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EURGBP Respects 0.8500 Resistance, BRL Under Significant Pressure

FOREX
  • US yields moderately reversed lower on Tuesday and with an associated bounce in US equities, the greenback pulled back from earlier session highs, with the USD index tracking close to unchanged as we approach the APAC crossover. JOLTS job openings surprisingly increased in May to 8.14m (cons 7.95m) but the data did little to jolt the market with the focus on Friday’s NFP report.
  • As such G10 currency adjustments remain limited, with tomorrow’s FOMC minutes, the US July 04 holiday & UK election Thursday keeping any conviction in check.
  • However, USDJPY continues to edge higher, looking to close above 161.50, having printed another multi-decade high of 161.74. Sights are on 162.21, a Fibonacci projection.
  • EURUSD’s trend outlook remains bearish and price action following the French first-round indicates that rallies remain good selling opportunities. Resistance at the 50-day EMA (intersecting today at 1.0771), has capped the latest correction well and should keep the market’s focus on the bear trigger at 1.0666, Jun 26 low.
  • It is also worth noting, EURGBP (-0.21%) failed to recover back above 0.8500 (also 50-day EMA), the key technical pivot for the cross, and while remaining below this level on a closing basis the outlook remains bearish.
  • In emerging markets, local pressures added weight to both the South African Rand and the Brazilian real. Brazil’s domestic situation continues to sour and USDBRL’s 0.65% climb today brings YTD gains for the pair to an impressive 17.3%. The moves could raise the risk of the central bank intervening to stabilise the currency.
  • Australia retail sales and European final services PMIs cross Wednesday. ADP and jobless claims from the US will play second fiddle to ISM services data for June and the FOMC minutes.
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