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Daily FX Brief, Jun 18 – Key Trade-Ideas In European Pairs, CPI Ahead!

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Economic Outlook

 

EUR/USD – European CPI In Highlights

The EUR/USD pair was up 0.2% to 1.1235. The European Central Bank will meet in Portugal on Thursday. The Bank of England will also make an interest rate decision on the same day.

In the data front, the EU announced Q1 Labour Cost, which increased by less-than-forecast of 2.4% vs. the 2.6% forecasted. In the US, the NY Empire State Manufacturing Index for June, disappointed with -8.6 in June vs. the previous 17.8 and the expected 10.0, during the NAHB Housing

Market Index for the same month rose at 64 vs. the anticipated 67. Weaker US data stopped the greenback from appreciating alongside uncertainty about the Fed’s stance.

Today, the macroeconomic calendar will include a speech from ECB’s Draghi, the German ZEW survey for June and EU’s final May inflation. The US, on the other hand, will release May Housing Starts and Building Permits.

Technical point of view, the EUR/USD pair is still at risk of dropping, as it rigged intraday gains ahead of the close, now seeking to support at around 1.1200. In the 4 hours graph, the EUR/USD is trading between the 61.8% and the 50% retracements of its latest daily advance, with the most relevant being at 1.1200, providing strong static support.

Technical indicators in the specified chart have walked off from there lows, but remain well into the negative area, keeping the risk skewed to the downside.

R3: 1.1311
R2: 1.1268
R1: 1.1245
Key Trading Level: 1.1224
S1: 1.1201
S2: 1.1181
S3: 1.1137

Consider staying bearish below 1.1224 to target 1.11600 today. While buying is expected, over 1.1224.

EUR/JPY – Dramatic Drop, Next Stop 120.850

The Japanese cross, EUR/JPY heads sharply lower as the safe haven appeal triggers. The U.S, China trade war continues to keep the Japanese yen in demand.

EUR/JPY appears so far to have met decent support in the 121.60 regions, which is now violated.

A breach of this area of contention is exposing recent lows in the 120.80/75 band ahead of 2019 lows in sub-119.00 levels (‘flash crash’ in early January).

On the broader outlook, the bearish bias on the cross remains intact below the multi-month resistance line, today at 124.98.

R3: 125.34
R2: 123.75
R1: 122.73
Key Trading Level: 122.16
S1: 121.14
S2: 120.57
S3: 118.98

Let’s keep an eye on it as double bottom levels often give a substantial opportunity. We may have a chance to buy EUR/JPY above 120.850. All the best!

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