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Things ProfZero doesn't like - Increasing correlationsINVESTMENT CONTEXT On June 9, the ECB governing council announced its intention to raise interest rates by 25bps in July; a "larger increment", possibly sized at 50bps, is envisaged for September if inflation persists For the third time this year the World Bank cut its economic growth forecast for 2022, this time to 2.9%, after January and April revisions to 4.1% and 3.2% respectively, and warned about coming years of above-average inflation and possibly stagflation The OECD slashed its global growth forecast to 3% - down from 4.5% it predicted only a few months ago U.S. inflation in May unexpectedly hit 40-year high at 8.6%, up from April's reading at 8.3% considerably adding pressures to the Fed Freeport LNG terminal in Texas, crucial for energy supplies to Europe, will be closed for at least three weeks following an explosion at its Texas Gulf Coast facility Mortgage demand is at the lowest level in 22 years in front of rising rates PROFZERO'S TAKE Equities cratered on June 9 and 10, as investors processed the combined news of the ECB announcing its path to increase interest rates and surprisingly surging inflation in the U.S. Albeit money-market traders already priced in the ECB 25bps hike scheduled for July, now they are factoring a 40% probability of a heftier 50bps raise for September - one that would bring interest rates into positive territory almost 2 quarters ahead of forecasts after 8 years of ultra-loose monetary policy. ProfZero largely anticipated that markets didn't fully bake-in the ECB's course on monetary policy; now that that pocket of volatility has been uncovered, ProfZero sees turmoil on equity markets as the positions that were constructed in an attempt to call the bottom are unwound; yet with more clarity on the Regulation's side, now investors can rely on a more detailed strategic frame ProfZero does not like swelling correlations. They signal generalized distress amongst traders, with algorithms amplifying the sentiment. Seeing the blockchain space fall along with the market at large while BTC comes at the closing point of a mid-term triangle indicates a possibly painful breakout may be in the making PROFONE'S TAKE After the bank cut again its world economic growth forecast for 2022, World Bank's President David Malpass said “The world economy is again in danger”. According to the OECD, the world economy will pay a "hefty price" for the war in Ukraine. The macroeconomic scenario is not homogeneous, and emerging market economies are expected to bear the brunt of the worsening conditions. Some signs of relief are appearing instead in developed countries, thanks to small price declines for semiconductors and fertilizers. ProfOne reminds that June is the peak period for energy supplies to be stocked ahead of winter in the northern hemisphere, while freight rates are expected to be kept high by persistent port congestion and intensifying deliveries for goods to be dispatched ahead of holiday season. Under such premises, Profs see but scant possibilities for near-term solution to the inflation equation, left alone the possibility of a "soft landing" for the economy deeper in 2022 PROFTHREE'S TAKE Mixed news coming from China - trade data showed exports bounced back in May, growing at 16.9% on a yearly basis, while also imports rose to 4.1% after both indicators had hit the floor in April amidst COVID-related restrictions. Yet, albeit trade figures beat expectations, investors somewhat shifted their attention to a new lockdown in one district of Shanghai, which capped the gains in Asian markets. ProfThree has set its eyes on the containment of COVID in Inner Mongolia, China’s key coal mining province, which now accounts for almost a half of total Omicron cases in the country. With coal supply and the related logistics under strain, prices might surge even higher, compounding to global energy supply and security concerns
CME:BTC1!
by ProfZero
ECB raises key rate by 25 basis points in JulyEUR/USD ⬇️ GBP/USD ⬇️ AUD/USD ⬇️ USD/CAD ⬆️ XAU ⬇️ WTI ⬇️ The European Central Bank (ECB) finally relents, and prepares to increase the key interest rate by 25 basis points in July, while other interest rate categories remain unchanged. In its statement, the ECB claims “conditions have been satisfied” for a rate hike and net asset purchases will cease as means to tighten the monetary policy. In response to this update, EUR/USD dipped from 1.0760, stabilized at 1.0620 with a closing price of 1.0614. While the ECB decision is less aggressive than the Federal Reserve and Reserve Bank of Australia, the ECB is expected to raise the key interest rate again in September. Greenback also rallied against other major currencies, GBP/USD dipped from 1.2552 to 1.249. New lockdown measures were imposed in Shanghai and Beijing to meet China’s zero-case policy target, both Australian currency and economy were dampened, AUD/USD declined to 0.7097, after trading flat at 0.7095. USD/CAD climbed and plateaued at 1.270 level to close at 1.2696, as Canada’s Net Change in Employment is expected to have a 30,000 increase - a double over last month’s growth of 15,200. A strong dollar and higher US treasury yields have gold futures prices subdued, spot gold briefly fell to 1,842 per ounce but quickly recovered to 1,852.8. The downsizing of several US refineries did not deter the oil bulls, crude oil went down to 121.51 a barrel, now on its way back to 120. Later tonight (10 June), forecasts have projected a 0.5% increase in US Core Consumer Price Index (CPI), and general CPI going even higher with oil prices soaring. More market information on Mitrade website.
