USD Remains Relatively Stable Amidst Low Market Volatility

Jun 28 21, 11:24 GMT

The greenback firmed during Friday’s late American session and today’s Asian session despite slightly softer inflation data released for May as well as the weaker than expected US consumption rate for the same month. The Aussie edged lower against the USD on Friday and Monday yet recovered the lost ground, as worries tend to increase about the delta variant of the pandemic in Australia, hurting investor sentiment. The pound weakened against the USD, EUR,JPY and CHF on Friday as the outlook of the UK recovery is clouded due to the Delta variant of the pandemic. Dow Jones rose, S&P 500 reached a new record high and Nasdaq retreated as US inflation data released on Friday were softer than expected on a month-on-month basis while the market’s attention turns to June’s employment report with the NFP figure which are due out at the end of the week. Gold prices inched higher on Friday and today’s Asian session, as the dollar showed some signs of weakness and despite US yields rising on Friday and seem about to correct lower today. Oil prices hit a new high since October 2018 during today’s Asian session as oil investors focus on the OPEC+ meeting this week and the possibility of Iran re-entering the oil market as a major exporter boosting supply seems to fade away.

The USD index maintained its sideways motion remaining afloat above the 91.75 (S1) support line, despite testing it at some points. As the index’s price action broke the downward trendline incepted since the 21st of June, we switch our bearish outlook in favour of a sideways bias. Should the bears regain control over the index we may see it breaking the 91.75 (S1) support line and aim if not breach the 91.30 (S2) support level. Should the bulls take over, we may see the index aiming if not breaking the 92.30 (R1) resistance level.

GBP/USD’s bearish tendencies continued during Friday’s American session, as the pair was aiming for the 1.3845 (S1) support line. For our sideways bias to change in favour of a bearish outlook though, we would require a clear breaking of the 1.3845 (S1) support line. Also we note that the RSI indicator below our 4-hour chart is below the reading of 50 which could provide a slight advantge for the bears. Should the pair actually remain under the selling interest of the markets we may see it breaking the 1.3845 (S1) support line and aim for the 1.3670 (S2) supprt level. Should buyers be in charge of cable’s direction, we may see the pair, reversing course, breaking the 1.3990 (R1) line and aim for the 1.4145 (R2) resistance level.

Other economic highlights today and the following Asian session:

No major financial releases are expected today NY Fed President Williams , ECB Vice President Luis De Guindos and Philadelphia Fed President Harker are scheduled to speak. During tomorrow’s Asian session we get from Japan the unemployment rate as well as the retail sales growth rate, both being for May.

As for the rest of the week

On Tuesday, we note UK’s preliminary Nationwide house prices for May, Germany’s preliminary HICP rate for June and the US Consumer Confidence for June. On Wednesday, we get Japan’s preliminary industrial output for May, China’s NBS manufacturing PMI for June, UK’s GDP rate for Q1, France’s CPI (EU Normalised) for June, Switzerland’s KOF indicator for June, Eurozone HICP for June and Canada’s GDP rate for April. On Thursday, we get Japan’s Tankan indicators for Q2, Australia’s Trade Data for May, China’s Caixin manufacturing PMI for June, Switzerland’s CPI rates for June, Sweden’s Riksbank interest rate decision, Germany’s Markit Manufacturing PMI for June and from the US the weekly initial jobless claims figure as well as the ISM manufacturing PMI for June. On Friday, we highlight the US Employment report for June with its NFP figure and the Canada’s Building approvals for May.

USD Index H4 Chart