US stocks declined in overnight trading as investors continued to react to fears of a second wave of the virus. The Dow Jones and the S&P500 declined for the third straight day. These declines came after China announced a series of new measures to limit movement in parts of Beijing as the number of new cases continued to rise. Also, authorities in Florida and Texas have reported a surge in cases, which means that the states could announce another round of lockdown. Investors are also concerned about an infrastructure bill, which is supported by Democrats and White House but opposed by some Republicans.
The Japanese yen gained slightly against the US dollar as investors reacted to the Japanese inflation data and Bank of Japan’s minutes. According to the statistics office, the national CPI remained at 0.1% in May while the core CPI remained at -0.2%. The CPI rose from the previous -0.1% to 0.0% on a month over month basis. These numbers show how difficult the situation is in Japan because of the pandemic. In its minutes released today, the BOJ justified its open-ended quantitative easing program, saying that it will help provide stability in the economy.
The British pound was little changed during the Asian session after dropping by more than 1% yesterday. The currency fell after the BOE released its rates decision in which it added £100 billion to its quantitative easing program. In the morning session, we will receive the May retail sales numbers from the UK. Analysts expect the data to show that the headline sales declined by 17.1% in May after dropping by another 22.6% in the previous month. They also expect the core retail sales to drop by 14.4% after falling by 18.4% in April. In addition to these, we will receive the German PPI numbers, interest rate decisions by the Russian central bank, and Canadian retail sales.
EUR/USD
The EUR/USD pair was little changed during the Asian session. It is trading at 1.1210, which is slightly above the overnight low of 1.1185. On the four-hour chart, this price is below the 50-day and 100-day exponential moving averages and between the 23.6% and 38.2% Fibonacci retracement level. It is also below the neckline of the head and shoulder pattern that has been forming throughout the week. As such, the pair may continue falling as bears attempt to move below 1.1200.
GBP/USD
The GBP/USD pair declined sharply yesterday after the BOE decision. It is now trading at 1.243, which is inches above yesterday’s low of 1.2400. On the four-hour chart, the price is below the 50-day and 100-day simple moving averages. Like the EUR/USD pair, the GBP/USD pair has moved below the head and shoulders neckline. This implies that the pair may continue falling as bears attempt to move below the 1.2400 support.
XBR/USD
The XBR/USD pair rose in overnight trading and the pair is trading at 41.75. This is a significant jump from the week’s low of 37.00. On the four-hour chart, the price is above the 61.8% Fibonacci retracement level and the short and medium-term moving averages. The price is also moving upwards as evidenced by the ascending trendline shown in white. Therefore, the price may continue rising as bulls attempt to target the previous resistance at 43.26.
