Fundamentals to be the key driver for the markets today

The USD continued to weaken in today’s Asian session, while gold’s price failed to benefit from it. On the other hand, US stock markets seem to be recovering some ground in the premarket hours. Across the pond, the common currency edged higher as US President Trump delayed the imposition of a 50% tariff on European products until the 9th of July. European equities tended to be on the rise today recovering Friday’s losses and stabilise. At the same time the US President’s relationship with Russian President Putin seems to be souring, which tends to beg the question whether new sanctions are to be applied on Russia, a scenario that could create some support for oil prices, yet at the same time may create hopes for a possible improvement of the EU-US relationships. Today we expect ECB President Christine Lagarde to capture EUR trader’s attention and should she sound more hawkish than market expectations, the common currency could get additional support. Other than that EUR trader may start preparing for the release of France’s preliminary HICP rate for May in tomorrow’s early European session and a possible acceleration could support the common currency.

On a technical level, EUR/USD is on the rise over the past week, aiming for the 1.1480 (R1) resistance line. Given that the RSI indicator below our 1-day chart is above the reading of 50 and rising, implying an increasingly bullish market sentiment for the pair, we expect the pair’s upward movement to continue. Should the bulls maintain control over the pair, we may see it breaking the 1.1480 (R1) resistance line and start aiming for the 1.1690 (R2) resistance level. For a bearish outlook to emerge, we would require the pair to break the 1.1210 (S1) support line and start aiming for the 1.0940 (S2) support level.

In the commodities front, WTI’s price action bounced on the 59.85 (S1) support line on Friday. The price action of WTI, despite some slight bearish tendencies over the past ten days seems to remain relatively stable. The RSI indicator is running along the reading of 50 and the Bollinger bands have narrowed with both indicators implying the possibility of a continuance of the sideways motion. Should bears take over, we may see WTI’s price breaking the 59.85 (S1) support line and continuing to aim for the 54.80 (S2) support level. For a bullish outlook we would require WTI’s price to rise above the 56.10 (R1) resistance line and start aiming of the 68.40 (R2) resistance level.

Other highlights for the day:

In tomorrow’s Asian session, we get Japan’s services PPI rate for April, other than that the calendar is pretty empty allowing for fundamentals to lead the market.

As for the rest of the week:

On Tuesday Germany’s forward-looking GfK consumer sentiment for June, France’s preliminary HICP rate, Euro Zone’s business climate and final consumer confidence for May, UK’s CBI distributive trades for May, the US durable goods orders for April and consumer confidence for May. On Wednesday, we get Australia’s CPI rates for April, from New Zealand RBNZ’s interest rate decision and France’s final GDP rate for Q1. On Thursday we get Australia’s capital expenditure for Q1, from the US the second GDP estimate for Q1 and the weekly initial jobless claims figure. On Friday we get from Japan Tokyo’s CPI rates for May and the preliminary industrial output for April, Australia’s retail sales for April, Sweden’s GDP rates for Q1, Switzerland’s KOF indicator for May, the Czech Republic’s final GDP rate for Q1, Germany’s preliminary HICP rates for May, from the US April’s PCE rates and final university of Michigan consumer sentiment, while from Canada we get the GDP rates for Q1.

EUR/USD Daily Chart

• Support: 1.1210 (S1), 1.0940 (S2), 1.0730 (S3)
• Resistance: 1.1480 (R1), 1.1690 (R2), 1.1905 (R3)

WTI Daily Chart

• Support: 59.85 (S1), 54.80 (S2), 51.40 (S3)
• Resistance: 64.10 (R1), 68.40 (R2), 72.20 (R3)

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