NASDAQ:XAU
by Mitrade_official
EUR/USD Under Pressure After ECB, U.S. Inflation Data EyedThe EUR/USD pair is losing ground on Thursday, following the European Central Bank monetary policy announcement. After hitting a nine-day high of 1.0773, the EUR/USD turned lower and dropped to its lowest in over two weeks at 1.0615 as investors assess the ECB outcome. The ECB announced the end of its monetary stimulus program at the beginning of July and hinted at a 25 basis points rate hike for next month. While many were expecting a nod to a more aggressive 50 bps increase move, the bank also painted a grim economic outlook, triggering risk aversion across the board. President Christine Lagarde suggested that the economic outlook has worsened, as near-term activity is expected to be negatively affected by higher energy costs, while price increases have spread across other sectors and risks remain tilted to the upside. During Lagarde’s press conference, the euro came under pressure even as German 10-year bond yields hit fresh multi-year highs at 1.47%. Despite US 10-year yields staying above 3.0%, the US-DE 10-year spread fell to its lowest level since July 2021 of 160 bps but provided no relief to the shared currency. On Friday, the U.S. will release May’s Consumer Price Index, which is expected to show that prices grew at an annualized pace of 8.3%, supporting the view that the Fed is headed to more rate increases. From a technical perspective, the EUR/USD short-term outlook has turned slightly bearish according to the daily chart. The price has dipped below the 20-day SMA while the RSI has crossed its midline upside-down and the MACD continues to point at dwindling buying interest. Still, the pair has managed to hold above the 1.0600 level so far. A break below could increase the bearish pressure. Next supports are seen at 1.0532, May 20 low, 1.0500 and the previous swing low at 1.0470. On the other hand, the EUR/USD needs to regain the 1.0700 level to improve the short-term perspective, with 1.0770 and 1.0850 as next bullish targets.
by Alex_Boltyan_FXAnalyst
EUR/JPY tops 144 as ECB-BoJ gap widens: 149 in sight?The euro-yen exchange rate ( EUR/JPY ) hit new year-to-date highs, surpassing the psychological level of 144, as monetary policy divergences between the European Central Bank, which has already widely telegraphed its first rate hike in over a decade, and the Bank of Japan, which remains imprisoned by an extremely dovish monetary policy, widened further. The spread between the yield on a German 2-year bond and the Japanese equivalent – which acts as a proxy for measuring monetary policy divergences between countries – has now reached 0.7%, the highest since August 2011, exerting upward pressure on the EUR/JPY exchange rate. The Eurozone is now experiencing more inflationary pressures than Japan. Annual inflation in the Eurozone surged to 8.1% in May 2022, a new record high and well above market expectations of 7.7%, while consumer prices in Japan only grew by 2.5% year on year in April 2022. While the Bank of Japan can still tolerate the yen's depreciation – which has lost 16% versus the dollar and 11% against the euro since the start of the year– due to the presence of a relatively contained inflation, the ECB no longer has this luxury. The market is anxiously awaiting the ECB's meeting tomorrow. A rate rise in July is already priced in, and additional hawkish signals (such as leaving the door open to a 50 basis point raise or not ruling out quantitative tightening by the end of the year) may provide additional support for the euro versus the Japanese yen. Next barrier is 4% away at 149 levels, which corresponds to the EUR/JPY pair's December 2014 highs. Beyond this level, one may consider 153.8, which served as a major support level from 2007 to September 2008.
