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The EUR/USD pair sharply grew on Thursday. It wasn't exactly predictable, but it was not illogical either. The first factor to consider is that the pair had been declining over the past month, indicating an impending upward correction. Furthermore, Thursday's macroeconomic backdrop could be interpreted in different ways.   The correlation between inflation and the European Central Bank's rates no longer exists, so a more significant slowdown in the EU Consumer Price Index did not trigger a decline in the euro, as it might have a few months ago. We can consider ECB President Christine Lagarde's speech as "moderately hawkish," and the minutes of the recent ECB meeting revealed that several members of the monetary committee supported a 0.5% rate hike in May. Thus, the euro had the right to grow.       There were an adequate number of trading signals, and since the movement was good and there was a trend-driven movement, it is not surprising for traders to gain profit. Initially, the pair bounced from the level of 1.0669 (a buy position should have been opened), then surpassed a critical line (supporting the trade), and finally reached the level of 1.0762 (where profit should have been taken). As a result, you could earn 85 pips. Such opportunities have been rare lately due to the lack of normal intraday trends.     The COT report for May 23 was delivered on Friday. Over the past nine months, COT data has been in line with developments in the market. The net position (second indicator on the chart) has been on the rise since September 2022. The euro started to show strength approximately at the same time. Currently, the net non-commercial position is bullish and keeps growing further. Likewise, the euro is bullish. Notably, we may assume by the extremely bullish net position that the uptrend may soon stop.   The first indicator shows that, and the red and green lines are far away from each other, which is usually a sign that the end of the trend might be nearing. The euro attempted to go down several months ago, but those were just minor pullbacks. In the reporting week, long positions of non-commercial traders decreased by 8,600 and short positions rose by 4,700. The net position dropped by 13,300. The number of long positions exceeds that of short ones by 174,000, a rather big gap. A correction or a new downtrend has started. So, it is clear that the pair will be bearish even without COT reports.     The COT report for May 23 was delivered on Friday. Over the past nine months, COT data has been in line with developments in the market. The net position (second indicator on the chart) has been on the rise since September 2022. The euro started to show strength approximately at the same time. Currently, the net non-commercial position is bullish and keeps growing further. Likewise, the euro is bullish. Notably, we may assume by the extremely bullish net position that the uptrend may soon stop.   The first indicator shows that, and the red and green lines are far away from each other, which is usually a sign that the end of the trend might be nearing. The euro attempted to go down several months ago, but those were just minor pullbacks. In the reporting week, long positions of non-commercial traders decreased by 8,600 and short positions rose by 4,700. The net position dropped by 13,300. The number of long positions exceeds that of short ones by 174,000, a rather big gap. A correction or a new downtrend has started. So, it is clear that the pair will be bearish even without COT reports.     Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.  

Eurozone and German PMIs weakened in June EUR/USD fell as much as 110 pips on Friday EUR/USD has taken a tumble on Friday. In the European session, the euro is trading at 1.0885, down 0.64%. The euro fell as low as 1.0844 earlier in the day. Later today, the US releases ISM Services PMI. The consensus stands at 54.0 for June, following 54.9 in May. The services sector is in solid shape and the ISM Services PMI has posted four straight readings over the 50 level, which separates expansion from contraction.     Eurozone, German PMIs fall in June Eurozone PMIs for June pointed to weaker activity in the services and manufacturing sectors. The Services PMI eased to 52.4, down from 55.1 in May and below the consensus of 54.5 points. The Manufacturing PMI fell to 43.6, down from the May reading of 44.8 which was also the consensus. Germany, the largest economy in the eurozone, showed a similar trend, with Services PMI falling from 54.7 to 54.1 and Manufacturing PMI dropping from 43.5 to 41.0 points. The 50 line separates contraction from expansion. The takeaway from these numbers is that the eurozone economy is cooling down. Business activity is still growing but at a weaker pace, while the manufacturing recession has deepened. The eurozone economy is yet to recover after negative growth in the past two quarters, as the ECB’s aggressive tightening makes its way through the economy. At first glance, the weak PMI readings should be good news for the ECB, which is trying to dampen economic growth in order to wrestle inflation back down to the 2% target. However, inflation remains very high at 6% and further tightening could tip the weak eurozone economy into a recession. The ECB’s efforts to push inflation lower have been made more difficult, as unemployment is at historic lows and wage growth is high. Germany, the bloc’s largest economy, isn’t the power locomotive that it once was and is still in recovery mode. The ECB has signalled that it will hike rates in July and another increase could be coming in September unless inflation decelerates more quickly.  

