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Weekly Technical Analysis: 12/06/2023 – US 500, EURUSD, USDJPY

Weekly Technical Analysis: 12/06/2023 – US 500, EURUSD, USDJPY

It will probably be the most important week of June as the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ) will review their rate policy amid an uncertain global macroeconomic environment. The decision might be a close call between a pause or another rate hike for the Fed if Tuesday’s CPI inflation figures surprise to the upside. On the other hand, investors are certain that the ECB will deliver another rate hike, while the BoJ should remain a notable outlier in keeping rates ultra-low.  

US 500 –>FOMC policy announcement

The US 500 stock index has been trending higher on expectations the Fed may pause its aggressive rate hike cycle or even pivot later this year. Investors believe that June’s policy meeting could be the right time to announce a pause, though given the resilience in the US labor market, a hawkish surprise cannot be ruled out, especially if Tuesday’s CPI inflation figures beat forecasts for a slowdown. If that proves to be the case, the index could give up the battle with the August high of 4,325 and reverse lower.

EURUSD –>ECB policy announcement

The ECB is widely expected to deliver another quarter percentage rate hike when it concludes its policy meeting on Thursday at 12:15 GMT. Hence, the euro may not rally much on the rate hike announcement, unless the central bank’s president Christine Lagarde sustains a hawkish communication, keeping the door open for more tightening. EURUSD seems to have set the ground for a bullish rotation but it needs to climb back above 1.0800 to attract fresh buying interest.

USDJPY –>BoJ policy announcement

BoJ policymakers believe that there is no urgency to change the current accommodative monetary settings, although they acknowledge inflation risks. If the central bank takes no action, USDJPY will remain exposed to the Fed and global risk sentiment. Technically, a close above 139.93 could resume positive momentum in the pair, whilst a break below the 20-day simple moving average at 138.75 could renew selling pressure.

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