The markets are continuing to take cues from Friday’s developments with the UK general elections. With the economic calendar light today, the markets are likely to remain flat for the most part except for the British pound. Currently, price action is attempting to push higher with some retracement in sight.
The failure to get a clear majority on the elections held in the UK on Thursday has put more uncertainty in the composition of the British parliament, especially with the Brexit talks ready to start on 19 June. Thus, investor sentiment could remain cautious.
Besides the UK, the Fed, Bank of Japan, BOE and the SNB’s central bank decisions are lined up this week. Although for the most part, not many changes are expected, the Fed is all set to raise interest rates this week. This is likely to bring some volatility to the markets.
EURUSD intraday analysis
EURUSD (1.1206): EUR/USD closed below 1.1200 on Friday, but price action is likely to remain supported above this level in the short term. With the Fed’s decision on interest rates on Wednesday, we could expect some subdued price action in the near term. On the daily chart, theprice is consolidating within 1.1285 and 1.1100 forming a rising wedge pattern. We can expect some near-term upside to 1.1265 with the potential for a downside break. This will send EURUSD back to 1.1100 support level with the possibility of further downside testing 1.1000.
GBPUSD intraday analysis
GBPUSD (1.2758): The British pound closed strong below 1.2800 on Friday although prices were seen pulling back from a 2-month low. In the near term, GBPUSD could retest 1.2800 where resistance could now be developed. The overall bias remains to the downside, and if the 1.2800 resistance holds we could see further downside to 1.2600 which completes the head and shoulders pattern for the GBPUSD. Below 1.2600, further downside will push the currency pair towards 1.2400 support level which is pending retest.
USDJPY intraday analysis
USDJPY (110.26): USDJPY rallied to 110.79 on Friday before promptly giving up the gains. The declines we see could post a higher low on the chart. This could occur between 110.00 and 109.50. A higher low could signal a potential change in the short-term trend. USDJPY could retest the resistance at 110.79 followed by a move to 112.00.
