Trading plan for 13/06/2017:
Overnight the US Dollar strengthened against the pound sterling, Yen, and Euro. EUR/USD fell below 1.1200, GBP/USD is trading below 1.2650 and USD/JPY is struggling above 110.00. Commodity currencies are strong, especially NZD and Canadian Dollar. They continued appreciation after the surprising Monday's hawkish statements from BoC official Wilkins. The sell-off of American tech giants FAANG lost a bit of momentum and this allows for the correction of yesterday's discounts on Asian trading floors (except for Tokyo, where the sellers dominate).
On Tuesday 13th of June, the event calendar is light in important economic releases, but market participants will pay attention to the Consumer Price Index data from the UK, ZEW Economic Sentiment data from Germany and PPI data from the US.
GBP/USD analysis for 13/06/2017:
The Consumer Price Index data are scheduled for release at 08:30 am GMT and market participants expect the inflation to hold steady at the level of 2.7% on a yearly basis, but decline slightly from 0.5% to 0.2% on a monthly basis. If expectations come true, then it will be another evidence that dark clouds are starting to gather above the post-Brexit British economy. Last bunch of poor economic data, like business confidence, consumer spending, credit card consumption seems to support this view. Moreover, rising headwinds arrive at a precarious juncture for UK Prime Minister Theresa May's government, which lost its majority in the Parliament last week. The setback in political power creates more uncertainty about the Brexit negotiations, which are due to begin later this month. In conclusion, despite the fact that inflation has been accelerating this year and it is still close to a four-year high and even above the Bank of England's 2.0% target, the worse-than-expected reading for today's CPI might just complicate the things even more.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. The price has already broken below the technical support zone between the levels of 1.2770 - 1.2707, so now this zone will act as resistance. Currently, the price is testing the level of 1.2707 from below in oversold market conditions. Nevertheless, the momentum oscillator is still below the fifty level, so the bias remains to the downside. The next support is seen at the level of 1.2633.
EUR/USD analysis for 13/06/2017:
The German ZEW Economic Sentiment data are scheduled for release at 09:00 am GMT and market participants expect another improvement in the 6-month economic outlook for the Eurozone. The ZEW for the whole Eurozone is expected to increase from 35.1 points to 37.1 points and the German ZEW alone is expected to increase from 20.6 points to 21.6 points. The reason behind such a positive sentiment might be backed up by the last week industrial production data and the retail sales data. Moreover, the DAX stock index is trading close to all time highs and the IHS Markit is expecting German GDP growth to trend at around 0.6% on a quarterly basis. In conclusion, today's data are expected to tick up to a two-year high in June 2017.
Let's now take a look at the EUR/USD technical picture on the H4 time frame. The price is trading above the golden trend line in a tight horizontal range between the levels of 1.1236 - 1.1163. A better-than-expected data might push the price out of the range towards the technical resistance at the level of 1.1236 and the market might even try to test the recent high at the level of 1.1285, but it seems like the good data are now mostly priced in by market participants, so the price might just not react so violently. Moreover, any violation of the golden trend line on a good data will indicate that the bear camp is in control over this market and the next support for the price is at the level of 1.1108.
Market Snapshot: Silver retraced 50% of the recent up move
The price of Silver has been falling for the last four days and now it reached the 50% Fibo at the level of 16.88. The market conditions are now oversold, so some kind of a corrective bounce is expected to occur from this level. Nevertheless, the overall outlook remains bearish as long as the golden trend line is clearly breached from below in impulsive fashion.
