Euro slammed on European election results

Next 24 hours: Euro still struggling after taking 1-2 punch

Today’s report: Euro slammed on European election results

Friday’s US jobs report has really done a good job shaking up the FX market, with the US Dollar racing back to the topside after we got a blowout NFP print well above forecast, also accompanied by hot wages.

Wake-up call

Chart talk: Technical & fundamental highlights

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EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0917 – 4 June high – Strong
  • R1 1.0813 - 3 May high – Medium
  • S1 1.0724 - 9 May low– Medium
  • S2 1.0695 – 14 February low – Strong

EURUSD – fundamental overview

The Euro has taken a hard hit in early Monday trade on the back of the news of French President Macron calling a snap election after getting defeated by the far right in the European elections. Meanwhile in Germany, Olaf Scholz's Social Democrats suffered their worst defeat on record, and over in Italy, Girogia Meloni is looking to solidify her control. Still, the three major centrist groups are expected to hold a comfortable majority despite the far right gaining seats. The only notable standout on Monday’s calendar comes from Eurozone consumer inflation expectations late in the day.

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 door is now open for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should be well supported ahead of 1.2000.

  • R2 1.2894 – 8 March/2024 high – Strong
  • R1 1.2818 – 4 June high – Medium
  • S1 1.2667 – 24 May low – Medium
  • S2 1.2643 – 16 May low – Strong

GBPUSD – fundamental overview

The Pound has come under some pressure into the new week, mostly on the back of the latest round of broad based US Dollar demand after Friday's US payrolls beat. Still, the market sees fewer rate reductions in the UK than in the US, which should keep the Pound well supported on dips. The only notable standout on Monday’s calendar comes from Eurozone consumer inflation expectations late in the day.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

  • R2 157.99 – 1 May high – Strong
  • R1 157.71 – 29 May high – Medium
  • S1 155.12 – 7 June low – Medium
  • S2 154.55 – 4 June low – Strong

USDJPY – fundamental overview

Thee had already been a nice wave of Yen selling after a strong headline US jobs report. Into Monday, there has been more Yen selling after the release of the final print of Japan's Q1 GDP which came in at -1.8% annualized, showing a massive economic contraction. The only notable standout on Monday’s calendar comes from Eurozone consumer inflation expectations late in the day.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6715– 16 May high – Strong
  • R2 0.6649 – 3 May high – Medium
  • S1 0.6558– 8 May low – Medium
  • S2 0.6500 – 8 May low – Strong

AUDUSD – fundamental overview

There is no denying the latest intense wave of downside pressure on the Australian Dollar coming from Friday's stronger headline US jobs report. Trading conditions have been rather light for the Australian Dollar as the week gets going given Aussie, China, and Hong Kong markets out on holiday. The only notable standout on Monday’s calendar comes from Eurozone consumer inflation expectations late in the day.

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 1.3847 – 16 April/2024 high – Strong
  • R1 1.3785 – 30 April high – Medium
  • S1 1.3662 – 7 June low – Medium
  • S2 1.3586 – 10 May low – Strong

USDCAD – fundamental overview

The Canadian Dollar couldn't avoid trading to multi-session lows against the Buck on a strong wave of Dollar demand from the US jobs report beat. However, the Loonie did hold up relatively well considering a better than expected Canada jobs report which reduced odds for a Bank of Canada cut at the July meeting to about 50% from what had been 70% a day earlier. The only notable standout on Monday’s calendar comes from Eurozone consumer inflation expectations late in the day.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6218 – 22 February high – Strong
  • R1 0.6171 – 28 May high – Medium
  • S1 0.6083 – 22 May low – Medium
  • S2 0.6031 – 15 May low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar kicks off the new week contending with an intense Friday retreat on the back of broad based US Dollar demand from a much stronger than expected US jobs report. The only notable standout on Monday’s calendar comes from Eurozone consumer inflation expectations late in the day.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. At the same time, the latest bullish breakout to a fresh record high beyond the 2024 high opens the door for the next measured move upside extension targeting the 5650 area. Key support comes in at 5194.

  • R2 5400 – Round Number – Strong
  • R1 5378 – 7 June/Record high – Medium
  • S1 5257 – 23 May low – Medium
  • S2 5194 – 31 May low – Strong

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite major disruption to the stock market.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.

  • R2 2500 – Psychological – Strong
  • R1 2451 – 20 May Record high – Medium
  • S1 2315 – 3 June low – Medium
  • S2 2277– 3 May low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical 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 end.

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

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