Stocks lower ahead of Q2 earnings

Next 24 hours: Inflation data continues to be a major headache for the Fed

Today’s report: Stocks lower ahead of Q2 earnings

While the Euro did indeed finally drop down to test parity on Tuesday, the ability for the single currency to avoid crashing below the barrier was actually quite impressive when considering the horrid German and Eurozone ZEW reads.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The market has come under intense pressure in recent months, with setbacks accelerating below the critical multi-year low from 2017 at 1.0340. This sets up a test of monumental support in the form of parity. At the same time, technical studies are tracking in oversold territory, suggesting additional setbacks should be limited. Back above 1.0500 would be required to take the immediate pressure off the downside.

  • R2 1.0400– Figure – Medium
  • R1 1.0278 - 6 July high – Medium
  • S1 1.0000 - 12 July/2022 low– Strong
  • S2 0.9900 – Figure – Medium

EURUSD – fundamental overview

We likely saw some option inspired price action on Tuesday, with the Euro kissing parity before bouncing off the massive level. The latest downside price action was helped along after German and Eurozone ZEW reads came in well below expectation. Key standouts on today’s calendar come from the RBNZ policy decision, China trade, German inflation, UK industrial production, trade, and GDP, Eurozone industrial production, US inflation, the Bank of Canada policy decision, and the Fed Beige Book.

EURUSD - Technical charts in detail

GBPUSD – technical overview

The market continues to be exceptionally well supported on dips below 1.2000. Unless we see a monthly close below 1.2000, we expect this to continue to be the case. Look for a break back above 1.2200 to take the immediate pressure off the downside.

  • R2 1.2214– 29 June high – Medium
  • R1 1.2056 – 8 July high – Medium
  • S1 1.1807 – 12 July/2022 low – Medium
  • S2 1.1800 – Figure – Strong

GBPUSD – fundamental overview

We've already seen the Pound suffer from policy divergence between the BOE and Fed, and we've already seen downside pressure from political uncertainty. Throw in more downside pressure this week on the headlines out of Heathrow that it will impose a cap of 100k daily departures, while asking airlines to stop selling summer tickets. Key standouts on today’s calendar come from the RBNZ policy decision, China trade, German inflation, UK industrial production, trade, and GDP, Eurozone industrial production, US inflation, the Bank of Canada policy decision, and the Fed Beige Book.

USDJPY – technical overview

The market has rocketed higher to its highest levels since 1998 after breaking through the 2002 high. Technical studies are however looking stretched, with scope for a sizable consolidation and correction in the weeks ahead. Look for additional upside from here to be well capped ahead of 140.00. A break back below 134.00 would take the immediate pressure off the topside.

  • R2 138.00 – Figure – Strong
  • R1 137.76 – 11 July/2022 high – Strong
  • S1 135.93 – 11 July low – Medium
  • S2 134.26 – 23 June low – Strong

USDJPY – fundamental overview

The combination of hotter Japan producer prices and comments from finance minister Suzuki that FX rates are being monitored with a strong sense of urgency, was enough of a combination to open some well overdue demand for the beaten down Yen. Key standouts on today’s calendar come from the RBNZ policy decision, China trade, German inflation, UK industrial production, trade, and GDP, Eurozone industrial production, US inflation, the Bank of Canada policy decision, and the Fed Beige Book.

AUDUSD – technical overview

Overall pressure remains on the downside and conditions remain quite choppy. A break back above 0.7070 would be required at a minimum to take the immediate pressure off the downside. Until then, scope exists for deeper setbacks towards 0.6500.

  • R1 0.6965 – 28 June high – Medium
  • R2 0.6875 – 8 July high – Medium
  • S1 0.6711 – 12 July/2022 low – Medium
  • S2 0.6700 – Figure – Strong

AUDUSD – fundamental overview

Most of the latest slide to fresh yearly lows in the Australian Dollar has come from renewed worry around the coronavirus in China. Meanwhile, a sharp decline in the price of iron oil has also contributed to the Aussie weakness. Key standouts on today’s calendar come from the RBNZ policy decision, China trade, German inflation, UK industrial production, trade, and GDP, Eurozone industrial production, US inflation, the Bank of Canada policy decision, and the Fed Beige Book.

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 1.3500 area. Setbacks should be very well supported down into the 1.2500 area.

  • R2 1.3079 – 17 June/2022 high – Strong
  • R1 1.3000 – Psychological  – Medium
  • S1 1.2820 – 28 June low – Medium
  • S2 1.2681 – 10 June low – Medium

USDCAD – fundamental overview

While the Canadian Dollar has suffered against the US Dollar in recent sessions, the Loonie has held up well against its peers on account of supported oil prices. All eyes now on today's Bank of Canada policy decision where the central bank is expected to raise rates by 75 basis points. Other key standouts on today’s calendar come from the RBNZ policy decision, China trade, German inflation, UK industrial production, trade, and GDP, Eurozone industrial production, US inflation, and the Fed Beige Book.

NZDUSD – technical overview

Overall pressure remains on the downside and conditions remain quite choppy. A break back above 0.6400 would be required to force a shift in the structure and suggest we are seeing a more significant bullish reversal. Until then, scope exists for fresh yearly lows and a retest of the major psychological barrier at 0.6000.

  • R2 0.6327 – 27 June high – Medium
  • R1 0.6260 – 29 June high – Medium
  • S1 0.6097– 11 July/2022 low – Medium
  • S2 0.6000 – Psychological – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has extended declines to a fresh yearly low this week, this on the back of ongoing monetary policy divergence with the FOMC and broad based risk off flow. The market will now settle in and digest the latest RBNZ decision due today. The expectation is the central bank will go ahead and hike 50 basis points. Key standouts on today’s calendar come from the RBNZ policy decision, China trade, German inflation, UK industrial production, trade, and GDP, Eurozone industrial production, US inflation, the Bank of Canada policy decision, and the Fed Beige Book.

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. Back above 4,206 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in around 3,400.

  • R2 4031 – 10 June high – Medium
  • R1 3950 – 28 June high – Medium
  • S1 3708 – 14 June low – Medium
  • S2 3637 – 17 June/2022 low – Strong

US SPX 500 – fundamental overview

With so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with rising inflation and slower growth should continue to weigh more heavily on investor sentiment in 2022.

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 1700.

  • R2 1880 – 13 June high – Strong
  • R1 1815 – 4 July high – Medium
  • S1 1723 – 12 July/2022 low – Medium
  • S2 1700 – 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 exhausted monetary policy, extended global equities, and inflation risk. 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.