Fed could not look at inflation at the level of the 1990s indefinitely. Its previous passivity could be explained by disappointing statistics on American employment, but in the near future, the situation in the US labor market risks a serious change. Judging by the dynamics of vacancies, the gap between potential and actual employment will be filled quickly. If this does not happen, wages will increase dramatically. Both options are potentially bullish for the US dollar.

How can the euro respond to the US dollar? Because of the Fed, investors forgot that thanks to the accelerated vaccination in the EU, a boom in economic growth is expected in the eurozone in the second half of the year. That Brussels successfully sold the first bonds from the European Rescue Fund, while the demand at the auction was off the scale. That after the ECB meeting, the members of the Governing Council recalled that the emergency asset purchase program will end in March 2022. That next year, the currency bloc will surpass the United States in terms of GDP growth. I do not think that the "bulls" on EUR/USD will just throw a white flag.

The key events of the week to June 25 will be the speeches of Christine Lagarde and Jerome Powell, as well as the releases of data on European business activity, the German business climate, and American orders for durable goods. The market needs the dust from the shocks to settle, and then it will determine the direction of further movement.

Technically, only the return of EUR/USD quotes above 1.198 will revive the scenario of the transformation of the blue "Shark" to 5-0, followed by the continuation of the rally to the targets on the "Wolf Wave". With this option, purchases will become relevant. If it is not possible to catch on to 1.198, there is a scenario with the implementation of the target by 88.6% according to the model of the red "Shark". It is located near 1.175, so we use a sell strategy on pullbacks.

Analysis of transactions in the EUR / USD pair

A sell signal appeared in the market last Friday, but it had to be ignored because it came when the MACD line was at the oversold area. Nonetheless, it set off a strong bearish trend, where if traders had short positions, it was easy to earn around 30 pips of profit.

Trading recommendations for June 21

Pay attention to the upcoming economic reports from the ECB and Bundesbank. Positive projections will help euro rally, while weaker data will resume the decline in EUR / USD. Then, in the afternoon, the Federal Reserve will hold a press conference, where if they announce future changes on monetary policy, dollar will continue to rise, while pound will collapse further.

For long positions:

Open a long position when euro reaches 1.1876 (green line on the chart), and then take profit around the level of 1.1942. Any rise in EUR / USD is going to be seen as a good opportunity to sell, so be careful when setting up transactions. And before buying, make sure that the MACD line is above zero, or is starting to rise from it.

For short positions:

Open a short position when euro reaches 1.1840 (red line on the chart), and then take profit at the level of 1.1775. Pressure will continue on the pair, and the breakout of yesterday's lows will form a new wave of decline in the market. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.