• EUR/USD remains weighed down by key 1.0763 Fibo supply

• 1.0763 Fibo is a 38.2% retrace of the 1.0916 to 1.0668 (June) drop

• 14-day momentum remains negative, reinforcing the overall bearish bias

• We are short at 1.0760 for a slump to the 2023 1.0602 (EBS) low

• However, bears should be mindful of the "cloud twist" above 1.0780 Wednesday

• Daily cloud twists usually act like a magnet

• EUR/USD Trader TGM2334. Previous update nL1N3IN07K

• Bearish Tuesday but a late recovery has slowed EUR/GBP's decline

• Wed market is offered but is trading just off 0.8432 previous session's low

• Market still trading away from Monday's shooting star candle (bearish)

• Initial support at 0.8430-32, recent lows

• Bears target the 0.8397 2024 low from June 14

• We lean bearish but stand aside for now

  For more click on FXBUZ

• A Tuesday doji candle and failure to close above 10DMA

• No preceding bull trend to reverse but still count as bearish signals

• Could also be some pull from today's 1.2561-81 cloud twist

• Fourteen day momentum remains negative and RSI flat lining

• Initial key support at 1.2643, the 100-DMA

• Market above the 100DMA since May 15 upside break

• We offer by 1.2703 for a bearish resumption

  For more click on FXBUZ

• Trades -0.05% in a 1.0706-1.0718 range with EUR/JPY +0.1% and EUR/GBP flat

• The UST yield curve flattened in Asia, 2yr UST -2bp 4.718%, 10yr +3bp 4.261%

• Prices suggest Fed to keep rates higher for longer, as did strong AUD CPI

• German GfK Consumer Climate is due, but unlikely to impact the Euro

• Charts; horizontal momentum studies, 21-day Bollinger bands slide

• 5, 10 & 21-day moving averages fall - daily signals show a negative bias

• Resistance starts at Monday's 1.0746 high and then last week's 1.0761 top

• Monday's 1.0686 low and then the June 1.0667 base are initial supports

• 1.0700 2.376 BLN and 1.0725/30 1.444 BLN are the close strikes for June 26th

For more click on FXBUZ

Synopsis:

Goldman Sachs forecasts a modest increase in core PCE inflation for May, anticipating a rise of 0.13% month-over-month and 2.59% year-over-year. They predict a temporary rise in June before a decline in July, leading to favorable inflation reports that could prompt the Fed to initiate rate cuts by September.

Key Points:

1. May Core PCE Forecast:

   • Goldman Sachs expects core PCE inflation to increase by 0.13% in May.
   • The year-over-year core PCE inflation rate is projected to be 2.59%.

2. Short-Term Inflation Dynamics:

   • In June, monthly core PCE inflation is forecasted to rise to 0.26% due to the fading of one-time drags from May and a 5bp boost from residual seasonality.
   • July is expected to see a drop in monthly core PCE inflation as residual seasonality turns negative and the impact of the January OER spike dissipates.

3. Fed Rate Cut Outlook:

   • By the September FOMC meeting, Goldman Sachs expects five consecutive months of favorable inflation reports.
   • They project year-over-year core PCE inflation to be at 2.8% by September.
   • This trend is anticipated to provide the Fed leadership with the confidence to implement the first rate cut.

Conclusion:

Goldman Sachs anticipates a modest increase in core PCE inflation for May, followed by temporary fluctuations in the coming months. They predict a series of favorable inflation reports by September, potentially leading the Fed to begin cutting rates. Investors should monitor the upcoming PCE prints and Fed communications closely as these dynamics unfold.

