Regional growth fears prompted traders to sell the EUR today!
Can the shared currency recover enough to regain its bullish momentum?
Before we go any further, ICYMI, yesterday’s watchlist checked GBP/CHF for a chance of a breakout and retest ahead of the BoE policy decision. Be sure to check if it’s still a good game!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
Initial weekly jobless claims in the United States For the week ending June 17: 264k vs. 271k for the previous week
Existing home sales in the United States For May: +0.2%m/m to 4.3m units (forecast -0.5%m/m; -3.2%m/m previously)
Powell Fed: FOMC members “believe there are more rate hikes coming but we want to make them at a pace that allows us to see the information coming in.”
In her remarks at a community event, Federal Reserve Board Member Michael Bowman He said that “further increases in the policy rate will be necessary to bring inflation down to our target over time”.
Crude stocks in EIA It dropped surprisingly by 3.8 million barrels against an increase of 300 thousand expected in the week of June 16th
Manufacturing PMI in Australia It rose from 48.4 to a three-month high of 48.6 in June as output contracted at the slowest pace since February.
PMI Services Australia It fell from 52.1 to 50.7 even as companies continued to hire additional staff in June
GfK UK Consumer Confidence It rose for the fifth consecutive month, up from -27 to -24 in June despite higher inflation and interest rates.
Japan’s national core consumer price indexwhich excludes volatile fresh food prices, came in at 3.2% yoy in May, higher than the expected 3.1% yoy but slower than April’s reading of 3.4% yoy.
au Jibun Bank Flash Japan Manufacturing PMI Decreased from 50.6 to 49.8 contraction in June as both output and new orders fell while new orders fell at their sharpest pace since February
UK retail sales It slowed from 0.5%m/m to 0.3%m/m in May (versus -0.2%m/m expected) thanks in part to warm weather boosting out-of-store retail activity
HCOB France Manufacturing PMI it fell from 45.7 to a 37-month low of 45.5 in June; PMI Services It also fell from 52.5 in May to a 28-month low of 48.0 in June.
Demand conditions deteriorated HCOB Germany Manufacturing PMI from 43.2 to 41.0 (37-month low) in June while PMI Services It fell from 57.2 to a 3-month low of 54.1
HCOB Eurozone Manufacturing PMI It fell from 44.8 to a 37-month low of 43.6 in June, PMI Services It also recorded a five-month low from 55.1 to 52.4.
S&P Global UK Manufacturing PMI It fell from 47.1 to a six-month low of 46.2, instead PMI Services It also weakened from 52.8 to a three-month low of 52.8
Price action news
As in the previous Asian sessions this week, traders were concerned about major central banks returning to sharp interest rate hikes that push bond yields higher and also increase the odds of a recession.
Risk on the Australian dollar (and NZD pair) weakened across the board earlier today. PMI reports from both Australia and Japan did not help raise investor concerns about global growth.
The Aussie held along at intraday lows near the start of the European session, giving traders time to price in the weaker Eurozone PMIs by selling the Euro.
US Manufacturing and Services PMIs at 1:45pm GMT
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EUR/JPY 15-minute forex Planned by TV
Weaker than expected Eurozone PMIs made traders sell the EUR today!
The EUR/JPY, which was trading around the minor psychological level of 156.60, fell all the way to the 155.25 region before the sellers took a cold bean.
What makes the drop even more interesting is that it stalled in an area of interest earlier this week.
Not only that, but the current levels of the EUR/JPY pair are also not very far from the 61.8% Fibonacci retracement, the S2 (155.11) level of today’s pivot points, and the trend line support that has not been breached in at least a week.
Are we looking forward to the trend continuing to form?
It may depend on how the EUR/JPY reacts to the retest of the trend line.
If the euro bears decide that a large 15-minute bearish candle is not enough to price in weaker Eurozone PMI growth, EUR/JPY could fall further, perhaps to the 154.50 region.
But if we see profit-taking at the end of the week, or if traders ignore weak Eurozone PMIs in favor of pricing in ECB tightening, EUR/JPY could rebound from its support zone and return above the trend line.
what do you think?