Analyst Articles – Forex News 24

EURUSD Price Outlook Cloudy – ECB’s Rehn Talks Rate Cuts and More QE
EUR/JPY Eying the Higher End of the Current Trading Range
Crude Oil Price Outlook – OPEC Support Confronts Technical Resistance
GBP Braces Ahead of Unemployment Data
Gold Price Chart Hints Reversal Lower May Be Brewing Ahead
NZD Slips Could Be Worth Buying Against Macro Risk Backdrop
ASX 200 Could Revisit Record Peaks If Fed Nurtures Risk Revival
Both Dow and Peso Jump on US-Mexico Deal, But Can They Continue?
AUDUSD Rebound Fizzles as Trump Fires Warning Shots on China Tariff
USDNOK Wobbling at Critical Support. USDSEK Recovery Ahead?

EURUSD Price Outlook Cloudy – ECB’s Rehn Talks Rate Cuts and More QE

Posted: 11 Jun 2019 03:39 AM PDT

EURUSD Price, Chart and Analysis:

ECB primed to intervene if economic weakness continues.
EURUSD unable to break higher, despite US dollar weakness.

Q2 2019 EUR Forecast and USD Top Trading Opportunities

Keep up to date with all key economic data and event releases via the DailyFX Economic Calendar

Bank of Finland governor and ECB governing council member Olli Rehn is back out on the wires Tuesday reiterating that the ECB stands ready to act, using all tools available, to counter the ongoing economic weakness and stubbornly low inflation in the Euro-Zone. Rehn, a candidate for the upcoming ECB President's role, said that the central bank is 'determined to act and stands ready to adjust all of its instruments, as appropriate'. He also noted that 'external risks to the Euro-Area won't fade in the near future'.

These instruments include stronger forward guidance, cutting interest rates further, potential changes to bank reserve rates and re-starting quantitative easing (QE). The ECB ended the last QE program at the end of 2018 and a swift re-introduction of the program would highlight the lack of effect the four-year, EUR2.6 trillion+ bond buying program has had on the economy. Growth remains tepid, while inflation expectations are near record lows.

EURUSD price action is currently predicated on US dollar more, more than Euro strength. Post last Thursday's ECB meeting – where the governing council officially push rates lower for longer – EURUSD touched a peak just under 1.1350 before fading back to its current quote around 1.1318. The pair traded at a 2019 high of 1.1571 on January 10 before sliding lower over the course of 2019. EURUSD remains in overbought territory, using the CCI indicator, and its upside is currently blocked by the 200-day moving average, a long-term indicator that has held firm all the way back to May 2018.

EURUSD Price – Bulls Clash with Technical Resistance

EURUSD Daily Price Chart (October 2018 – June 11, 2019)

Retail traders are 43.8% net-long EURUSD according to the latest IG Client Sentiment Data, a bullish contrarian indicator. However recent daily and weekly positional changes give us a mixed trading bias.

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What is your view on EURUSD – bullish or bearish? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

2019-06-11 10:30:00

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EUR/JPY Eying the Higher End of the Current Trading Range

Posted: 11 Jun 2019 03:02 AM PDT

EUR/JPY Price Outlook, Charts and Analysis

EUR price looking ahead to ECB Governor Draghi's speech tomorrow.
EUR/JPY correcting higher.

See our EUR and JPY guides and find out for free what is likely to move market prices through Q2 from Main Currencies and Commodities Forecasts

To learn more about data releases for this week check outDailyFX Economic Calendar

EUR/JPY– Changing Course

On Jun 6, EUR/JPY corrected higher after carving out a higher low at 121.24. On the following day the pair rallied and closed within a higher trading range (122.50 – 124.20).

The Relative Strength Index (RSI) abandoned on Jun 3, the oversold area highlighting bearish momentum might be nearing its final stage . The oscillator pointed higher on the following days and crossed above 50 today reflecting a possible start of an uptrend.

