Fed’s out, ECB’s and BoJ’s turn.

The Fed yesterday decided to remain on hold as was widely anticipated. Furthermore, Fed Chair Powell re-iterated on numerous occasions that despite remaining on hold, this does not mean that the Fed is done with hiking interest rates. Hence leaving the door open for future rate hikes, as the median target rate is now revised upwards by 0.5%, it may imply that the Fed may hike two more times by the end of the year with rate cuts being “a few years out”. Interestingly, the Dot plot moved higher following yesterday’s FOMC interest rate decision, with Fed policymakers now anticipating the Fed’s terminal rate to be higher as was previously mentioned with the median rate by the end of the year now being 5.6% compared to March’s meeting, at which it was 5.1%. In Today’s European session, market attention may likely turn to the ECB who is widely anticipated to hike interest rates by 25-basis points, during their monetary policy meeting due on later today. Furthermore, we note that Germany and the Eurozone area are still in a technical recession, with traders now worrying that should the ECB continue on its aggressive rate hiking path, it may lead to more Eurozone economies entering a technical recession. During Tomorrow’s Asian session, traders will likely be switching their attention to the BOJ’s interest rate decision, where despite BOJ Governor Ueda constantly re-iterating the bank’s commitment to its ultra loose monetary policy, the Governments fiscal policy which is due to be released tomorrow, may underscore the bank’s commitment to maintaining its current monetary policy. In the US equities markets, we note that Google (#GOOG) is being sued the EU Competition Committee to be potentially in breach of Article 102 which “prohibits abusive behaviour by dominant undertakings in any given market”, where should Google be found guilty, it may open the door for Google’s ad revenue business in the Eurozone being broken up in order to encourage greater competition.

USD/JPY appears to be moving in an upwards fashion, having broken above resistance now turned support at 140.80 (S1). As such, we maintain a bullish outlook for the pair, as long as the price action remains above support at 140.80 (S1) and supporting our case is the RSI indicator below our 4-Hour chart, currently registering a figure near 70, implying a strong bullish market sentiment. For our bullish outlook to continue, we would like to see a clear break above resistance at the 142.75 (R1) level with the next potential target for the bulls being the 145.10 (R2) resistance ceiling. On the other hand, for a bearish outlook, we would like to see a clear break below support at the 140.80 (S1) level with the next potential target for the bears being the 138.70 (S2) support base.

EUR/USD continues to be moving in an upwards fashion despite failing to break resistance at 1.0855 (R1) , as it continues to validate our upwards moving trendline which was incepted on the 7   of June. As such, we maintain a bullish outlook for the pair and supporting our case is the RSI indicator below our 4-Hour chart which currently registers a figure above the reading of 50, implying a bullish market sentiment. For our bullish outlook to continue, we would like to see a clear break above resistance at 1.0855 (R1) with the next possible target for the bulls being the 1.1000 (R2) resistance level. On the other hand, for a bearish outlook we would like to see a clear break below support at 1.0695 (S1) with the next possible target for the bears being the 1.0525 (S2) support base.

Autres faits marquants de la journée :

Today we note the release of France’s final HICP rate for May, Turkey’s Net FX reserves, US NY Fed manufacturing index for June, Philly Fed business index for the same month, weekly initial jobless claims figure, May’s industrial production and we highlight the retail sales growth rate for May. In tomorrow’s Asian session, besides BoJ’s interest rate decision, we also note the release of Japan’s Chain Store sales for May. 

Graphique de l’EUR/USD H4

Support: 1.0695 (S1), 1.0525 (S2), 1.0370 (S3)

Resistance: 1.0855 (R1), 1.1000 (R2), 1.1140 (R3)

Graphique de l’USD/JPY H4

Support: 140.80 (S1), 138.70 (S2), 136.60 (S3)

Resistance: 142.75 (R1), 145.10 (R2), 147.30 (R3)

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