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Antipodeans Perform Well, EURGBP Plumbs Fresh Year-to-Date Lows

FOREX
  • Despite the USD index’s moderate strength on Friday, the likes of AUD and NZD have remained well supported on Friday, rising between 0.4%-0.55% as we approach the weekend close.
  • Aussie’s post RBA rally is extending and the AUDUSD bull cycle that started on May 31 remains in play with the pair trading at its recent highs. Resistance at the 50-day EMA has been cleared. The break higher strengthened on the break of 0.6733, 76.4% of the downleg in May.
  • Continued progress for GBPUSD, following the break of key resistance at 1.2545, points to a stronger signal of a bottoming out of prices. 1.2592 is next up, a Fibonacci retracement which has capped the topside in today’s session and 1.2680 remains the key topside level.
  • Perhaps more interesting is the cross, with EURGBP declining for four consecutive sessions and continuing to press to new YTD lows into the Friday close. The primary trend direction remains down, highlighted by a bearish price sequence of lower lows and lower highs. The focus is on 0.8547 – which has been pierced - the Dec 1 2022 low and a key support.
  • The offshore Yuan (-0.30%) underperformed on Friday as greater-than-expected economic headwinds are putting pressure on the People’s Bank of China to ease policy. Following its recent guidance for banks to lower interest on deposits, this may indicate a higher likelihood of a cut to its medium-term lending facility rate as soon as next week, policy advisors and analysts told MNI. A sustained break above 7.1500 for USDCNH might expose bull channel top resistance, currently located around 7.1700.
  • Lots of event risk next week highlighted by US inflation data, the FOMC meeting and the ECB rate decision. The week will also conclude with the June Bank of Japan meeting.
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