by Capitalcom
Radar recap before the breakoutPROFZERO'S TAKE - RADAR RECAP Ever since the very first edition of our daily Parlay, Profs have repeatedly cited their radar to keep track of ongoing macroeconomic developments and forming views. It's about time then for a first full-blown recap of what we are looking at right now, and how do we see the next steps moving: World politics: The war in Ukraine has reshaped European geopolitics, forcing the EU to rethink its entire energy supply and security policy off from Russia, other than bringing the continent back to reassessing the readiness of its armed forces. The blockade of the port of Odesa exacerbated supply-chain tensions that had been simmering since 2021, pushing commodity prices to all-time highs in energy and fertilizers and ushering the risk of famine and social unrest in the Middle East and Africa due to shortage of cereals and calories at large. Meanwhile, the relationships between the U.S. and China remain tense over Taiwan, as the island remains exposed to a potential Chinese invasion - Bearish Monetary policy: Central banks around the world have finally taken inflation seriously, launching interest rate hike and balance sheet trimming plans in an attempt to cool price surges and yet preserve growth and employment in the real economy. U.S. data in May were in fact supportive, with Main Street adding 390,000 jobs and keeping unemployment as low as 3.6%. Yet, the effects of higher interest rates are going to be felt only as they trickle down through the economy, in the form of costlier mortgages for homeowners and more expensive or altogether barred access to debt financing for sub-investment grade nations and corporates. As a result, defaults could sweep the economy, as already seen by the failure of Sri Lanka to pay its foreign-currency debt; the looming default of Russia; and the collapse back in 2021 of Chinese constructions giant Evergrande - Neutral Equities: The secular bull run hit by equities since the fall of Lehman Brothers in 2008, and fueled by loose monetary and fiscal policy on both shores of the Atlantic, hit a major stop in Q1 2022, when investors rushed to the door, spooked by the prospects of Regulators draining liquidity from the system. As a result, Nasdaq plunged 30% from peak (November 2021) to trough (April 2022), while S&P 500 only teetered on the brink of a bear market (negative 19.9% peak-to-trough). Investor fled Growth stocks whose profits are deep in the future, hence exposed to greater discounting by higher interest rates, favoring Value equities thanks to the solidity of their balance sheets and capacity to generate income via dividends. ProfZero argues that within the very Growth space, Value-like equities do already exists - tech giant Microsoft (MSFT) for instance is America's best-rated company (AAA/stable) - Neutral Commodities: After a lost decade, and crude oil trading even in negative price territory for one day in 2020 (April 20, WTI crude contract settling at negative 37.63/boe), commodities came back roaring in 2022, in what analysts at Goldman Sachs have already dubbed the beginning of a new supercycle. ProfZero concurs that commodities - and their supply chains - have been taken for granted for too long; now, in the wake of de-globalization talks, developed as well as emerging economies find themselves rattled by the prospects of unsustainably high - or even unaccessible - key commodities like fuel and fertilizers, or even worse calories. Thinking one step ahead, ProfOne has set its eyes on the minerals of the future - cobalt, lithium and nickel - reminding that these are also highly concentrated in a handful of areas around the globe, thus possibly falling into the same supply trap of the commodities of the past century - Bullish Blockchain assets: A unprecedented "crypto winter" has gripped investors in the blockchain space, first sending BTC from all-time at USD 68,990 in November 2021 to USD 25,350 on May 12, 2022 (63% peak-to-trough), then decreeing the collapse of Terra/LUNA project in just 3 days on the second week of May this year. Yet, the blockchain space is showing remarkable resilience, with BTC resisting further slides and in fact potentially preparing for a new "golden age", as foreseen by venture capital fund Andreesen Horowitz. ProfZero remains focused on the superiority of the blockchain as a technology, capable to shape the next decade in information processing, automotive, entertainment, finance and healthcare - Bullish
CME:BTC1!Long
by ProfZero
EURJPY Fundamentals and more potential UPSIDESHey traders, above is a fundamental overview on EURJPY, we have seen the pair flying recently to 142 levels. that was due to high levels of OIL and fear of inflation in JAPAN as the country is considered an OIL importer which result EURJPY to jump from 138 to 142 Levels, now the price is consolidating. we are watching to buy the retrace of the bull flag breakout where the price is consolidating for the time being. we still see some potential upsides as we have ECB statement on Thursday where we will focus on EURO longs as the EUROPEAN Central Bank is heading towards a hike in interest rate as one of the most hawkish statements around. Once we will receive any bullish confirmation the trade will be executed. Don't forget to leave your comment and opinions.