• AUD/USD rallies 0.45% in Asia as Australia inflation hits 6-mth high in May

• Core inflation up for 4th straight month, odds on a Aug rate hike narrow

• Futures indicate a 32% chance of Aug rate hike from 12% before data

• Rate cut seen unlikely until April as RBA stays higher-for-longer

• AUD tests 0.6680 resistance break likely, opens rally to 0.6700-05 likely

• Support 0.6650-55; AUD/JPY rallies to 17-yr high, targets 107.84, 2007 high

• Asia range 0.6636-0.66785

• For more click on FXBUZ

• Australian CPI surprised on the topside, weighted +4%y/y v's 3.8% expected

• Data suggest the RBA will probably keep interest rates higher for longer

• If the upcoming data comes in strong, a rate hike becomes a possibility

• AUD jumped 25pts on the CPI and is currently up 0.32% at 0.6669

• TECHS - 5, 10 & 21-day moving averages coil, 21-day Bollinger bands expand

• Daily momentum studies flat-line - the technical outlook in neutral

• Today's 0.6636 low then this week's 0.6627 base are initial support

• Last week's 0.6679 high and then the June 0.6704 top are first resistance

For more click on FXBUZ

• Off 0.05% after closing down 0.2% as French election uncertainty weighed

• French opposition parties gain credibility amid disenchantment with Macron

• There is no tier-one EZ data today, so the U.S. dollar likely leads EUR/USD

• Charts; an inside day - neutral momentum studies, 21-day Bolli bands slide

• 5, 10 & 21-day moving averages fall - daily signals show a negative bias

• Resistance starts at Monday's 1.0746 high and then last week's 1.0761 top

• Monday's 1.0686 low and then the June 1.0667 base are initial supports

• 1.0700 2.376 BLN and 1.0725/30 1.444 BLN are the close strikes for June 26th

  For more click on FXBUZ

U.S.
consumer confidence slipped but beat expectations, as house price inflation slowed on Tuesday. Wall Street closed mixed, Treasury yields consolidated, the USD firmed, and commodities fell.

Federal Reserve Governor Michelle Bowman believes a steady policy rate will be needed for 'some time'. Fed Governor Lisa Cook will be data-driven and expects a rate cut 'at some point'.

After the close FedEx beat expectations and its shares jumped 14%.

There is no strong lead for Asian markets, with EM ETFs off 0.23%.
Australian inflation, key for Reserve Bank of Australia policy, and Singapore manufacturing lead Wednesday's regional data schedule.

Christopher Kent, RBA Assistant Governor (Financial Markets) will speak ahead of CPI, while the Bank of Thailand releases the minutes of its June 12 meeting.
The focus will be on regional markets, while USD/JPY continues to sit below the psychological 160.00 level.

Dow -0.76%, S&P +0.39%, and Nasdaq +1.26% led by Nvidia.
Treasury yields saw strong demand for a two-year auction, as rates consolidated ahead of upcoming inflation data; 2yr steady at 4.734%, 10yr -1bp to 4.238%, and 30yr unchanged at 4.372%.

Oil fell as weak U.S. consumer confidence fuelled demand fears, Brent -1.25% and WTI -1.05%.
U.S. copper -1.6% amid China demand uncertainty; and gold -0.6%, capped by the firmer USD.

The U.S. dollar =USD closed up 0.1% with modest moves in the major currencies.
EUR slipped 0.2% as the French elections continue to worry investors.
GBP and CAD were unchanged, USD/JPY +0.05%, USD/CNH +0.1%, AUD -0.15%, and NZD -0.05%.

For more click on FXBUZ

• AUD/USD consolidates after closing 0.13% lower Tue, eyes AU CPI data Wed

• Australia's May consumer prices expected to fall around 0.2%

• But annual rate will likely pick up to 3.8% from 3.6%

• Data key for RBA rate expectations, will feed into June quarter CPI report

• C.bank struck hawkish note last week, warned of upside risks to inflation

• Markets price in 12% chance of Aug rate hike, now barely price a cut by May

• High May inflation reading will see rate hike probability rise, support AUD

• Speech by RBA Assistant Governor Christopher Kent on Wednesday awaited

• Resistance 0.6675-80, 0.6700, support 0.6625-30, 0.6610-15

• Trade a broad 0.6580-0.6710 range; Mon global range 0.66725-0.6648 range

• For more click on FXBUZ

Synopsis:

HSBC analyzes the potential impact of the upcoming UK parliamentary election on GBP, noting that historical data shows no clear pattern. They argue that despite expectations of warmer EU ties under a Labour-led government, there are limits to how positive this could be for GBP. The currency's performance is more likely to be influenced by BoE's monetary policy compared to other central banks.

Key Points:

1. Historical Inconsistencies:

   • Analysis of opinion polls and movements in EUR/GBP since the previous election reveals no consistent pattern. GBP's performance has varied regardless of the Labour party’s standing among voters.

2. Potential Labour Government:

   • Media reports suggest a Labour-led government could improve ties with the EU, which some believe would be GBP positive.
   • However, HSBC notes limits to this potential improvement, suggesting it may not lead to a significant positive reaction for GBP.