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EUR/JPY DAILY PRICE CHART (FEB 19, 2019- JUN 3, 2019) Zoomed IN

EUR/JPY DAILY PRICE CHART (NOV 16, 2016 – JUN 11, 2019) Zoomed OUT

Looking at the daily chart we notice on June 7 EUR/JPY broke above the downtrend line originated from the May 1 high at 125.23. The price closed and traded above the downtrend line hinting at a rally towards the higher end of the trading range shown above, see the chart. The weekly resistance levels at 123.40 and the May 21 high at 123.75 need to be kept in focus.

In turn, a close below 122.50 would mean more bearishness and could send the price lower towards 121.30. Although, the supports levels at 23.60% Fibonacci retracement at 122.15, 122.00 and 121.49 should be watched closely.

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EUR/JPY Four-HOUR PRICE CHART (May 7 – JUNE 11, 2019)

Looking at the four-hour chart, we notice EUR/JPY rebounded from 122.62 yesterday and today. Therefore, any break below this level could start a movement to send the price towards 122.10 contingent on breaking below 122.50. The support level at 122.27 needs to be considered.

On the flipside, any break above 123.10 could mean the start of a bullish move towards the May 21 high at 123.75 however, the weekly resistance at 123.40 is worth monitoring.

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi

2019-06-11 09:30:00

Crude Oil Price Outlook – OPEC Support Confronts Technical Resistance

Posted: 11 Jun 2019 01:05 AM PDT

Crude Oil Price Chart and Analysis:

OPEC still trying to get Russia to commit to ongoing production cuts.
Technical set-up remains a negative bias.

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How to Trade Oil: Crude Oil Trading Strategies & Tips.

Crude Oil Needs a Fresh Driver

Crude oil opens within Monday's $2 range and is likely to remain constrained in the short-term as OPEC continues to discuss extending the current production cuts. While most members are said to be onboard, Russia is still considering supporting cuts that have been in place since the start of the year and while they recognise the risks of over-production, energy minister Novak said that Russia would look at how events develop through June before committing to a further extension.

While the cessation of trade hostilities between Mexico and the US gave oil a small bid, the ongoing clash between the US and China will begin to ramp up in the next couple of weeks when additional tariffs will be introduced by the US. Global growth currently remains weak and further hostilities between two of the world's largest economies will press down on oil.

The latest daily chart shows oil little changed but with a negative bias. Crude remains below the important 200-day moving average, while the 20-day ma has just fallen through the longer-term ma, highlighting current bearish momentum. There is little in the way of support to stop crude re-testing the 50% Fibonacci retracement level at $60.63/bbl. before the June 5, multi-month, low comes into focus. Crude has moved out of oversold territory, after hitting extremes in late May and earlier this month. To the upside, $63.50/bbl. before a tight zone between $64.90/bbl. and $65.80/bbl.

WTI vs Brent: Top 5 Differences Between WTI and Brent Crude Oil

Crude Oil Daily Price Chart (June 2018 – June 11, 2019)

What is your view on crude oil – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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2019-06-11 08:00:00

GBP Braces Ahead of Unemployment Data

Posted: 10 Jun 2019 11:48 PM PDT

TALKING POINTS – CRUDE OIL PRICES, UK UNEMPLOYMENT DATA, BREXI RISKS, EUROPEAN ECONOMY

GBP groans ahead of local unemployment data after dismal reports
NOK eying local CPI as crude oil prices continue to show weakness
Euro traders will be a keeping a peripheral eye on confidence data

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Sterling traders will be nervously waiting for the release of local unemployment data after a recent publication of abysmal economic data. The highlight was month-on-month UK manufacturing data, which shrunk 3.9 percent in April – the largest contraction in approximately 17 years. An unfavorable political backdrop is compounding weakness in GBP with the race for the position of Prime Minister introducing greater uncertainty in the Brexit narrative.

