EURUSD: potential for the upside
The favorite Fed's inflation gauge was the indicator closely watched during the previous week. As per published data on Friday, PCE Price Index in May was standing at 2.6% on a yearly basis, in line with market forecast. Core PCE was also standing at 2.6% in may on a yearly basis. Durable Goods Orders were increased by 0.1% in May, while the market was expecting to see a drop of -0.1% on a monthly basis. Final GDP Growth Rate for Q1 stands at 1.4% for the quarter, and without a change from the previous post. The US CB Consumer Confidence reached 100.4 in June, above market estimate of 100. New home sales in the US dropped by 11.3% on a monthly basis in May, indicating that this industry continues to be hit by increased interest rates. Michigan Consumer Sentiment final for June reached the level of 68.2, a bit higher from forecasted 65.8.
The Ifo Business Climate for June in Germany stands at 88.6, slightly below 89.7 expected by the market. GFK Consumer Confidence for July in Germany was -21.8, a bit higher from -18.9 estimated by the market. Unemployment rate in Germany reached 6% in June, which is 0.1 percentage points higher from May and also from market forecast.
There has been some modestly increased volatility during the previous week, in expectation of the PCE data. However, the currency pair sustained the 1.067 – 1.07 range. The highest – lowest levels reached during the week were 1.074 and 1.066. The long term support line at 1.067 has been tested during the week, however, without a strength to be breached, for the second week in a row. The RSI was oscillating around the level of 40, clearly indicating that traders are still waging which side to trade. Moving averages of 50 and 200 days continue to move as two parallel lines, without a clear sign of a potential cross in the future period.
For the last two weeks, the support line at 1.067 has been tested, but without market strength to break it to the downside. Such developments are increasing the probability for a short term reversal to the upside of the currency pair. In a week ahead, non-farm payrolls are set for a release as well as unemployment rate for June, which might bring some higher volatility to the markets, if posted figures are not the ones that the market is currently expecting to see. As per current charts, there is higher probability for a move toward levels above the 1.07 current short term resistance line, while there is lower probability that the 1.08 could be clearly tested. For a move below the 1.067 support line, charts are indicating quite a low probability.
Important news to watch during the week ahead are:
Euro: Germany Inflation Rate preliminary for June, EuroZone Inflation Rate flash for June, EuroZone Unemployment Rate in May,
USD: ISM Manufacturing PMI for June, Fed Chair Powell speech, ISM Services PMI for June, FOMC Minutes, Non-farm Payrolls for June, Unemployment Rate in June
The Ifo Business Climate for June in Germany stands at 88.6, slightly below 89.7 expected by the market. GFK Consumer Confidence for July in Germany was -21.8, a bit higher from -18.9 estimated by the market. Unemployment rate in Germany reached 6% in June, which is 0.1 percentage points higher from May and also from market forecast.
There has been some modestly increased volatility during the previous week, in expectation of the PCE data. However, the currency pair sustained the 1.067 – 1.07 range. The highest – lowest levels reached during the week were 1.074 and 1.066. The long term support line at 1.067 has been tested during the week, however, without a strength to be breached, for the second week in a row. The RSI was oscillating around the level of 40, clearly indicating that traders are still waging which side to trade. Moving averages of 50 and 200 days continue to move as two parallel lines, without a clear sign of a potential cross in the future period.
For the last two weeks, the support line at 1.067 has been tested, but without market strength to break it to the downside. Such developments are increasing the probability for a short term reversal to the upside of the currency pair. In a week ahead, non-farm payrolls are set for a release as well as unemployment rate for June, which might bring some higher volatility to the markets, if posted figures are not the ones that the market is currently expecting to see. As per current charts, there is higher probability for a move toward levels above the 1.07 current short term resistance line, while there is lower probability that the 1.08 could be clearly tested. For a move below the 1.067 support line, charts are indicating quite a low probability.
Important news to watch during the week ahead are:
Euro: Germany Inflation Rate preliminary for June, EuroZone Inflation Rate flash for June, EuroZone Unemployment Rate in May,
USD: ISM Manufacturing PMI for June, Fed Chair Powell speech, ISM Services PMI for June, FOMC Minutes, Non-farm Payrolls for June, Unemployment Rate in June
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