US Dollar gains momentum into latter half of week

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 1.3000.

• R2 1.2849 – 16 June/2023 high – Strong
• R1 1.2760 – 27 June high – Medium
• S1 1.2607 – 28 June low – Medium
• S2 1.2600 – Figure– Medium

GBPUSD – fundamental overview

The Pound too a hard hit on Wednesday, feeling the pain from the news of the UK's largest water company being low on cash. Meanwhile front end rates were also skeptical about BOE Bailey's claim that rates could stay at peak levels longer than traders expect. Key standouts on Thursday’s calendar come from German inflation reads, UK consumer credit, mortgage approvals, and net lending, Eurozone sentiment and confidence reads, US GDP, initial jobless claims, and pending home sales.

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 145.00 – Psychological – Strong
• R1 144.62 – 28 June/2023 high – Medium
• S1 142.69 – 23 June low – Medium
• S2 141.21 – 20 June low – Strong

USDJPY – fundamental overview

It's been more of the same for the ailing Yen as we run into the latter portion of the week. The currency continues to extend declines to fresh yearly lows against the US Dollar on a very clear monetary policy divergence theme. Key standouts on Thursday’s calendar come from German inflation reads, UK consumer credit, mortgage approvals, and net lending, Eurozone sentiment and confidence reads, US GDP, initial jobless claims, and pending home sales.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base following the late 2022 surge back above 0.6500. Next key resistance comes in at 0.7284. Setbacks should continue to be well supported in the 0.6500 area. Only a monthly close below 0.6500 would give reason for rethink.

• R1 0.6806 – 22 June high – Strong
• R2 0.6721 – 27 June high – Medium
• S1 0.6597 – 28 June low – Medium
• S2 0.6564 – 10 March low – Strong

AUDUSD – fundamental overview

The Australian Dollar has really reconsidered its position in the aftermath of this latest soft Aussie inflation data. The data came in a good deal below forecast and with it, a repricing of RBA expectations, with market odds for a July hike sinking to about 20% from greater than 60% last week. Key standouts on Thursday’s calendar come from German inflation reads, UK consumer credit, mortgage approvals, and net lending, Eurozone sentiment and confidence reads, US GDP, initial jobless claims, and pending home sales.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term 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 1.3384 – 12 June high – Strong
• R1 1.3277 – 28 June high – Medium
• S1 1.3117 – 27 June/2023 low – Strong
• S2 1.3100 – Figure – Medium

USDCAD – fundamental overview

The Canadian Dollar was forced to rethink its bullish run after Canada CPI came in a good deal softer than expected earlier in the week. Odds for a July hike have now pulled back to about 50%. Meanwhile, commodities price weakness has also opened additional downside pressure on the Loonie. Key standouts on Thursday’s calendar come from German inflation reads, UK consumer credit, mortgage approvals, and net lending, Eurozone sentiment and confidence reads, US GDP, initial jobless claims, and pending home sales.

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. A monthly close below 0.6000 would intensify bearish price action.

• R2 0.6201 – 27 June high – Strong
• R1 0.6166 – 28 June high – Medium
• S1 0.6069 – 28 June low – Medium
• S2 0.6031 – 7 June low – Medium

NZDUSD – fundamental overview

New Zealand Fin Min Robertson has rejected the move to subordinate the RBNZ's maximum employment mandate to price stability. This is a dovish move that has since opened fresh selling in the New Zealand Dollar. Key standouts on Thursday’s calendar come from German inflation reads, UK consumer credit, mortgage approvals, and net lending, Eurozone sentiment and confidence reads, US GDP, initial jobless claims, and pending home sales.

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 4400 will be required to take the immediate pressure off the downside. Next key support comes in at 4260.

• R2 4500 – Psychological – Strong
• R1 4452 – 16 June/2023 high – Medium
• S1 4328 – 26 June low – Medium
• S2 4260 – 8 June 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 despite market expectations that would argue otherwise.

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 2076 – Record high/2020 – Strong
• R1 1986 – 24 May high – Medium
• S1 1903 – 28 June low – Medium
• S2 1900 – Round Number – 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.