close

Technical outlook: The US dollar index has hit the initial projected target at about 104.15 as seen on the 4H chart here. The Fibonacci 1.618 extension was exceeded as the bulls registered a high close to 104.23. The index reversed sharply from there, dragging the index lower through 103.00 before finding some near-term support. It is seen to be trading close to 103.70 at this point in writing.     The US dollar index seems to have more room on the upside to complete the rally, which had begun from the 100.34 lows. After witnessing a straight rally from 100.60 towards 104.23 levels, the price could consolidate ahead of 105.50 which looks like the next Fibonacci extension and target. Near-term support is seen just below 103.00.   The US dollar index should be targeting 105.50 and higher in the next few trading sessions. Please also note that 105.50 is the next price resistance and the bulls want to take that out to complete the larger-degree corrective pattern. After hitting 105.50, the US dollar index could begin a bearish reversal dragging the price much lower.   Trading idea: A potential rally through 105.50 remains possible in the near term.    

Technical outlook: EURUSD bounced off the 1.0640 lows last week and pushed higher towards 1.0779 on Friday as projected earlier. The bears were quick to take this opportunity and came back in control as the trajectory reversed towards 1.0700-10 to close the week. The single currency pair is seen to be trading close to 1.0700 at this point in writing as the bulls prepare to push towards 1.0760 at least in the near term.   EURUSD is unfolding an expanded flat corrective wave at a larger degree from the 1.1035 highs earlier.   The first wave lower terminated around 1.0520, while the second wave rallied through the 1.1095 highs before terminating. Since then, the last wave has been underway and is projected to terminate around 1.0500 in the next few trading sessions. EURUSD might have terminated a lower-degree corrective rally at 1.0779 on Friday or it could extend up to the 1.0820-30 area in the next 1-2 trading sessions.   The instrument could be trapped in a range for a few sessions before the bears are back in control to drag the price lower towards 1.0500. Watch out for intraday resistance around the 1.0820-30 zone.     Trading idea: A potential drop towards 1.0500 is possible in the near term.  

RBA minutes state that the rate hike decision was close China’s central bank trims key lending rates The Australian dollar has hit a bump in the road and is down 1% this week. In the European session, AUD/USD is trading at 0.6795, down 0.80% on the day.   RBA minutes – rate decision was close The Reserve Bank of Australia has a habit of surprising the markets. The RBA’s rate hike earlier this month was a shocker, as the markets had expected rates to remain unchanged. The minutes of the meeting, released today, indicated that the decision was “finely balanced” between a pause and a hike. In support of a pause, members noted that the sharp increases in rates raised the possibility of the economy stalling. In the end, however, concerns over persistent inflation won the day as the Bank voted to hike rates by 0.25%. The takeaway from the dovish minutes is that the RBA was very close to taking a pause and will be open to holding rates at the July meeting, depending on the data, especially inflation. The Australian dollar has fallen sharply today as investors have lowered their expectations over future rate hikes. The RBA has backed up hawkish words with action, raising rates to 4.1%, the highest level since 2011. Still, inflation has been stickier than expected, and headline inflation jumped in April from 6.3% to 6.8%. The core rate fell from 6.9% to 6.5%, but that is incompatible with the target of 2%. The RBA has projected that inflation will not fall to 2% until mid-2025, which means more hikes are likely, barring a sharp drop in inflation. China’s central bank announced on Tuesday that it was cutting key lending rates, in a move to boost investment and consumption. The post-pandemic recovery has been slow, and soft demand for exports has been bad news for Australia, as China is a key trading partner. China posted 4.5% growth in the first quarter, which was better than expected, but key indicators such as retail spending and industrial output missed expectations in May. . AUD/USD Technical 0.6772 is under pressure in support. Below, there is support at 0.6668 0.6836 and 0.6940 are the next resistance lines        

EUR/USD Higher timeframes Bulls continue to rise, but failed to close above the high of the daily correction (1.1012) yesterday. This mark and the next high of the weekly correction (1.1096) remain the main targets of the current upward movement. The nearest supports of the higher timeframes today are 1.0936 (daily short-term trend) and 1.0901 (monthly medium-term trend).       H4 - H1 On lower timeframes, the main advantage now belongs to the bulls. As of writing, they are testing the first resistance of the classic pivot points (1.1031), and further targets for an intraday rise are R2 (1.1053) and R3 (1.1080). The key levels today serve as supports and are located at 1.1004 (central pivot point) and 1.0939 (weekly long-term trend); intermediate supports are S1 (1.0982) and S2 (1.0955). The weekly long-term trend (1.0939) is currently reinforced by the daily short-term trend (1.0936), so a consolidation below will help change the current balance of power not only on lower timeframes but also on the daily timeframe.