Riskier asset bulls take a breather

The USD tended to gain some ground against its counterparts on Friday as the bullish momentum for riskier assets such as commodity currencies and the US equities markets seems to have paused briefly. Yet we still view it as a bullish market and fundamentals including the recent visit of US Foreign Secretary Blinken to China, in an effort to mend the US-Sino relationships, allowed for some optimism to surface and fundamentals are expected to lead the way for the markets today. Should the developments continue to be on the positive side we may see riskier assets such as the Aussie getting some support. Yet Aussie traders besides the ongoing developments in the US-Sino relationships may keep an eye out also for the release of RBA’s June meeting minutes during tomorrow’s Asian session. 

AUD/USD corrected lower and during today’s Asian session tested the 0.6835 (S1) support line. Despite the correction lower we tend to maintain our bullish outlook as long as the upward trendline incepted since the 31^a. of May remains intact. Should the bulls maintain control over the pair we may see AUD/USD breaking the 0.6895 (R1) resistance line and aim for the 0.6960 (R2) level. Should the bears take over, we may see the pair reversing course, breaking the prementioned upward trendline as a first sign of an interruption of the upward movement, break the 0.6835 (S1) support line and aim for the 0.6770 (S2) support level.    

At this point we should note that on Friday the release of the preliminary University of Michigan indicators for June implied an unexpectedly optimistic average consumer in the US which could allow for more spending in the US economy. Overall, as the market restarts its engines we expect the next series of central banks’ interest rate decisions to garner interest among traders with UK’s BoE being under the spotlight yet also Turkey’s CBT may generate substantial interest as it is expected to reverse its loose monetary policy in a substantial pivot point towards more orthodox economic policies.  

EUR/USD maintained a tight range bound motion on Friday, without even nearing the 1.1000 (R1) resistance line and the 1.0855 (S1) support level. We tend to maintain our bias for the sideways motion to continue, yet the RSI indicator remains near the reading of 70 implying a rather bullish market sentiment for the pair. Should the pair find extensive buying orders along its path, we may see EUR/USD breaking the 1.1000 (R1) resistance line and aim for the 1.1175 (R2) level. Should a selling interest be expressed by the market we may see the pair dropping, breaking the 1.0855 (S1) support line and aim for the 1.0695 (S2) support level. 

Other highlights for the day:

In today’s European session we note the planned speeches of ECB’s Lane and Schnabel, while we also get from the UK Rightmove’s House price growth rate for June. In the American session, we get Canada’s May producer prices. During tomorrow’s Asian session, we get Japan’s revised industrial output for April.

As for the rest of the week:

On Wednesday we note the release of the UK’s CPI rates for May and the CBI trends for industrial orders for June, while from Canada we get April’s retail sales and from the Czech Republic CNB’s interest rate decision. On Thursday we get New Zealand’s GDP rate for May, the US weekly initial jobless claims figure and Eurozone’s preliminary consumer confidence for June, while on the monetary front we note Fed Chairman Powell’s testimony before Congress, the release of BoE’s interest rate decision, while also note from Switzerland SNB’s, from Turkey CBT’s and from Norway, Norgesbank’s interest rate decisions. On Friday we highlight the release of the preliminary June PMI figures of Australia, Japan, France, Germany, the Eurozone as a whole, the UK and the US, while we also note the release of Japan’s CPI rates for May and UK’s retail sales for April.

EUR/USD H4 Chart

Support: 1.0855 (S1), 1.0695 (S2), 1.0525 (S3)

Resistance: 1.1000 (R1), 1.1175 (R2), 1.1370 (R3)

AUD/USD H4 Chart

Support: 0.6835 (S1), 0.6770 (S2), 0.6700 (S3)

Resistance: 0.6895 (R1), 0.6960 (R2), 0.7025 (R3)

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