The test of 1.0975 on Tuesday afternoon, coinciding with the time when the MACD line was in the overbought area, prompted a sell signal that resulted in a price decrease of around 30 pips. Lending data in the eurozone and speeches from ECB members may maintain demand for euro and continue its upward trend.   Good indicators on M3 money supply aggregate and private sector lending volume in the eurozone may also lead to a new surge in prices. Similarly, hawkish remarks by ECB President Christine Lagarde, pointing out potential further aggressive actions on the central bank's balance sheet, will also strengthen demand for euro.   For long positions: Buy when euro hits 1.0958 (green line on the chart) and take profit at the price of 1.0995. An upward movement will continue if lending in the eurozone remains at a normal level, allowing the ECB to raise rates without problems. However, when buying, traders should make sure that the MACD line lies above zero or rises from it. Euro can also be bought after two consecutive price tests of 1.0935, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0958 and 1.0995.   For short positions: Sell when euro reaches 1.0935 (red line on the chart) and take profit at the price of 1.0903. Pressure will return in case of poor statistics from the eurozone. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0958, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0935 and 1.0903.     What's on the chart: Thin green line - entry price at which you can buy EUR/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell EUR/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market     Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.    

AUD/USD rallied by 97 pips from last Thursday, 29 June low of 0.6593. Staged a minor bullish breakout ahead of RBA’s monetary policy decision today. Watch 0.6630 key short-term support to maintain the current bullish tone. Since its 0.6593 minor low printed last Thursday, 29 June, the AUD/USD has managed to stage a rebound of 97 pips to print an intraday high of 0.6692 yesterday, 3 July ahead of Australia central bank, RBA’s monetary policy decision out later today at 0430 GMT. The interest rates futures market has implied a reduction in the odds of a 25 basis points (bps) hike due to the recent softer-than-expected annualized monthly CPI data for May; 5.6% from 6.8% in April and below expectations of 6.1%. As of 3 July 2023, the ASX 30-day interbank cash rate futures has priced in a 16% chance of a 25 bps hike on the cash rate, down from a 53% chance that was priced two weeks ago on 16 June.     Fig 1: AUD/USD short-term trend as of 4 Jul 2023 (Source: TradingView, click to enlarge chart) Minor bullish breakout The AUD/USD has managed to exit from the upper limit of a minor descending channel that was in place since its 16 June 2023 high of 0.6900 now acting as a pull-back support at 0.6630. This latest set of price actions has indicated that the minor downtrend phase from the 16 June 2023 high of 0.6900 to the 29 June 2023 low of 0.6593 is likely to have ended.     Short-term positive momentum has resurfaced The hourly RSI oscillator has just broken above a corresponding resistance at the 47 level after it exited from its oversold region last Thursday 29 June. Watch the 0.6690 short-term pivotal support (the pull-back of the former minor descending channel resistance & former minor swing high area of 29/30 June 2023) and clearance above 0.6790 (20-day moving average) sees the next resistance coming in at 0.6790. However, failure to hold above 0.6630 negates the bullish tone to expose the 0.6580/6550 key medium-term pivotal support zone.    

Analysis of transactions and tips for trading USD/JPY Further growth became limited because the test of 149.04 coincided with the sharp rise of the MACD line from zero. The second test, on the other hand, took place when the MACD line returned from the overbought area, providing a signal to sell. This led to a price decrease of over 50 pips. The Bank of Japan's intervention holds significant importance for the currency market. But for today, the pair's decline will be influenced by data from the US labor market, where unemployment figures will decrease to 3.7%. A sharp reduction in the number of new jobs in September could also weaken dollar, leading to an active sale of USD/JPY. Otherwise, if the data surpass forecasts even by a small margin, the pair will continue to rise, once again reaching 150 yen per dollar. Data on average hourly earnings in the US could also influence market sentiment, unlike the interview with FOMC member Christopher Waller.   For long positions: Buy when the price hits 149.04 (green line on the chart) and take profit at 150.03. Growth will only be possible amid very strong data from the US labor market, continuing the bullish trend. When buying, ensure that the MACD line lies above zero or just starts to rise from it. Also consider buying USD/JPY after two consecutive price tests of 148.65, but the MACD line should be in the oversold area as only by that will the market reverse to 149.04 and 150.03. For short positions: Sell when the price reaches 148.65 (red line on the chart) and take profit at 147.77. Pressure will return in the event of a sharp reduction in jobs in the US and weak statistics. When selling, ensure that the MACD line lies below zero or drops down from it. Also consider selling USD/JPY after two consecutive price tests of 149.04, but the MACD line should be in the overbought area as only by that will the market reverse to 148.65 and 147.77.     What's on the chart: Thin green line - entry price at which you can buy USD/JPY Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell USD/JPY Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market   Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.