The Federal Reserve speeds up its quantitative tightening, and this is certainly bullish news for the USD. At the same time, this is a negative factor for the American stocks, which have entered their seasonally worst month.
Weekly Market Outlook: June 17-21
Let’s see what the upcoming week prepares for us.
On Tuesday, traders will look at the monetary policy meeting minutes by the Reserve Bank of Australia. On its last meeting, the central bank cut the interest rate. Any comments on additional risks for the monetary policy will weaken the aussie.
On Wednesday, take into consideration inflation levels from the UK and Canada. Higher-than-expected readings will push the domestic currencies up.
However, the most important event of the day is the Fed’s meeting. The central bank will not change the interest rate but we anticipate important comments on the future monetary policy. Analysts predict at least 1 rate cut until the year-end. If Mr. Powell gives any negative hints on the reduction of the rate, the USD will fall. In the case of the optimistic tone, the USD will not be harmed.
On Thursday, be ready to high volatility on markets. Traders of the Asian session will pay attention to the release of the GDP growth of New Zealand and the monetary policy statement by the Bank of Japan. The central bank will keep the rate on hold but some comments on the monetary policy may affect the Japanese yen. The European session will be important for the British pound. Retail Sales data together with the monetary policy statement will have an impact on the GBP. Pay higher attention to the central bank’s comments. A hawkish tone will encourage British currency.
On Friday, European currency may be under pressure. Flash PMI data for Germany, France, and the whole Europe will influence the euro.
The loonie will be either supported or weakened by the Retail Sales data.
Now it’s time to look at the technical setups.
Euro: correction or the downtrend?
Upward movement of EUR/USD was stopped last week. The pair rebounded from the highs near 1.1340 and moved down. The first important support is located between 1.1248. A break below will provoke a formation of the downtrend with next supports at 1.1260 and 1.1176. Until the pair breaks below the range, it still has chances to continue the uptrend. The trend up will be confirmed after the pair breaks above 1.1340.
USD/JPY is in the downtrend.
The downtrend of the USD/JPY pair continues. A close below 108.05 will provoke further decline to 107.63. However, the pair may turn around. In this case, we will see a rise to 108.73. Don’t forget to check levels of the upper boundary of the downward channel.
GBP/USD keeps moving down.
As soon as the pair appears below 1.2653 will may anticipate a further decline to 1.2580. A close below 1.2580 will be dramatic for the pair. To start controlling the situation, the pair needs to rise above 1.2740 that may be difficult.
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