Long
by JoeChampion
4
BTC negating breakout could mean impending correctionINVESTMENT CONTEXT The epicenter of the Ukraine conflict is now Severodonetsk, where 70% of the strategically important eastern city had been captured by Russia, until a Ukrainian counterattack claimed it back The World Health Organisation (WHO) reported that there have been 780 confirmed monkeypox cases over the past three weeks in countries where the disease is not endemic The WTO dubbed the global risk for monkeypox as "moderate" U.K. sales in May fell 1.1% on a yearly basis, as consumers cut down on big-ticket items like furniture and electronics A global rush to secure lithium, nickel, cobalt and other key battery minerals from a handful of nations is sending commodity and battery prices to all-time highs Goldman Sachs senior chairman Lloyd Blankfein urged investors to "dial back" on negativity, seeing a rather possible "soft landing" for the economy PROFZERO'S TAKE ECB policy makers are clashing about when to stop reinvesting into the continent's government bonds, with some positing to act as early as this week. ProfZero keeps ECB - and now also Bank of England, BoE - policy making high on its radar, as but parts of the impending quantitative tightening have been priced by market In a rather choppy session, equities gave up much of the earlier gains on June 6 as bear momentum persisted. ProfZero concurs with The Economist on a recession in the making for 2023 or even 2024, as higher interest rates trickle down into costlier mortgages and liquidity dry-up for "zombie" corporates (i.e. firms that can't generate sufficient cash flow to make up for interest payments). Yet near-term breathers like China's reopening and the resilience of U.S. economy point to a rather mild crash. Will that be enough to absorb also the surge in commodity prices? Much of the answer lies in China, where Goldman Sachs just boosted forecasts May 20, June 1 and June 6: ProfZero called all BTC sell-offs indicating insufficient buy-side pressure. Now that the triangle trade is restored, a potential correction is brewing - a new call on leg (C) of short-term Elliott wave PROFONE'S TAKE ProfOne’s sees it about time to dig into container shipments, given that 90% of the world's goods are seaborne. Port bottlenecks, shortage of empty containers and land transport delays, worsened by Ukraine-Russia war and Chinese lockdowns, caused the well-known supply chains disruptions of 2021. Freight rates are in average five time higher now compared to pre-pandemic levels. While global carriers are enjoying the sixth straight quarter of record-high profits, prices do not see signs of abating. ProfOne agrees that China reopening and decline of consumer demand like in the U.K. could ease the situation, but there is no optimism about steep freight rates reduction just ahead of peak delivery season and ports congestion still at historically high levels PROFTHREE'S TAKE Building on China's Premier Li Keqiang warning in May that the economy is now facing bigger difficulties than those in 2020, ProfThree points out a contraction of China’s services activity for the third month in a row. In May, the Caixin gauge rose to 41.1 points after plunging to 36.2 in April, yet remained well below the 50.0 points level which separates growth from contraction. Referring to ProfZero’s recent reflection on the deflationary nature of services consumption, ProfThree is worried about the growing unemployment the sector is facing due to COVID-induced restrictions, and its effect on the economy. Profs are awaiting Chinese data on inflation due June 10, both PPI and CPI (Producers’ and Consumers’ Price Index, respectively). The print is considered one of the key factors in the People's Bank of China's decision on interest rates expected by the third week of June
CME:BTC1!
by ProfZero
Irrational market is about to endXETR:DAX The macro condition is continuously deteriorating. Record braking inflation across the Euro Area, worsening supply chain issues, declining PMIs and lower consumer confidence. It's a non-stop barrage of negative news. Surprisingly enough, though, the indices have been having a great time. But the last ray of light is about to be clouded with the ECB meeting looming this week. DAX is about to experience its first significant decline after a couple of weeks of resilient pumping. As for technical analysis, we can observe a pretty clear double top forming at the ~14600 level, lowering volume and an exhaustion candle today - all pointing towards a reversal. Be wary of another low volume pump tomorrow but overall, expect a red weekly candle.
