June-23, 2022, Daily latest currency trading analysis and forex market forecast, by forex forum.
The GBP/USD pair is trading in the red at 1.2232 at the time of writing. In the short term, the pair moves sideways, so we’ll have to wait for the pair to escape from this range before going long or short. The price seems undecided as the Dollar Index moved sideways in the short term.
The pair continues to stay in a neutral zone as the US data came in worse than expected earlier. The Flash Services PMI came in at 51.6 points versus 53.4 points in the previous reporting period, even if the specialists expected a potential growth up to 53.9 points.
Furthermore, the Flash Manufacturing PMI was reported at 52.4 points below 56.0 estimated, while the Unemployment Claims dropped from 231K to 229K failing to reach the 227K forecasts. On the other hand, the UK inflation data came in mixed. The Flash Services PMI came in better than expected signaling further expansion, while the Flash Manufacturing PMI reported worse than expected data.
USD/JPY
The Japanese yen is in positive territory today, extending its gains from yesterday. USD/JPY is trading at 135.46 in the European session, down 0.56% on the day.
Yen Rises As U.S. Yields Dip
The yen has gained a bit of strength as USD/JPY is back below 136.00, after rising close to 136.71 earlier in the week, its highest level since September 1998. The yen received a reprieve from its recent slide due to a drop yesterday in U.S. Treasury yields, rather than any newfound strength related to the yen. This is another indication that USD/JPY movement is at the mercy of the U.S./Japan rate differential, with the Bank of Japan holding firm on its yield cap for JGBs.
USD/JPY Technical
There is resistance at 1.3657 and 1.3814
USD/JPY has support at 1.3404 and 1.3247
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EUR/USD
The EUR/USD slides for the first day in the week, down by 0.30%, courtesy of a mixed market mood and dismal S&P Global PMIs figures on the Euro area reported in the European session, which tumbled the EUR/USD from daily highs around 1.0580s to daily lows near 1.0482. At 1.0509, the EUR/USD prints losses and is ready to continue its path towards the 1.0500 figure.
Elsewhere, the US Dollar Index, a gauge of the buck’s value against its peers, pops up 0.25% sitting at 104.445, while US Treasury yields, fall, reflecting investors are reassessing not as aggressive as expected Fed tightening, as the US S&P Global PMIs crossed wires.
USD/CAD
Analysts at CIBC see the USD/CAD pair trading around 1.29 during the third quarter and rising toward 1.31 by year-end. They consider markets are overpricing tightening this year from the Bank of Canada and the Federal Reserve.
“A likely 75 bp hike by the Bank of Canada in July, and the potential for another move of that magnitude in September if we don’t see enough of an inflation deceleration by then, should be aggressive enough to allow USDCAD to remain around current levels over the next three months.”
“Contrary to market expectations, the BoC is unlikely to send Canada’s overnight rate beyond the Fed’s destination of 3.25%. Canada’s debtburdened households and mortgage renewals will see rate hikes weigh more on discretionary consumer spending in Canada. That points to a slightly lower terminal rate for the BoC overnight rate, although we’re leaning towards a 3% peak rather than our prior 2.75% after the May inflation data.”
NZD/USD
On the other hand, The NZD/USD pair has been suppressed for a while now but approaches a rather key level of support (0.6200) once again. This presents an interesting dilemma of a possible bounce of breakdown. Chartists will tell you that the more frequently a level is tested and respected, the more likely it is to eventually give way. Thus far, the pair has approached 0.6200 and the 61.8% Fib of the March 2020 major move without continued downside momentum.
Fundamental factors supporting another bounce off the 0.6200 level include China’s supportive monetary policy amid scattered lockdowns and slower growth. Nevertheless, IMF forecast China to recover faster than the US into 2023 which bodes well for the Kiwi as China is new Zealand’s largest trading partner. Looking at the US dollar, we have already seen yields drop and market expectations around the Fed’s terminal rate appears to have peaked last week, around 4%.
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