3. GBP Drivers:

   • GBP's performance is expected to be driven more by the BoE's monetary policy outlook rather than the immediate aftermath of the election.
   • Limited fiscal room and a sluggish UK growth outlook also diminish the likelihood of a strong GBP reaction.

4. Past Election Responses:

   • Historical GBP responses, positioning, and flows around past UK elections indicate no assured stronger GBP from a potential Labour victory.

Conclusion:

HSBC's analysis suggests caution in assuming a strong GBP reaction to a potential Labour victory in the upcoming UK elections. The currency's movements are likely to be influenced more by the BoE's monetary policy stance and other central banks' actions.

The dollar mostly firmed within recent ranges against other majors on Tuesday as the market awaited catalysts to resolve questions over the path of Fed policy and European politics.

Expectations that Friday's PCE price data will show a resumption of U.S. disinflation presents the recently firm dollar with potential downside risks, since such an outcome could soften the market's perception of future Fed policy.

However, uncertainty over the fortunes of the far right and left in France's June 30 and July 7 parliamentary elections remains a supportive safe-haven argument for the dollar due to worries about the implications for fiscal policy in the euro zone's second-largest economy.

The fact that UK voters go to the polls on July 4 adds to the political muddle confronting investors.

Lending rhetorical support to the dollar, Fed Governor Michelle Bowman reiterated her view that holding the policy rate steady "for some time" will probably be enough to bring inflation under control, but also repeated her willingness to raise borrowing costs if needed.

Fed Governor Lisa Cook said the U.S. central bank is on track for a rate cut if the economy’s performance meets her expectations, but she declined to say when the Fed will be able to act.

U.S.
Treasury yields were narrowly mixed, sticking to familiar ground.

The S&P 500 firmed 0.34% by New York afternoon trade, while The tech-heavy Nasdaq jumped over 1%, buoyed by strength in Nvidia and other megacaps, while the Dow slipped as investors awaited the PCE release.

WTI slid 0.89%, as weak U.S. consumer confidence data added to concern about the U.S. economic outlook and investors scrutinized summer driving demand.

Conference Board consumer confidence fell this month, though less than expected, while May was revised lower.

Copper fell 1.42%, as the firmer dollar spurred a bout of selling, with stalled demand growth in top consumer China and soaring inventories reinforcing negative sentiment.

Gold weakened 0.59%, also hurt by the firmer U.S. currency.

Heading toward the close: EUR/USD -0.16%, USD/JPY +0.06%, GBP/USD +0.08%, AUD/USD -0.11%.

For more click on FXBUZ

• GBP$ flat at 1.2682 in NorAm afternoon trading; Tuesday range 1.2702-1.2670

• Pair tested 1.27 in early Europe trade amid Carlsbad-Britvic merger talk

• Near-GBP 3bn in GBP demand if merger goes thru lifting bullish tones

• Beverage cheer the hope of sterling bulls after hitting resistance

• Traders also focused on UK elex on July 4; Labour touted to gain control

• Res 1.2705 falling 10-DMA, 1.2741 50% of 1.2860-1.2622, 1.2807 Apr 13 high

• Support 1.2670 Tuesday low, 1.2642 the 100-DMA, 1.2622 the Jun 21 low

• 3 days of GBP$ higher highs, higher lows hints at nascent bid forming

• UK CBI (RS) on Wednesday, UK Q1 GDP Thursday in focus

Synopsis:

ING expects the euro to face difficulties sustaining a rally in the coming weeks due to ongoing political and economic uncertainties in the eurozone. Despite some positive developments, such as the French-German yield spreads narrowing and the euro edging up, ING warns against chasing EUR/USD higher due to potential bearish scenarios, including the upcoming French elections and economic stresses.

Key Points:

1. French-German Yield Spreads and Budget Rules:

   • Representatives of France's National Rally (RN) party have indicated respect for the nation's budget rules, leading to a narrowing of French-German yield spreads and a slight increase in the euro.
   • However, plans to cut EUR 7bn in taxes, partially funded by reducing France's contribution to the EU budget, persist.

2. Ongoing Economic Stress:

   • ING's eurozone macro team foresees continued economic stress, suggesting caution in expecting EUR/USD to rally back to and over 1.08.
   • The team anticipates many potentially bearish developments ahead, including the possibility of the Leftist Alliance performing better than expected in Sunday's elections.