In addition to monitoring the EU-UK divorce, the Euro will also be watching tomorrow's release of the Eurozone Sentix investor confidence report. The median estimate has the survey pegged at 2.5, considerably lower than the previous reading at 5.3. The last report was actually the lowest reading since November and the index has been steadily declining January 2018.

Increasing political uncertainty over Brexit, the budget dispute with Italy, and growing tension between the EU and US over policy toward Iran have not helped bolster confidence in the Euro. Furthermore, PMI data out of key Eurozone economies – Germany, France and Italy – have been showing alarming weakness. Compounding fears are ongoing debates about who will replace the head of key EU institutions e.g. the ECB.

In the Nordics, Norway will be publishing a cascade of inflation data with expectations that price growth will show weakness amid falling crude oil prices and souring global sentiment. The Norwegian economy's foundation is built on the petroleum sector, making it exposed to oscillations in global demand. With Europe as its biggest client, it is likely that if regional growth trends continue, inflationary pressure in Norway will continue to wane and could disrupt the Norges Bank's intended rate hike cycle.

CHART OF THE DAY: OBX INDEX, NOK-CROSSES SHOW WEAKNESS ALONGSIDE FALLING CRUDE OIL PRICES

EURO, GBP, NOK TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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2019-06-11 06:30:00

Gold Price Chart Hints Reversal Lower May Be Brewing Ahead

Posted: 10 Jun 2019 11:12 PM PDT

GOLD & CRUDE OIL TALKING POINTS:

Gold price chart hints bearish Double Top setup may be taking shape
Crude oil price recovery rejected at resistance below $56/bbl on WTI
US PPI and API inventory data, EIA short-term outlook report on tap

Gold prices fell as the US Dollar rose after the Trump administration opted to cancel planned tariffs on imports from Mexico. The move cooled Fed rate cut speculation somewhat, undermining the appeal of anti-fiat alternatives epitomized by the yellow metal.

The news buoyed risk appetite, but typically cycle-sensitive crude oil prices were unable to capitalize. The benchmark WTI contract drifted lower amid reports that Saudi Arabia and Russia are struggling to agree on extending the OPEC+ output cut scheme. Riyadh is on board, but Moscow is unconvinced for now.

GOLD PRICES MAY OVERLOOK US PPI, EIA OUTLOOK AND API INVENTORY DATA DUE

Looking ahead, a relatively quiet economic calendar is headlined by US PPI data. The core wholesale inflation rate is expected to tick lower a bit, from 2.4 to 2.3 percent. A soft result echoing recently downbeat US news-flow might narrowly boost Fed rate cut bets, but scope for follow-through seems limited.

First, the priced-in outlook already envisions a seemingly fanciful scenario wherein the Fed will cut 2-3 times before year-end while also ending quantitative tightening (QT). That seems like an improbably large amount of easing at a time when employment and inflation are broadly near its targets.

Second, traders are probably unwilling to commit to a directional bias based on PPI data when its higher-impact CPI counterpart is due just 24 hours later. With that in mind, a consolidative session may be ahead. Still, kneejerk volatility – courtesy of unexpected US-China trade war headlines, say – remains a risk.

The EIA short-term energy outlook and API oil inventory flow data are also due. The former may speak to the parallel drop in US production capacity and prices since mid-April, which hints at ebbing demand amid global slowdown. The latter will be weighed against forecasts calling for a narrow 961k- barrel outflow.

Did we get it right with our crude oil and gold forecasts? Get them here to find out!

GOLD TECHNICAL ANALYSIS

Gold prices retreated from resistance at 1346.75, the February swing top, and formed a bearish Evening Star candlestick pattern. The setup hints a double top may be in the works. A daily close below support in the 1323.40-26.30 area exposes the 1303.70-09.12 zone. Alternatively, a push through resistance puts trend-defining resistance in the 1357.50-66.06 region back in focus.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices probed higher after producing a Bullish Engulfing candlestick pattern as expected but the move hit a wall on a test of support-turned-resistance at 55.75. Turning lower from here eyes initial support in the 50.31-51.33 area, with a daily close below that putting the spotlight on support set from September 2016 in the 42.05-43.00 zone. Alternatively, a breach of 55.75 targets the 57.24-88 zone next.

