France enters long political week

The common currency jumped in today’s Asian session against the USD, the GBP and the JPY, in a sign of wider strength for the EUR. The results of the first round of the French elections brought the far right in the driver’s seat,  yet the market may have been prepared for Marine Le Pen’s party to win the first round by a wider margin and given that it was not realized the single currency, was allowed to rise. We expect political uncertainty to be maintained in France which under certain circumstances may have an adverse effect on the EUR. Further more, we highlight the release of Germany’s preliminary HICP rates for June and a possible deceleration of the rate for the past month could enhance market expectations for the ECB to proceed with two more rate cuts this year and thus weigh on the common currency.   

EUR/USD jumped during today’s Asian session, breaking the 1.0740 (S1) resistance line, now turned to support. The pair’s bullish tendencies seem to be emerging, while at the same time we note that the RSI indicator has reached the reading of 50, implying that any bearish sentiment has faded away. Should the bulls maintain control over the pair, we may see EUR/USD aiming if not breaking the 1.0890 (R1) resistance line. On the flip side should the bears take over, we may see the pair breaking the 1.0740 (S1) support line and setting in its sights the 1.0615 (S2) support level. 

Aussie traders on the other hand, are expected to keep a close eye on the release of RBA’s last meeting minutes during tomorrow’s  Asian session. Should the bank’s minutes show that RBA policymakers maintain a strong, confident, hawkish stance, we may see the Aussie getting some support.  

AUD/USD edged higher on Friday, yet overall the movement of the pair does not seem willing to escape the boundaries set by the 0.6715 (R1) resistance line and the 0.6575 (S1) support line. We tend to maintain our bias for the sideways motion to continue between the prementioned levels. The Bollinger bands seem to have narrowed, implying lower volatility that could allow the sideways movement to continue, while the RSI indicator despite slightly rising above the reading of 50 is still unconvincing regarding any bullish tendencies of the market. Should buyers dictate the pair’s direction, we may see it breaking the 0.6715 (R1) resistance line and aiming for the 0.6870 (R2) resistance level. Should a selling interest be expressed by the market, we may see the pair breaking the 0.6575 (S1) support line and aim for the 0.6445 (S2) support level.

Other highlights for the day

Today we note the release of the US the ISM manufacturing PMI figure for June and a possible rise of the indicator’s reading could provide some support for the USD, especially if it rises above the reading of 50, implying expansion of economic activity. On the monetary front we note today ECB President Christine Lagarde’s speech while during tomorrow’s Asian session RBA is to release the minutes of the June meeting.

As for the rest of the week

On Tuesday we get the Eurozone’s preliminary HICP rate for June, followed by Canada’s manufacturing PMI figure for June and the US JOLTS Job openings figure for May. On Wednesday, we get Australia’s building approvals figure and Retail sales rate both for May, Turkey’s CPI rate for June, the Eurozone’s final composite PMI figure, the UK final services PMI and the US ADP employment figure all for June and the US weekly initial jobless claims figure, Canada’s trade balance figure and the US factory orders rate both for May, the US ISM Non-Manufacturing PMI figure for June and later we get the Fed’s last meeting minutes. On Thursday, we get Germany’s industrial orders rate for May, Switzerland’s CPI rate for June. On Friday, we get Japan’s household spending rate and Germany’s Industrial order rate both for May. Furthermore, we get the UK’s Halifax house prices figure for June, Sweden’s GDP rate for May, the US Employment data for June and Canada’s employment data for June as well. Calendar follows

EUR/USD Daily Chart

• Support: 1.0740 (S1), 1.0615 (S2), 1.0450 (S3)
• Resistance: 1.0890 (R1), 1.1010 (R2), 1.1140 (R3)

AUD/USD Daily Chart

• Support: 0.6575 (S1), 0.6445 (S2), 0.6285 (S3)
• Resistance: 0.6715 (R1), 0.6870 (R2), 0.7030 (R3)

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