American stocks erased earlier gains after mixed economic data from the United States. According to the Conference Board, the country’s consumer confidence dropped from 103.2 to 98.7 in June. This was the lowest confidence data in over 9 years. Consumers are worried about the soaring inflation and slow wage growth. Additional data revealed that the country’s house prices continued rising amid a supply and demand imbalance. The house price index rose by 18% year-over-year. Meanwhile, data by the Commerce Department revealed that the trade deficit narrowed by $104.3 billion. Nike shares dropped even after the company published strong results.
The euro made a strong bearish breakout ahead of important economic data from the euro area. The European Commission will publish the latest consumer and business confidence data. Like in the United States, the expectation is that the bloc’s confidence continued dropping as the cost of living continued escalating. The euro also declined even after the hawkish statement by Christine Lagarde. In a statement on Tuesday, the ECB chair said that the bank will start hiking interest rates as inflation remained at elevated levels. The ECB meetings in Portugal will continue. Some of the speeches to watch will be Christine Lagarde’s and De Guindos.
The economic calendar will have some important events on Wednesday. The US statistics agency will publish the latest GDP and personal consumer expenditure (PCE) data. Economists expect the data to show that the economy contracted by 1.5% in the first quarter. This being the third estimate, the data will likely not have a major impact on the US dollar and American equities. The US will also publish the latest oil inventories data. Expectation is that inventories dropped again last week. The other key catalysts will be speeches by key central bank officials like Christine Lagarde, Jerome Powell, and Andrew Bailey.
EURUSD
The EURUSD pair dropped to a low of 1.0500, which was the lowest level since June 23. On the four-hour chart, the pair managed to invalidate the ascending triangle pattern that has been forming. Now, the pattern resembles a triple-top, which is usually a bearish sign. The pair moved slightly below the 25-day moving average while the Relative Vigor Index (RVI) tilted lower. Therefore, the pair will likely continue falling as bears target the key support at 1.0450.
GBPUSD
The GBPUSD pair dropped slightly after the weak US consumer confidence data. It fell to a low of 1.2178, which was the lowest level since Thursday last week. The pair has moved slightly below the upper side of the descending channel pattern. It has also dropped to the 38.2% Fibonacci Retracement level while the RSI has tilted lower. The pair will likely continue falling as bears target the lower side of the channel.
EURCHF
The EURCHF pair dropped to a low of 1.007 as the Swiss franc strength continued. The pair dropped below the 25-day and 50-day moving averages. The RSI and the Stochastic Oscillator have tilted lower. It also dropped below the key support level at 1.009, which was the lowest level on June 17. The pair will likely continue falling as bears target the parity level.
