Trading idea for the Dollar Index (DXY) dated June 28, 2024

GBP/USD analysis on July 1, 2024GBP/USD, in anticipation of new market movements, shows cautious growth, but remains near the level of 1.2665. The US currency failed to end last week on a positive note, and the pound managed to regain some of its lost positions, as investors again drew attention to a possible reduction in interest rates by the US Federal Reserve.Friday's data showed a slowdown in the core index of personal consumption expenditures in the United States. In May, the annual rate decreased from 2.8% to 2.6%, and the monthly rate decreased from 0.3% to 0.1%. The overall index also sank from 2.7% to 2.6% in annual terms and from 0.3% to 0.0% on a monthly basis. This increased the likelihood that the Fed will begin easing monetary policy in September, with two expected rate cuts of 25 basis points during 2024. At about the same time, a transition to a more lenient policy of the Bank of England is predicted, which expresses concern about sustained inflation in the country.On Friday, June 28, investors drew attention to the positive data from the UK. According to the final estimate, in the first quarter, the country's GDP grew by 0.7% in quarterly terms and 0.3% annually, which exceeded forecasts and was the best result among the G7 countries. Real household income increased by 0.7%, and business investment increased by 0.5%, with a forecast of 0.9%.Data on UK consumer lending will be published today at 10:30 (GMT+2). Net lending is expected to grow in May from 3.1 billion pounds to 3.3 billion pounds, and the number of approved mortgage applications is likely to decrease from 61.14 thousand to 61.0 thousand.Technical indicators on the daily chart show mixed signals: The Bollinger Bands indicator is narrowing, indicating a mixed trading pattern, the MACD is turning up, forming a buy signal. Stochastic is also showing upward dynamics, retreating from the 20% level.It is recommended to open long positions only after a confident breakout of the key resistance of 1.2700. The target is 1.2800. We place the stop loss at 1.2650.We will consider sales when the price breaks and fixes below the 1.2600 level with a target of 1.2500. In this case, we put the stop loss at 1.2650.

AUD/USD has noticeably sagged, rolling back from local highs on June 26 and at the beginning of the week it is testing the support of 0.6665 for a breakdown downwards. Traders analyze macroeconomic data from Australia and China. In Australia, the manufacturing PMI for June fell from 47.5 to 47.2 points, and the ANZ jobs index fell 2.2% after a 1.9% decline in the previous month. In addition, in May, the weighted average consumer price index rose from 3.6% to 4.0%, which raised concerns about a possible interest rate hike in August. Although these data supported the Australian dollar, the comments of the deputy head of the Reserve Bank of Australia, Andrew Hauser, who said that it was impossible to make decisions based on a single inflation report, restrained further growth of the pair.The data from China was mixed: the Caixin business activity index in manufacturing rose from 51.7 to 51.8 points in June, exceeding analysts' expectations, but the index in the services sector fell from 51.1 to 50.5 points. The index in the manufacturing sector from the National Bureau of Statistics remained at 49.5 points.Expectations of further actions by the RBA provide some support to the Australian dollar. Unexpectedly strong inflation growth in Australia may lead to new interest rate hikes. In May, the consumer price index accelerated from 3.6% to 4.0%. Business activity data from the Australian Industry Group (AiG) and the Commonwealth Bank, inflation statistics from TD Securities, as well as retail sales data for May are expected to be published on Wednesday. On Friday, the US is expected to release June labor market data, where the number of new jobs is projected to decrease from 272 thousand to 180 thousand.The main forex indicators on the daily chart give mixed signals: the Bollinger bands move to a horizontal position, the MACD is growing, maintaining a weak buy signal, and the Stochastic Oscillator is approaching maximum levels.It is recommended to open short positions with a confident breakdown down to the level of 0.6667. The target is 0.6622. We will set the stop loss at 0.6690.For purchases, we are waiting for a rebound from 0.6667 and an upward breakdown of the resistance of 0.6679. The target mark is 0.6725. We place the stop loss at 0.6655.