XETR:DAXShort
by hidelord
EUR/JPY CONTINUED GAINS SEEM LIKELYHaruhiko Kuroda, Governor of the Bank of Japan (BOJ), expressly denies expectations of monetary and fiscal policy tightening in the coming months. He said Japan is in no position to tighten monetary policy. This clearly indicates that the yen might be significantly weaker. Technically, price is currently treading above 138.938. We expect it to find resistance at around 141.629 to 143 area. However, upside momentum may be nullified if a reversal happens to occur when price pullbacks and breaks below the turning point 138.938
Long
by TradeyMarkets
EURCHF: Inflation still a negative catalyst for ECB!EURCHF Intraday - We look to Sell at 1.0326 (stop at 1.0358) Daily signals are mildly bearish. Price action continued to range between key support & resistance (1.0250 - 1.0330) although we expect a break of this range soon. The bias is to break to the downside. Further downside is expected although we prefer to set shorts at our bespoke resistance levels at 1.0330, resulting in improved risk/reward. Our profit targets will be 1.0254 and 1.0220 Resistance: 1.0280 / 1.0300 / 1.0330 Support: 1.0260 / 1.0250 / 1.0230 Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’) . Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
Short
by VantageMarkets
ProfZero likes relief trades, but calls BTC overheat for now 🤒INVESTMENT CONTEXT After choppy negotiations, the EU finally agreed on May 31 to ban oil and petroleum products from Russia, with a temporary exception for imports carried via pipeline Inflation reading in EU for the month of May scored 8.1% on a yearly basis, well above median analyst estimates of 7.8% and April 7.5% reading, underscoring inflation is still far from having peaked Insider buying at S&P 500 companies in May has been the strongest since March 2020, signaling that blue chip executives have called the bottom on their stocks President Joe Biden said on May 30 that the U.S. will not send Ukraine long-range rocket systems that could attack Russian territory, in an apparently de-escalatory move Blockchain assets confidently extended gains even as market sentiment persists in Extreme Fear territory, with BTC attempting to regain 32k in upward channel breakout PROFZERO'S TAKE ProfZero reads the latest signals from the West to Ukraine as underwhelming, and only mildly conductive of greater resolve to bring the conflict to an end. In fact, ProfZero and ProfOne already remarked the faltering cohesion of the bloc on crude oil could only translate into yet deeper fractures on natural gas, especially as the buy season for winter 2022-2023 is now reaching its peak Russia has signaled its willingness to facilitate the unhindered export of grain from Ukrainian ports to destination countries, in coordination with Turkey. The move may represent a major relief to several Middle Eastern and North African economies (Egypt, Lebanon, Libya and Tunisia in particular) that rely for at least half of the daily cereal supply from Ukraine - and a deflation factor on soft commodities at large ProfZero highly values insider buying to read bull cycles - definitely another relief element in the picture ProfZero is amongst those not caught off-guard by EU spike in inflation in May. As it was shared for the past month, there simply is no corner of the economy as of now from which price decreases could originate. Brent prices in fact keep swelling, and on May 30 they broke through USD 120/boe, a major technical as well as fundamental indicator; the embargo on two-thirds of crude imports from Russia certainly will not contribute to bringing prices down. With the ECB still expected to officialize its monetary policy, it is easy to see mounting pressure to for tighter interest rate increases - with all too known prospective effects on markets The two-day rebound staged by blockchain assets has reached a standstill, with BTC nonetheless trading firmly above USD 31.5k, pulling up the entire asset class (noteworthy overperformance of Layer-1 asset ADA, up 45% in 3 days). Yet ProfZero sides with rather bearish analysts, interpreting the rally as largely a relief trade out of oversold territory. Still, seeing BTC breaking out of the 2-week range-bound channel and potentially setting for leg (D) of a bearish Elliott wave may concur to moderately optimistic scenario in the short term PROFTHREE'S TAKE ProfThree and ProfZero agree - it’s time to talk about gold. Bullion has historically been responsive to changes in the Fed’s monetary policy, as well as to fluctuations in bond yields and US dollar. ProfThree doubts the recent slowdown in U.S. Personal Consumption Expenditures (PCE) print points to the peak of inflation already being at our back; in fact, the +50bps interest rate hikes expected for July and August are clear pitfalls ahead for zero-yielding gold. On a balancing note, ProfZero and ProfThree concur gold shall still enjoy price support on persistently higher inflation, and on Central Banks bolstering reserves in the wake of volatility
CME:BTC1!