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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2019-06-11 05:00:00

NZD Slips Could Be Worth Buying Against Macro Risk Backdrop

Posted: 10 Jun 2019 10:35 PM PDT

Currency Pair: Bullish NZD/USD

Expertise: Fundamental and Technical

Average Time Frame: One Month

New DailyFX Quarterly Forecasts for Q3 and are available here

After a strong run higher into last week the New Zealand Dollar has wilted somewhat on its daily chart but there is scope for hope that the year's long downtrend will not be resumed.

Most of the recent price action would appear to have a lot to do with the 'USD' side of NZD/USD and rather less to do with the local currency. Suspicions that US interest rates may yet go lower knocked the US Dollar and raised risk appetite to the Kiwi's benefit.

However, in the last couple of days softer trade rhetoric from Washington toward Beijing has seen the US Dollar creep higher. Of course, trade headlines are a real unpredictable lottery for currency investors and others but, if the world is really headed towards more monetary accommodation the New Zealand Dollar should find itself well underpinned.

Such backdrops always result in a 'hunt for yield' and the currency still offers it. Its key Official Cash Rate may be at a record low of 1.50%- and expected to go lower- but that will still probably leave the New Zealand Dollar offering better yields than most developed market peers and a triple-A credit rating to boot.

Technically speaking NZD/USD is headed back towards the downtrend line which capped trade from late March until the start of June. It may even get there and slide back into a support zone defined on the top by the 6357 region, which capped trade between mid-May and early June, and at base by this year's low.

However, for as long as markets suspect that the Fed will be more accommodative in the weeks and months ahead, the New Zealand Dollar is likely to retain a stronger underpinning than it has had for much of this year. The recent peak of 0.6680 should be reachable again at the very least, with consolidation around that region and a push higher very possible if stronger risk appetite remains clear.

The Australian Dollar will also benefit in much the same way, probably, but, with more near-term rate hikes priced into its forward curve than New Zealand's, the Kiwi might get more support.

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— Written by David Cottle, DailyFX Research

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2019-06-11 04:57:00

ASX 200 Could Revisit Record Peaks If Fed Nurtures Risk Revival

Posted: 10 Jun 2019 09:17 PM PDT

ASX 200 Analysis Talking Points:

Australian stocks should perhaps have suffered harshly in a trade war environment
They didn't though, and managed to retain their allure
A lower interest rate environment could see them race ahead

Find out what retail foreign exchange traders make of the Australian Dollar's chances right now at the DailyFX Sentiment Page.

Could the ASX 200 be set to revisit record highs if lower global interest rates revive risk appetite?

The Australian benchmark has done well so far this year in any case, despite a macro backdrop which might seem tailor-made to scupper it. After all, the defining feature of the world economy has been a trade impasse between the US and China. Australia has broad economic and political links with both. Indeed it's arguably the third nation most in need of a durable deal.

Still, the ASX has risen nicely on a combination of other factors. One is the very weakness of the Australian Dollar brought about by that trade-related slide in risk appetite. Aussie stocks have looked quite welcoming to offshore investors. Then there are iron ore prices. Supply difficulties elsewhere have seen Australia's top commodity export in greater demand.

So, if the index can thrive in times of reduced risk appetite, what might it do if things pick up?

That weak US payroll number last week has probably made any more US rate rises in the medium term extremely unlikely. The most recent commentary from Federal Reserve speakers has markets on alert, expectant that the central bank will act to support asset prices. Since the financial crisis the prospect of lower US rates has acted like a magic bullet for risk appetite, whether it should or not. Ample Dollar liquidity remains for better or worse the most reassuring sight most investors can imagine.

