Looking for activity to pick up

Next 24 hours: Risk sentiment sours

Today’s report: Looking for activity to pick up

Monday was an uneventful day of trade for the most part. Absence of any meaningful economic data on the calendar or any important updates around the US debt ceiling or the monetary policy outlook have left things in a state of narrow consolidation.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The Euro remains well supported on dips following a run to the topside through 1.1000 earlier this year. Any additional setbacks should be well supported ahead of 1.0500 in favor of the formation of the next major higher low and a bullish continuation. Ultimately, only a monthly close back below 1.0500 would give reason for concern. Next key resistance comes in the form of the March 2022 high at 1.1185.

  • R2 1.0905 – 16 May high – Strong
  • R1 1.0849 - 18 May high – Medium
  • S1 1.0760 - 19 May low – Medium
  • S2 1.0713 – 24 March low – Strong

EURUSD – fundamental overview

The Euro has sold off a bit on soft construction and confidence data. Meanwhile, ECB's Villeroy expects rate peak by September at the latest, with a hike or pause possible in the next three meetings. Key standouts on Tuesday’s calendar come from an ECB Guindos speech, German Eurozone and UK PMI reads, Canada producer prices, US new home sales, and US building permits.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2680.

  • R2 1.2547 – 16 May high – Strong
  • R1 1.2493 – 18 May high – Medium
  • S1 1.2391 – 18 May low– Medium
  • S2 1.2344 – 10 April low – Strong

GBPUSD – fundamental overview

The Pound came under mild pressure on Monday, mostly on reports of long liquidations. Key standouts on Tuesday’s calendar come from an ECB Guindos speech, German Eurozone and UK PMI reads, Canada producer prices, US new home sales, and US building permits.

USDJPY – technical overview

The major pair has seen a nice recovery following the massive correction out from multi-year highs. Setbacks have finally been well supported ahead of 125.00 in the 127s thus far. At this stage, it looks like the market could be wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported in favor of higher lows along the way.

  • R2 139.90 – 30 November high – Strong
  • R1 138.88 – 23 May/2023 high – Medium
  • S1 136.30 – 17 May low – Medium
  • S2 135.64 – 15 May low – Strong

USDJPY – fundamental overview

The Yen has extended its run of declines to fresh yearly lows against the Buck on more dovish comments out from the BOJ. BOJ Kazuo was out reiterating calls for continued ultra-easy policy. Key standouts on Tuesday’s calendar come from an ECB Guindos speech, German Eurozone and UK PMI reads, Canada producer prices, US new home sales, and US building permits.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base following the late 2022 surge back above 0.6500. The recent weekly close back above previous support now turned resistance at 0.6682 strengthens the outlook for a bullish structural shift. Next key resistance comes in at 0.7284. Setbacks should be well supported ahead of 0.6500.

  • R1 0.6806 – 14 April high – Strong
  • R2 0.6804– 8 May high – Medium
  • S1 0.6590 – 15 March low – Medium
  • S2 0.6564 – 10 March low – Strong

AUDUSD – fundamental overview

The Australian Dollar was weighed down on Monday from weakness in the RMB and metals prices. Key standouts on Tuesday’s calendar come from an ECB Guindos speech, German Eurozone and UK PMI reads, Canada producer prices, US new home sales, and US building permits.

USDCAD – technical overview

A recent surge back above 1.3000 signals an end to a period of bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3600 – Figure – Medium
  • R1 1.3568 – 15 May high – Medium
  • S1 1.3404 – 16 May low – Medium
  • S2 1.3301 – 14 April low – Strong

USDCAD – fundamental overview

A mild session for the Canadian Dollar on Tuesday, with the currency getting sold just a bit on falling commodities prices. Key standouts on Tuesday’s calendar come from an ECB Guindos speech, German Eurozone and UK PMI reads, Canada producer prices, US new home sales, and US building permits.

NZDUSD – technical overview

Overall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6577 would be required to take the immediate pressure off the downside.

  • R2 0.6391 – 14 February high – Strong
  • R1 0.6306 – 19 May high – Medium
  • S1 0.6111– 26 April low – Medium
  • S2 0.6084 – 8 March low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been getting help from higher US equities and solid local developments. This resulted in the currency standing out as the best performer in the G10 over the past week and month. Most recently, the NZ trade deficit swung to a surplus, and NZ FinMin Robertson said he doesn't think New Zealand's credit rating will be downgraded. Key standouts on Tuesday’s calendar come from an ECB Guindos speech, German Eurozone and UK PMI reads, Canada producer prices, US new home sales, and US building permits.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4300 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in at 4049.

  • R2 4217 – 26 August high – Strong
  • R1 4217 – 19 May/2023 high – Medium
  • S1 4100 –  12 May low – Medium
  • S2 4049 – 4 May low – Strong

US SPX 500 – fundamental overview

We've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy that risks potential recession in the months ahead. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. The recent break back above 1808 strengthens the bullish outlook. Next major resistance comes in at 2100, above which opens the next extension towards 2,500.

  • R2 2100 – Round Number – Strong
  • R1 2076 – Record high/2020 – Strong
  • S1 1952 – 18 May low – Medium
  • S2 1934 – 22 March low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Peformance chart: 30 Day Performance vs. US dollar (%)

Suggested reading

Daily Reports Global FX Insights   LMAX Exchange  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.