USD Gains For A Second Day In A Row

Jun 29 21, 10:34 GMT

The US Dollar gained yesterday against a basket of its counterparts with the exception of JPY maybe because safe haven flows tended to favor the Japanese currency even more. Recent comments made by Fed officials tended to increase the attention of the market in regards to financial data and given that Fed Chairman Jerome Powell last week stated that the bank will not act simply on fear of inflation focus is on the employment data due out this week. On the fundamental front the progress made in the agreement of another infrastructure spending package tends to provide some support for the USD as well as US stockmarkets of which Nasdaq reached new record highs. In the Forex market both the greenback and the Yen tended to gain on the market’s worries which are related to the Delta strain of the pandemic enjoying some safe haven inflows. Attention could also turn to today’s US financial releases, while EUR traders may keep an eye out for Germany’s inflation rates.

Nasdaq continued to rise yesterday and broke the 14475 (S1) resistance line, now turned to support thus reaching new record highs. We tend to maintain a bullish outlook as long as the upward trendline incepted since the 16th of June continues to guide the index. It should be noted that the RSI indicator below our 4-hour chart, has surpassed the reading of 70 which one the one hand confirms the bull’s dominance, while on the other hand may imply that the index is overbought and a correction lower is possible. Should the bulls maintain their control over the index, we may see Nasdaq breaking the 14650 (R1) resistance line and aim for the 14825 (R2) level. Should the bears say enough is enough and take over, we may see the index breaking the 14475 (S1) support line, the upward trendline and aim for the 14270 (S2) support level.

The path of the pandemic weighs on the Aussie

The Aussie seems to be weakening against the USD today given that the commodity currency was hurt by the weak risk appetite of the market. The path of the pandemic seems to be weighing on the Aussie, given that the lockdown measures in Australia were extended. On the monetary front, we highlight RBA Governor Lowe’s speech and any dovish comment also given the path of the pandemic in Australia could weaken AUD, given that the bank is to have a meeting next week. During Wednesday’s Asian session, we get China’s NBS manufacturing PMI for June, which is expected to drop somewhat and if so, could weaken the Aussie as the drop may imply less exports of raw materials from Australia to China.

AUD/USD continued to descent lower after breaking the upward trendline on Friday the 25th of June. We tend to expect the downward movement to continue, given also that RSI indicator below our 4-hour chart, is below the reading of 50 which may imply a slight advantage of the bears. Should the selling interest be extended, we may see the pair breaking the 0.7530 (S1) support line and aim for the 0.7465 (S2) support level. Should buyers be able to reverse the pair’s downward movement, we may see AUD/USD breaking the 0.7595 (R1) resistance line and aim for the 0.7665 (R2) resistance level.

Other economic highlights today and the following Asian session:

In today’s European session, we note the release of UK’s Nationwide house prices for June, Eurozone’s business climate and the final consumer confidence both being for June, and later Germany’s preliminary HICP rate for June. In the American session we get the US consumer confidence for June and the API weekly crude oil inventories figure. Also we note Richmond Fed President Barkin’s and ECB President Lagarde’s planned speeches During tomorrow’s Asian session we note the speech of RBA governor Lowe, Japan’s preliminary industrial output for May and China’s NBS manufacturing PMI for June.

US 100 Cash H4 Chart