European futures turned lower on Friday morning as worries about the bloc’s energy situation continued. The main concern is that Russia could continue reducing its natural gas to European Union in his bid to punish the members for their support of Ukraine. Germany, the most industrialized economy in the region, could move to rationing, which will affect its growth. In a statement, the country’s economy minister warned that a complete embargo would have a similar impact to the collapse of Lehman Brothers. Stocks also declined after Ray Dalio unveiled a $10 billion short on European stocks like ASML, TotalEnergies, and Sanofi. Dalio runs the biggest hedge fund in the world with over $150 billion in assets.
The British pound moved slightly ahead of the upcoming UK retail sales numbers. Analysts expect the data to show that sales dropped by 0.7% in May after rising by 1.4% in the previous month. This will translate to a 4.5% year-on-year decline. Excluding the volatile food and energy products, analysts expect the data to show that sales fell by 1.0% and by 5.1% on a MoM and YoY basis. The main cause for this decline will be the soaring inflation. Data published on Wednesday showed that the country’s consumer inflation surged to the lowest level in over four decades.
US stocks were relatively mixed after the final day of Jerome Powell’s testimony in Congress. The Fed chair reiterated that the American economy was doing well although inflation was a major challenge. As a result, he said that the bank will do whatever it can to lower inflation. This will include high interest rates and the ongoing balance sheet reduction policy. These stocks will react to the upcoming new home sales data that will come out in the American session. Analysts expect the data to show that new home sales declined from 591k to 588k. Earlier this week, data showed that the country’s existing home sales dropped sharply in May.
GBPUSD
The GBPUSD pair moved sideways ahead of the upcoming UK retail sales numbers. It is trading at 1.2230, which is slightly above this week’s low of 1.2140. The pair has also moved between the 38.2% and 50% Fibonacci retracement level. It is above the 25-day moving average while the Relative Strength Index (RSI) has moved to the neutral point. It has formed a descending channel that is shown in green. Therefore, the pair will likely remain in this range today.
USDCHF
The USDCHF pair has been in a strong bearish trend after the Swiss National Bank (SNB) delivered a hawkish interest rate decision. The pair dropped to a low of 0.9567, which was the lowest level since early June. It has moved below the bearish pennant pattern shown in green. At the same time, it has fallen below the 25-day and 50-day moving average while the DeMarker indicator has moved slightly above the oversold level. The pair will likely continue falling as bears target the key support at 0.9500.
EURUSD
The EURUSD pair moved sideways as investors reflected on the statement by Jerome Powell. It is trading at 1.0500, which is along the ascending trendline shown in green. The pair has moved slightly below the 25-day moving average while the Relative Strength Index has moved to the neutral point at 50. The DeMarker is pointing lower. The pair will likely continue falling now it has found a strong resistance at 1.0585.