by ProfZero
EUR/JPY - BUY SET UP ON ECB RATE HIKES The EURO now sits under 138.000 on the exchange rate, a key resistance level that will now surely break after European Inflation hit 8.1% for the month of April 2022, igniting the debate about whether the ECB should be raising rates at 0.50% increments instead of 0.25% increments as signaled by Christian Legard. With European Bond Yields climbing and paying a premium over Japan, the EURO will likely continue to strengthen against the YEN as interest rates rise in Europe. The overnight carry trade will start to become profitable for the EURO into 2023, which is likely to attract investors into buying the currency pair.
Long
by KayansMarkets
EUR/USD: Bears regain control and revisit 1.0730 31 May 2022, EUR/USD comes under pressure following recent tops. Germany labour market report, EMU Flash CPI next of note. US Consumer Confidence next on tap in the US docket. Sellers seem to have regained the upper hand and now drag EUR/USD back to the 1.0730 region on turnaround Tuesday. EUR/USD meets resistance just below 1.0800 Following three consecutive daily advances, EUR/USD now retreats to the 1.0730 after climbing to new monthly highs near 1.0790 at the beginning of the week. The so far corrective move in the pair comes in tandem with the resumption of some buying interest in the greenback, as US markets slowly return to the normal activity following Monday’s Memorial Day holiday. The ongoing decline in the pair also falls in line with the knee-jerk in the German 10y Bund yields, which retreat to the 1.04% region on Tuesday. In the domestic calendar, the German labour market report is due seconded by the preliminary inflation figures in the broader Euroland for the month of May. Across the pond, results from the housing sector are due ahead of the Consumer Confidence print tracked by the Conference Board. What to look for around EUR EUR/USD’s bounce off 2022 lows near 1.0350 (May 13) has been so far underpinned by unusual hawkish ECB-speak leaning towards an initial rate hike as soon as in July, while the consensus view that the bond-purchase programme should end at some point in early Q3 has also lent legs to the European currency. In addition, the renewed selling bias in the greenback has also collaborated with the multi-cent upside in the pair, as investors appear to have already pencilled in a couple of 50 bps rate hikes at the June and July gatherings. However, EUR/USD is still far away from exiting the woods and it is expected to remain at the mercy of dollar dynamics, geopolitical concerns and the Fed-ECB divergence, while higher German yields, elevated inflation and a decent pace of the economic recovery in the euro bloc are also supportive of an improvement in the mood around the euro. Key events in the euro area this week: Germany Unemployment Change, Unemployment Rate, EMU Flash Inflation Rate (Tuesday) – Germany Retail Sales, Final Manufacturing PMI, EMU Final Manufacturing PMI, ECB Lagarde (Wednesday) – Germany Balance of Trade, Final Services PMI, EMU Retail Sales, Final Services PMI (Friday). Eminent issues on the back boiler: Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro area. Impact of the war in Ukraine on the region’s growth prospects. EUR/USD levels to watch So far, spot is retreating 0.30% at 1.0741 and a breach of 1.0641 (low May 25) would target 1.0532 (low May 20) en route to 1.0348 (2022 low May 13). On the other hand, the next up barrier emerges at 1.0786 (monthly high May 30) followed by 1.0936 (weekly high April 21) and finally 1.0981 (100-day SMA).
by sniper_2022
EUR/USD - Recovery Losing MomentumThe dollar has given back a decent portion of its recent gains over the last couple of weeks and has now reached some very interesting levels. The greenback correction has coincided with a hawkish shift from the ECB which has lifted the euro, making the impact on the EURUSD pair all the more significant. But how much further can it run? It's now reached a potentially significant area around 1.08 where the top of the steeper descending channel crosses the 50 and 61.8 fibs. A break above here could be very significant and a bullish signal. Interestingly, the 4-hour chart suggests it's already struggling. Not long after breaking the 200/233-period SMA for the first time in a few months, momentum indicators are flashing divergences with price action. Has the recovery run out of steam? A move lower could see a significant test around 1.0650 where the 200/233-period SMA band coincides with early May resistance. A break below this could suggest a continuation of the trend that preceded the recent EURUSD recovery.