3. Market Reactions and Investor Sentiment:

   • Bond investors may welcome the RN's comments on France's budget, but ING believes it is too early for the party to make significant concessions to its manifesto.
   • The euro's struggle to sustain a rally is expected to impact key euro cross rates, such as EUR/AUD and EUR/NOK, which may decline.

4. Impact of US Inflation Data:

   • Should US inflation data come in on the low side, it could accelerate the downward movements in key euro cross rates.

Conclusion:

ING advises caution in expecting a sustained rally for the euro in the coming weeks, given the political and economic uncertainties in the eurozone. Key euro cross rates may come under pressure, especially if US inflation data favors a stronger USD.

• Ether rallied to 3423.29 Tuesday, traded up +3.2% in NY's morning

• Despite the gains the crypto currency faces downside risks

• The pair trades below the 10- & 50-DMAs, 10-DMA about to cross below 50-DMA

• Daily RSI is unwinding near oversold condition, may indicate consolidation

• Monthly RSI is falling which implies longer-term downward momentum

• Test of May's low seems likely as US weekly claims, May PCE reports loom

• For more click on FXBUZ

Synopsis:

Credit Agricole discusses the impact of the RBA's hawkish hold, arguing it strengthens the case for being long on AUD/USD and AUD/NZD. This decision has reduced speculation about rate cuts and even led to some pricing in potential rate hikes. Meanwhile, NZ’s Chief Economist sounded less hawkish, supporting the long AUD/NZD trade.

Key Points:

1. RBA's Hawkish Hold:

   • The RBA's decision to maintain rates while adopting a hawkish tone has diminished expectations of rate cuts this year.
   • This has led to the Australian rates market considering the possibility of a rate hike.

2. New Zealand's Economic Stance:

   • New Zealand's economy has exited a recession, but the Chief Economist's less hawkish tone has influenced the market.

3. Market Reactions:

   • Investors are increasingly favoring long AUD/NZD trades.
   • The AUD has strengthened against the USD following softer US retail sales data and continued market pricing of Fed rate cuts.

4. Future Influences:

   • The release of US core PCE data in the coming week will be critical.
   • Further easing in core inflation could bolster both the AUD and NZD.

Conclusion:

Credit Agricole's analysis supports a bullish outlook for AUD/USD and AUD/NZD, driven by the RBA's stance and market reactions to US economic data. The improved relative rates setting for these currency pairs will be tested by upcoming US core PCE data.

• EUR/GBP hits 0.8440 after extending south from 0.8478 (two-week high Monday)

• 0.8440 is lowest level since BoE's dovish hold last Thursday (June 20)

• French election risk is weighing on euro; election outcome hard to predict

• UK election next week (July 4); outcome easy to predict: big Labour majority

• EUR/GBP might sink to 0.80 for first time since 2016 on French, UK elections

• Von der Leyen lined up for second term under EU top jobs deal nL8N3IN0Q8

Synopsis:

ANZ outlines a cautiously optimistic outlook for the euro, suggesting that despite initial economic lag and the negative impact of the EU general election, the EUR/USD is poised for growth. The focus is on the ECB's handling of wage inflation and the anticipated easing cycle, which could drive euro area growth and support a bullish trend for EUR/USD.

Key Points:

1. Economic Backdrop:

   • Early quarter economic indicators showed lagging performance in the euro area.
   • The EU general election led to a temporary weakness in the EUR.

2. ECB's Focus:

   • The ECB's emphasis on wage growth and services inflation is critical for future rate cut decisions.
   • Negotiated wage rates were strong in Q1, but overall wage growth is closer to 4.1% y/y.

3. PMI Performance:

   • Manufacturing PMIs for France and Germany began to align more closely with the rest of Europe by the end of Q2, though disparities remain.
   • Strength in composite PMIs is mainly due to the services sector, highlighting an uneven recovery.

4. Easing Cycle and Growth:

   • ANZ anticipates a cumulative 200bp of cuts over 2024 and 2025.
   • Expected rate cuts should bolster confidence surveys and map to economic growth in Q3.

5. Bullish EUR/USD Trend:

   • Despite the initial drop due to the EU election, a bullish trend for the EUR is anticipated.
   • ANZ expects the EUR to outperform the USD and CAD, with EUR/USD projected to reach 1.09 by the end of Q3 and 1.10 by Q4 2024.

