Comentário Diário | 21/06/2019
Dovish Fed continues to feed USD bears
The USD weakened further yesterday as the Fed’s dovishness on Wednesday continues to feed the bears around the USD. A further decline of the 10 year Treasury yield , near the 2% threshold, contributed to further USD weakness. Analysts tend to point out that the rally in gold’s prices, may foreshadow a longer timeframe of selling pressure for the greenback. Also, analysts tend to mention that the upside for the USD is capped as the market is already looking beyond the July meeting. We expect market focus to switch towards the Osaka G20 meeting next week in order to see if the US and China can resolve their trading differences. Unless we see some favorable fundamental headlines for the USD we could see it weakening even further, however some early signs of stabilization started to occur. EUR/USD continued its rise yesterday, clearly breaking the 1.1260 (S1) resistance level (now turned to support) and testing the 1.1300 (R1) resistance line. As the pair broke the upward trendline incepted since Wednesday, we switch our bullish bias in favor of a sideways motion scenario. Should the bulls once again reign over the pair’s direction, we could see it breaking the 1.1300 (R1) resistance line and aim for the 1.1340 (R2) resistance level. Should the bears be in charge, we could see EUR/USD breaking the 1.1260 (S1) support line and aim for lower grounds.
Pound weakens on BoE’s interest rate decision
BoE’s interest rate decision was released yesterday, and despite the bank remaining on hold as expected the pound weakened, as the outlook seems uncertain. Despite some hawkish comments in the near past by BoE members, the bank lowered its Q2 GDP estimate reaching 0.0% qoq. Also the bank seems to favor an ongoing tightening of the monetary policy at a gradual and limited pace. Yet the above scenario, assumes that a smooth Brexit will take place, which is highly uncertain. On the latest news regarding the UK political scene, the first phase for replacing Theresa May seems to be ending and now the members will have to choose between Boris Johnson and Jeremy Hunt for its next leader. We expect the pound to remain under pressure in the near term as uncertainty remains high. Cable maintained a sideways motion yesterday above the 1.2665 (S1) support line. As the pair broke the upward trendline incepted since the 18th of the month, we switch our bullish bias, in favor of a sideways scenario. Should the pair be under the selling interest of the market, we could see it breaking the 1.2665 (S1) support line and aim for the 1.2560 (S2) support barrier. Should the pair’s long positions be favored by the market, we could see it breaking the 1.2775 (R1) resistance line.
Other economic highlights, today and early tomorrow
Today during the European session, we get Eurozone’s preliminary PMI figures for June. In the American session we get Canada’s retail sales growth rates for April, the US preliminary Markit Mfg PMI for June and the Baker Hughes oil rig count figure. As for speakers, BoE’s Tenreyro, Fed’s Mester and Daly are scheduled to speak. During Monday’s Asian session RBA governor Lowe speaks.
• Support: 1.1260 (S1), 1.1220 (S2), 1.1180 (S3)
•Resistance: 1.1300 (R1), 1.1340 (R2), 1.1380 (R3)
• Support: 1.2665 (S1), 1.2560 (S2), 1.2475 (S3)
•Resistance: 1.2775 (R1), 1.2865 (R2), 1.2945 (R3)