FOREX Fundamental analysis for EUR/USD on July 1, 2024The circumstances turned out well. The slowdown in inflation in the United States and expectations that Marine Le Pen's party is unlikely to achieve an absolute majority in Parliament allowed the EURUSD to break above the resistance of 1.0725. Political tension will continue to put pressure on the euro until the second round of elections, but its influence has already weakened, which creates prerequisites for the growth of the main currency pair.According to Elabe, in the first round, the National Rally won 33% of the vote, the New Popular Front – 29%, and the Revival of Emmanuel Macron – 22%. This is projected at 255-295 seats in the National Assembly for the right, 120-140 for the left and 90-125 for Macron's party and his allies. Marine Le Pen's opponents must join forces to prevent her party from gaining an absolute majority of 289 seats. If her party succeeds, Jordan Bardella will become the new prime minister.The most negative scenario for the markets would be the success of the New Popular Front. The victory of the National Rally increases the likelihood of a repeat of the Italian scenario, when the right-wingers, who criticized the EU before the elections, then began to cooperate with Brussels. In any case, the results of the first round reduced the difference in French and German bond yields and contributed to the growth of EURUSD.The hammer of political instability is gradually moving away from the euro, while the anvil in the form of a slowdown in the US economy continues to limit the dollar. In May, the growth rate of the American index of personal consumption expenditures decreased from 2.7% to 2.6% in annual terms and from 0.3% to 0.1% on a monthly basis. The core PCE index remained unchanged from the previous month and slowed from 2.8% to 2.6% year-on-year. Markets have almost stopped expecting inflation to accelerate again, as at the beginning of the year, and estimate the probability of two Fed rate cuts in 2024 at 95%. The chances of a rate cut in September are 63%.Observing the cooling of the US economy, sooner or later you will want to prevent its complete freezing. The Fed is on the verge of declaring victory over inflation, and, according to Oxford Economics, the labor market report is becoming a more important indicator than CPI and PCE statistics. Weak employment data for April lifted the EURUSD rate, while strong data for May caused the pair to fall.I believe that the June NFP report will help you choose forex trading strategies for dollar pairs for the coming month. Before its release, the EURUSD will move in versatile fluctuations. The elections in France have not yet been completed, and on July 4 there will be a vote in Britain. In addition, a slowdown in inflation in the Eurozone may put pressure on the euro. We maintain long positions open from 1.0725, counting on further weakening of the US labor market.EUR/USD Technical analysisEUR/USD corrects the short-term downtrend. At the moment, the pair is breaking through the resistance area (A) 1.0758 - 1.0750. If the correction continues, it will be possible to wait for the test of the resistance area (B) 1.0804 - 1.0792. Zone (B) is the boundary of the trend, and from here we will consider selling the instrument with a target at the minimum of June 26.If EUR/USD returns to the 1.0750 level during trading, a sell pattern will form. In this case, it will be possible to consider short positions with the first target at the 1.0712 level and with the second target at the June 26 minimum.

FOREX Fundamental analysis for EUR/USD on June 28, 2024A week ago, we noted the difficult situation in which EURUSD found itself: On the one hand, the pair is under pressure from political instability in France, on the other hand, the slowdown in the US economy. Since then, the situation has stabilized a little: rumors about Frexit have subsided, and disappointing economic data from the United States gave reason to think that the asset has finally found the bottom. However, Donald Trump unexpectedly intervened in Forex currency trading.The upcoming presidential elections in the United States are of serious concern. On the one hand, a candidate with a criminal record, on the other hand, an elderly person who cannot speak publicly without medical assistance. The first debate showed the advantage of a younger Trump, whose protectionism could disrupt supply chains and trigger a new wave of inflation. This will force the Fed not only to keep the rate at 5.5%, but also to consider the possibility of tightening monetary policy. Great news for EURUSD sellers.As noted earlier, the presidential debate may be more important than the risks of the collapse of the Eurozone and American statistics. Despite a decline in business equipment orders and an increase in the number of repeated applications for unemployment benefits to a maximum since 2021, Donald Trump releases are far away.Trump's return to power accelerates economic risks, overshadowing factors such as leveling Americans' excess savings with a threat to the labor market. Even Rafael Bostic's "dovish" statements about the need for a rate cut failed to disperse the volatility of currency pairs, although the head of the Atlanta Federal Reserve said that a rate cut would be the first step in a series of measures to ease monetary policy.The pressure on the EURUSD has also increased due to the widening of the spread between French and German bonds. Before the first round of elections to the National Assembly, investors are worried about a possible victory for the right. These fears intensified after Germany's statement about the ECB's unwelcome intervention in the debt market to support French securities.A decrease in political tension may remove the threat of Frexit, and the deterioration of American statistics will force the Fed to return to considering the issue of rate cuts. This gives hope that the EURUSD has found the bottom and is ready to grow. But Trump's intervention, trade wars and a possible correction of the S&P 500 could lead to a further drop in the pair.In such circumstances, you need to be ready to act in both directions. A breakout of support at 1.0665 can be considered a signal for selling EURUSD, and a successful breakout of resistance at 1.0725 can be considered a signal for purchases.EUR/USD Technical analysisAfter working out the sellers' target, EUR/USD went into an upward correction, and if the movement continues today, we will wait for the test of the resistance area 1.0758 - 1.0750. From here, we suggest considering new entries into short positions with targets in the range of 1.0712 - 1.0666.We remind you that there are no signals of a change in direction of movement so far, and the short-term trend remains downward. We will wait for the update of the minimum from June 26 and the breakthrough of the Target zone 1.0664 - 1.0638. If the price is fixed below this area, then the next target of the "bears" will be the Golden zone 1.0580 - 1.0571.

