DAILY FOREX OUTLOOK

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British Pound Under Pressure as GDP Shrinks

The U.S. dollar stabilized after weakening for two sessions.

The British pound dropped 0.4% to $1.2684, paring almost all gains made in the prior two sessions. Investors were disappointed by official reports that British GDP shrank 0.4% on month in April (vs. -0.1% expected and in March). Also, U.K. manufacturing production fell 3.9% on month (vs. -1.4% expected, +0.9% in March).

The Australian dollar slid 0.6% to $0.6956. China reported May trade surplus of $41.65B (vs. $22.30B surplus expected, $13.77B surplus in April) with exports increasing 1.1% on year (vs. -3.9% expected, -2.7% in April).

Meanwhile, the Mexican peso strengthened over 2% against the greenback, buoyed by U.S. President Donald Trump’s decision to halt imposing tariffs on Mexican imports.

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USD/JPY Intraday: Watch 108.15 downside. The pair, as shown on a 30-minute chart, remains on the downside after peaking at 108.71 yesterday. Currently, the descending 20-period moving average, which has crossed below the 50-period one, is capping any upside potential of the pair. The intraday outlook has turned bearish, and a pull-back to 108.30 would trigger a further decline toward 108.15 on the downside. Alternatively, a return to the key resistance at 108.60 would open a path toward 108.70 on the upside.

EUR/USD Intraday: Key resistance at 1.1325. The pair has failed to post a sustainable rebound from a low of 1.1289 seen overnight. Currently, it is trading at levels around the 20-period moving average, but remains capped by the key resistance at 1.1325. As long as this level is not surpassed, intraday bearishness persists, and the pair is likely to pull back to 1.1300 and 1.1290 on the downside. Alternatively, above 1.1325, expect a further advance toward 1.1345 on the upside.

AUD/USD Intraday: Target 0.6935 downside. The pair continues a down-trend while being capped by the descending 20-period moving average. The relative strength index has not yet recovered the neutrality level of 50, suggesting a lack of upward momentum for the pair. A break below the immediate support (first downside target) at 0.6950 would trigger a further decline toward 0.6935. Only a return to the key resistance at 0.6970 would bring about a bullish reversal.

NZD/USD intraday: Rebound expected. The pair is trading above the key support level at 0.6591, which should limit the downside potential. The relative strength index posts a bullish divergence signal, suggesting the loss of downward momentum. Hence, as long as 0.6591 holds on the downside, expect a rebound with targets at 0.6634 and 0.6646 in extension. Alternatively, only a break below 0.6591 would turn the outlook to bearish and call for a drop to 0.6570.

GBP/USD Intraday: Key resistance at 1.2700. Despite the pair posting a rebound from 1.2655 (around the low of June 10), the upward potential is likely to be limited by the resistance at 1.2700. The declining 50-period moving average is playing a resistance role. The relative strength index is around its neutrality level at 50, showing the lack of upward momentum. To conclude, below 1.2700, expect a return with targets at 1.2670 and 1.2655 in extension. Alternatively, crossing above 1.2700 would bring a further rise with 1.2725 and 1.2745 as targets.

USD/CHF Intraday: Turning down. The pair retreated from 0.9915 (around the high of June 10) and struck to the lower boundary of the Bollinger Bands. The death cross between 20-period and 50-period moving averages has been identified, indicating a bearish reversal signal. The relative strength index is below its neutrality level at 50. To conclude, as long as 0.9915 is not surpassed, a return to 0.9880 and even to 0.9855 (the low of June 7) seems more likely to occur. Alternatively, crossing above 0.9915 would bring a rise with 0.9930 and 0.9950 as targets.

USD/CAD Intraday: Under pressure. The pair is under pressure below the key resistance level at 1.3285, which should limit the upside potential. The relative strength index stays around its neutrality level at 50, showing the lack of upward momentum. In this case, as long as 1.3285 is not surpassed, intraday bearish bias remains with down targets at 1.3250 & 1.3235 in extension. Alternatively, only a break above 1.3285 would turn the outlook to positive and call for a technical rebound with 1.3315 and 1.3340 as targets.

EUR/JPY intraday: Downside prevails. The pair retreated from 122.99 and broke below both 20-period and 50-period moving averages. The relative strength index is locating at the selling zone between 30 and 50, calling for a further downside. Therefore, as long as 122.99 holds on the upside, expect a drop to 122.18 before targeting to 121.94 in extension. Alternatively, a break above 122.99 would indicate a bullish reversal signal and bring a new up leg with 123.39 as a target.

EUR/GBP intraday: Further upside. The pair has recorded a series of higher top and higher bottoms since June 6, confirming a bullish outlook. The upward momentum is further reinforced by a rising 50-period moving averages. The relative strength index stays above its neutrality level at 50. To conclude, as long as 0.8891 is support, a new challenge to 0.8959 and even to 0.8979 seems more likely to occur. On the other hand, a break below 0.8891 would trigger a return with 0.8857 as a target.

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