Conclusion:

ANZ forecasts a positive outlook for the euro, driven by the ECB's management of inflation and an anticipated easing cycle that could stimulate economic growth. The EUR/USD is expected to rise, ending Q3 at 1.09 and Q4 2024 at 1.10.

Synopsis:

MUFG discusses the limited impact of Japan's verbal intervention on the yen, noting that while it may create temporary caution among market participants, the underlying trends and broader economic factors continue to support a weakening yen. The potential for direct intervention remains, especially if the yen's sell-off pace increases.

Key Points:

1. Verbal Intervention and Market Reaction:

   • Japanese officials' comments have heightened market participants' awareness of the risk of direct intervention should USD/JPY exceed the 160.00 level.
   • The focus appears to be more on the rapidity of the yen's decline rather than a specific level triggering intervention.

2. Current USD/JPY Trend:

   • USD/JPY has been gradually rising throughout the month, making immediate intervention less justifiable.
   • The gradual pace of the yen's weakening trend contrasts with sharp movements that would typically prompt intervention.

3. US Treasury's Monitoring List:

   • The US Treasury's recent decision to add Japan to its monitoring list for foreign exchange practices introduces doubts about imminent intervention.
   • Vice Finance Minister Kanda noted that US counterparts are primarily concerned with transparency, not necessarily opposing Japan's intervention.

4. Market Dynamics and Speculative Positions:

   • Despite narrowing yield spreads between Japan and other countries, the yen continues to weaken.
   • Leveraged funds have increased short yen positions, reaching their highest levels since 2017.

Conclusion:

MUFG anticipates continued pressure on Japan to intervene directly in the FX market due to the yen's persistent weakening trend and the lack of fundamental factors to reverse this trend. While verbal interventions may provide temporary relief, the overall economic and market conditions suggest that the yen will remain under downward pressure, potentially necessitating more concrete actions from Japanese authorities.

• AUD/USD hit 0.66505 in Asia then traded 0.66725 in Europe's morning

• Pair then slid downward, NY opened near 0.6660, pair traded near flat

• Overnight lift was aided by US yield US2YT=RR drop, equity ESv1 gains

• Iron-ore DCIOc2 drop & USD/CNH rally helped drive the pair's slide

• Techs lean bullish; pair above 10- & 21-DMAs, monthly RSI rising slightly

• US June consumer confidence, April CaseShiller housing are data risks

• June Philly Fed non-mfg business survey is also a data risk in NY

• Remarks from Fed's Cook, Bowman may impact risk sentiment

• For more click on FXBUZ

• Encouraging sign for EUR/CHF shorts as rebound stalls where it should

• 200DMA (0.9594) holds firm. Focus back on support at 0.9565 (Apr 19 low)

• Below 0.9565 opens door to 0.9500-10

• French election risks makes it difficult for traders to chase EUR higher

• Though this risk has eased slightly as Bund-OAT spread narrows (-3bps WTD)

For more click on FXBUZ

• EUR/USD trading mainly within 1.05-1.10 since start 2023

• Of late, pair continually returning to centre of its range

• An already quiet paring is quietening further

• There is an interest rate gap of 1.75% weighing EUR/USD

• While EUR/USD isn't moving its pays to sell

• Extent of rallies may lessen as pair slides toward base of its range

• Traders are still long despite slashing bets on rise nL1N3IN06W

• Dollar tempered by threat of Japan intervention, yen fragile nL1N3IN068

• Japan: will respond appropriately to excessive yen volatility nL1N3IN01D

• Also Japan bond yields likely firm into July BOJ meeting nL1N3IN01O

• USD/JPY jittery, as demonstrated by brief drop to 158.75 Monday nL1N3IM0CA

• However, USD/JPY could still soar despite Japan's threats nL1N3IM09G

• USD/JPY has seen a 159.18-71 EBS range, on Tuesday, so far

• Traders might target stops likely clustered above April's 160.24 peak

• EUR/JPY usually climbs in June according to seasonal data nL1N3I40JT

• A sterling bid holding just below 1.2700: 10DMA is at 1.2705

• Tighter range, possibly corrective following Monday's gains

• Fourteen day momentum remains negative: RSI struggles to confirm price rise

• We have an offer ahead of the 1.2713 38.2% Fibo, off 1.2859-1.2622 and 10DMA

• If met we look for a resumption of the fall from 1.2859

• A tight stop would be set above the 1.2738 June 19 high

  For more click on FXBUZ