Let’s start with a look at the economic calendar for the upcoming days.
Weekly Forex Outlook: June 4-8
The USD index spiked to resistance at 95.00 but failed to hold there. There’s a shooting star candlestick on the weekly chart – a sign that the greenback may correct down to support at 93.35. Uncertainty over the US-North Korea summit next week and trade tensions between the United States and other countries represent the main negative factors for the USD. At the same time, data out on Friday showed that US jobs growth accelerated and wages rose in May, making a rate hike by the Federal Reserve in June a near certainty and increasing expectations of a fourth hike this year. So, despite the correction down, the USD still has a strong economy and central bank policy that supports it.
The upcoming days will be light on the news from America. The Reserve Bank of Australia will announce its interest rate decision early on Tuesday. This day of the week will also bring British services PMI, the speech of the ECB president Mario Draghi and the US ISM non-manufacturing PMI. On Wednesday, Australia will release its GDP, Canada will release trade balance and crude oil inventories will be out in the US. Highlights of Thursday include Australian trade balance and the speech of the bank of Canada’s Governor, while Japanese Prime Minister Shinzo Abe will meet with US President Trump at the White House to discuss the planned US summit with North Korea’s Kim Jong Un. The most interesting event of Friday will be the Canadian employment change and unemployment rate. In addition, the Group of Seven will start and the world’s leading economies will discuss trade issues.
To sum up, you can see that the AUD, the CAD, the EUR and the GBP will be the pairs to trade on news this week.
EUR/USD formed a hammer on the weekly chart. Support is at 1.1630 and as long as the euro is staying above this level we target 1.1750 and 1.1850. The euro took a breath after anti-establishment parties reached a deal on a coalition government – a solution that will help to evert potentially destabilizing elections. EUR/JPY may rise to 129.25. Investors will switch from Italy to the policy of the ECB. The European Central bank will be behind the Fed is raising rates, so euro’s recovery will likely be moderate and temporary.
AUD/USD has support at 0.7545 and can rise to 0.7690 and 0.7730. The RBA is not expected to raise rates but traders expect positive economic figures From Australia. USD/CAD is vulnerable to a decline to 1.2830 as long as it trades below 1.2940. GBP/USD may test resistance at 0.34 and 0.3460.