EUR/USD: experts expect decline in business sentiment in the EU
The pair EUR/USD showed a decline, reaching the level of 1.0697, and a negative trend compared to its main competitors, including the U.S. dollar. This trend could intensify after the publication of macroeconomic data.
Today, investors will pay attention to the Italian Service Business Activity Index, which is expected to decline from 57.6 to 56.5 points, while in France the index may drop from 54.6 to 52.8 points. While Germany is expected to increase from 56.0 to 57.8 points, it is not enough to have a significant impact on the composite index of service sector business activity across the EU and it may continue to decline from 56.2 to 55.9 points.
- Resistance levels: 1.0759, 1.0920.
- Support levels: 1.0628, 1.0400.
USD/CAD: USD is regaining lost ground
The pair USD/CAD during the Asian session is moderately rising after the active decline last week and is testing the level of 1.3440 in an attempt to break up, retreating from the local lows set on May 16.
Technical factors are supporting the upward dynamic, while the main impulses for the U.S. currency growth are gradually weakening. The U.S. labor market report released on Friday pointed to a continued high level of tightness: the unemployment rate rose from 3.4% to 3.7%, while the forecasted level was 3.5%. The number of new jobs created outside the agriculture sector increased by 339,000 in May, up from 294,000 last month, although analysts had expected 180,000. Average hourly earnings growth slowed from 0.4% to 0.3% on a monthly basis and from 4.4% to 4.3% on an annual basis. These statistics put additional pressure on the U.S. Federal Reserve (Fed) to further tighten monetary policy. Nevertheless, experts suppose with the probability of about 66% that the Fed will keep interest rates unchanged at the next meeting, which is scheduled for June 13-14.
- Resistance levels: 1.3450, 1.3500, 1.3550 and 1.3600.
- Support levels: 1.3400, 1.3350, 1.3300, 1.3250.
NZD/USD: pair pulled back from the peak of May
The NZD/USD pair showed mixed trading dynamics, holding near the level of 0.6060. It deviated from the local highs set on May 25 as a result of the reaction to the publication of the May report on the U.S. labor market, which caused mixed feelings among traders.
Let's remind that this data showed the increase in the number of new jobs outside the agricultural sector by 339.0 thousand after the previous growth of 294.0 thousand, while analysts expected the slowdown to 190.0 thousand. At the same time the unemployment rate went up from 3.4% to 3.7% while the forecast was 3.5%. In such a situation, it is unclear what steps the US Federal Reserve (Fed) officials will take at the upcoming meeting scheduled for June 13-14. Earlier most experts were inclined to consider a 25-basis-point interest rate hike, but rising unemployment could force the regulator to suspend monetary policy tightening. Right now there is about a 66.0% chance that the Fed will leave rates at current levels.
- Resistance levels: 0.6100, 0.6150, 0.6200 and 0.6250.
- Support levels: 0.6043, 0.5984, 0.5938 and 0.5900.
GBP/USD: pound is affected by the contradictory sentiment
GBP/USD is in a consolidation phase near the level of 1.2430, but there is an ongoing negative sentiment which formed on June 2 when the pound declined after its local highs set on May 16.
According to a Reuters poll of British economists, most of them predict a 3.0% decline in average home prices in the country this year, while previously a 2.4% decline was expected. This is due to the ongoing cost of living crisis and the expected rise in interest rates, which will have a negative impact on consumers and the entire British economy. The slow decline in inflation is likely to stimulate an interest rate hike from 4.50% to 5.00% at the Bank of England meeting scheduled for June.
- Resistance levels: 1.2450, 1.2500, 1.2550, 1.2600.
- Support levels: 1.2390, 1.2350, 1.2307, 1.2236.