Growth-Linked Stocks Could Be Back In Demand

The ASX may yet see a clear rotation out of the defensive stocks which have done well up to now- utility names and real estate investment trusts- and into firms more leveraged to the global cycle. Think miners of course, but also builders and retailers. Don't forget that this isn't all about the Fed. Australian interest rates have just been cut to a new record low and could yet go down again, even if the market is overestimating the chances of really deep cuts.

So, back to those record highs which is where we came in. The ASX scaled them in the hopeful days of November 2007. Yes, that was shortly before the world started Googling the term 'subprime.' Back then the index hit 6842. That's a little over 300 points above the current market. The record is not under immediate threat. But it is well within range of any likely Fed-inspired worldwide bump, especially if it comes with signs of trade rapprochement between Washington and Beijing.

Uptrend Looks Very Firm

Technically speaking the ASX remains well within the daily chart uptrend which has endured solidly since February and which is in any case only a continuation of the rise up from late January's lows.

Trade seems to have carved out a new higher-high this week already, but a strident upside test of that upward channel top would be a strong statement of current bearish intent. The channel has seen fairly frequent tests of its upper reaches and a new one would need to take on and top the 6595 region.

The daily chart looks for once like a true microcosm of the monthly and its' when you look at the strength of the uptrend on the latter that the proximity to that record peak becomes really apparent.

Of course, these are very news-driven markets, often only one Presidential Tweet away from reversal, so there can be no guarantees. But the ASX looks very likely to prosper further if global liquidity eases up.

Resources for Traders

Whether you're new to trading or an old hand DailyFX has plenty of resources to help you. There's our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There's also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they're all free.

— Written by David Cottle, DailyFX Research

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2019-06-11 03:30:00

Both Dow and Peso Jump on US-Mexico Deal, But Can They Continue?

Posted: 10 Jun 2019 08:05 PM PDT

Trade War Talking Points:

Weekend news that the US would not trigger a 5% tariff on all Mexican goods spurred a USDMXN drop and supported the broad risk bid
There remains evidence that speculative reach doesn’t have firm footing with trade wars and GDP weighing while markets await the Fed
Dollar’s trend channel breakdown has scuttled the chance for immediate follow through with a mixed backdrop and 200 DMA still holding

Do you trade on fundamental themes or event risk? See what live events we will cover on DailyFX ahead (including the ECB rate decision and NFPs) as well as our regular webinar series meant to help you hone your trading.

How Much Lift is the Aversion of a US-Mexico Trade War Worth?

The new trading week began with a favorable fundamental development – though the balance of negative-to-positive week beginning catalysts is still heavily skewed in favor of the bears. Friday evening, US President Donald Trump tweeted that an agreement was reached between US and Mexican negotiators on the latter’s efforts to curb migration destined for the United States. That news would in turn obviate the risk of a 5 percent tariff on all Mexican imports into the US which was due to go into effect Monday had there not be an agreement in place. The news was clearly a relief for Mexican assets which could have been in the same position as China struggling under its own standoff – just without the scale to hold off the deeper economic cuts. The biggest jumps would be registered in the Mexican Peso with the steepest single-day USDMXN exchange rate drop in 11 months as well as the Mexican ETFs (like the MSCI’s) though the local equity index didn’t seem to enjoy the same windfall.

Chart of USDMXN and 1-Day Rate of Change (Daily)

As with many breakthroughs forged nowadays, the US-Mexico agreement carries some significant caveats. According to President Trump, the deal struck between the two included additional elements that he did not initially enumerate, and which he later suggested would entail purchases of US agricultural goods. Mexican authorities have disputed that they agreed to such purchases, however, which could potentially pose a problem. Trump has threatened to move forward with the tariffs if Mexico were to reverse course at all from the agreement, and it isn’t clear on which interpretation of the deal he is going to make that decision. That said, it seems the White House is looking to establish a baseline for how the trade wars can eventually find a successful conclusion; so it is likely that the matter is worked out.

Chart of Ratio Mexico MSCI ETF to S&P 500 (Daily)