by OANDA
EUR/USD crosses over 50-day SMA: will 1.094 be retested?The EUR/USD pair has crossed over the 50-day simple moving average (SMA) at the 1.074 level, following preliminary data showing Germany's overall inflation rising 7.9% year-on-year in May, reaching its highest level since winter 1973 and above expectations of 7.6%. German inflation has sparked speculations about a 50 basis point increase in ECB interest rates, bolstering the single currency. The Euribor futures market is now fully pricing in 50-basis-point hike by July, EUREX:FEU3N2022 . Meanwhile, US economic prints – FRED:EXHOSLUSM495S housing data , ECONOMICS:USGDPQQ first quarter GDP, and the FRED:UMCSENT Michigan consumer sentiment index – fell short of forecasts last week, tempering Fed tightening expectations and weighing on the USD. Technically, the EUR/USD pair is recovering from the bullish divergence in mid-May, when prices established new lows but momentum oscillators (daily RSI) did not. On the upside, bulls see 1.094 as the next major resistance level, where they will face severe selling pressure from bears because the level has not been breached since April 6. On the downside, 1.064 may be a level of support for buyers looking to re-enter the short-term rally.
by Capitalcom
ECB playing it cool; hope it won't have to drop it like it's hotINVESTMENT CONTEXT According to the minutes of the latest Federal Open Market Committee meeting held in early May, policymakers remarked the need to keep raising the Fed's interest rate, noting that "a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook" Russia heavily cut interest rates for the second time since the beginning of the war in Ukraine, bringing it from 14% to 11% as annual inflation cooled from 17.8% in April to 17.5% as of May Thematic investment management giant Fidelity sees increased recession risk as volatility is set to persist After the collapse of LUNA, Terra project has voted to preserve the community and launch of a new blockchain, LUNA 2.0 PROFZERO'S TAKE While markets ambiguously read the minutes from FOMC meeting in May, ProfZero sees a rather coherent stance by policymakers, who won't refrain from exacerbating the already tightening monetary policy in order to tamp down inflation. What stood as a surprise to ProfZero was instead Ursula von der Leyen tone at Davos, where the EU Commission President said the EU won't be rushed into withdrawing monetary stimulus, and that supply-fueled inflation should not cause investor "panic". ProfZero concurs inflation in EU is largely imported; yet it fails to agree with Madame von der Leyen - the EU is caught between ailing growth, sticky inflation (flat around 7.5%) and threatened by massive debt loads (Italy above all). A tangle monetary policy alone may hardly undo all on its own Crude oil bull run is persisting deep into Q2, thus likely translating into yet another bumper quarter for energy majors. With Brent crude firmly above USD 100/boe and European natural gas (TTF) futures above 80 points after years below 20, ProfZero expects more good news for investors in the segment, especially in the form of greater dividend stability and buyback plans. Yet, as now several energy stocks trade at all-time highs (Cheniere, LNG; Chevron, CVX; Equinor, EQNR), ProfZero cautions against potential steep reversals should catalysts form to put a lid on prices - the ramp up in U.S. shale gas production should already alarm industry players, while on the opposite side it would play as a highly welcomed agent of deflation for economies at large When one of the world's most respected macroeconomists shares his views, ProfZero stands, and listens. Olivier Blanchard warned about swelling inflation as early as February 2021; now the former MIT Professor and Chief Economist at the International Monetary Fund (IMF) sees a "0.9 probability" the economy will return to a low-interest rates scenario, overcoming the tendency for markets to "focus on the present and extrapolate it forever". ProfZero has long been advocating in favor of keeping "cool heads" and focusing on underlying value fundamentals. Professor Blanchard would be proud to know ProfZero is really puzzled about the dynamics of semiconductor industry. One of the key commodities of the future has been in chronic undersupply for over a year. Yet, sector equities fail to impress, despite the apparent surge in pricing power. NVIDIA's (NVDA) beat on top and bottom line (USD 8.29bn revenue vs. 8.10 forecast; USD 1.36 EPS vs. 1.29) sent the stock sliding 7% in the after market, plunging it down 50% since the November 2021 peak. ProfZero well remembers how beaten energy stocks were during the pandemic, before roaring back in 2022. Is the same narrative brewing the semiconductor space?
CME:BTC1!
by ProfZero