The trading idea for the dollar index (DXY) dated June 26, 2024The dollar index (DXY) is growing for the second day in a row, and at the moment it reached the level of 105.50, maintaining an upward potential with the intention of overcoming the maximum of the beginning of May of 105.55. Support from fundamental factors contributes to the strengthening of the American currency.Investors still doubt the willingness of the US Federal Reserve (Fed) to lower its key interest rate several times this year. Although financial markets assume that monetary policy easing may begin in September, the Fed's further actions will depend on the dynamics of inflation and a number of other economic and political factors.Many representatives of the regulator insist on maintaining current rates until inflation reaches the target level of 2%. At a meeting in New York on Tuesday, Fed spokeswoman Michelle Bowman stressed that lowering rates is now impractical, and added that it is even possible to raise them if disinflation stalls. Mary Daly, President of the Federal Reserve Bank of San Francisco, noted the need to continue fighting inflation, while avoiding excessive pressure on the labor market and rising unemployment. The head of the Federal Reserve Bank of Chicago, Ostan Goolsby, said that it is necessary to wait for new evidence of a decrease in inflationary pressure before adjusting monetary policy.This week, on Friday, markets are waiting for the release of data on the basic price index of personal consumption expenditures (PCE) in the United States for May. The PCE index is one of the basic criteria for determining the dynamics of inflation for the Fed, and may clarify the prospects for the Fed's monetary policy. Data on gross domestic product, durable goods orders and initial applications for unemployment benefits in the United States are also expected on Thursday. If these figures meet expectations, the DXY may test resistance at 106.00 even before the publication of data on the personal consumption expenditure index on Friday.Taking into account fundamental factors and based on indicator readings and graphical patterns, we consider placing an order on DXY:Buy Stop 105.60Take-Profit 107.00Stop-Loss 105.00

FOREX Fundamental analysis of EUR/USD on June 26, 2024The slowdown in the American economy is clearly not enough for the collapse of the US dollar. The economy does not have a constant of growth. At other times it strengthens, at other times it slips. It would seem that hardly anyone today would dare to say that the United States economy is in for a deep recession. However, discussions on this topic are already underway. Of course, the Fed should clearly indicate its position and confirm or deny the intention to lower rates. Instead, after the statements of FOMC officials, it seems that easing the exchange rate is not a priority for the regulator. Moreover, representatives of the Central Bank even hint at a possible tightening of monetary policy. Of course, against this background, the EURUSD will decline.Michelle Bowman argues that migration is higher than ever, large-scale fiscal incentives and softening financial conditions increase the risk of a new wave of inflation. If it is resumed or the disinflation process is stopped, Ms. Bowman is ready to support an increase in the federal funds rate. Lisa Cook, in turn, believes that easing the Fed's monetary policy will be appropriate in the future, but does not indicate when exactly this future will come.The market is starting to assume that by keeping rates at 5.5% and not giving signals about the timing of easing amid a slowdown in the economy and inflation, the Fed is demonstrating readiness for a hard landing. If a recession starts in the United States, the rate cut could happen dramatically and significantly. Interestingly, betting options predict a drop of 300 basis points in 9 months, which is significantly higher than the expectations of the FOMC and the market.If a recession in the American economy occurs in 2025, it will seriously shake the dollar's position in forex currency trading. In the meantime, the greenback is winning thanks to the neutral and sometimes hawkish rhetoric of the Fed and political risks in Europe. Investors fear that the unexpected victory of the New Popular Front in France will be more devastating than the success of the leading National Rally.Leftist forces in France plan to raise budget spending by €150 billion by 2027 in order to fulfill promises to reduce the retirement age from 64 to 60 years and raise salaries for civil servants by 10%. They are also going to raise taxes for the rich and corporations, without planning to reduce the deficit in accordance with EU requirements.Political uncertainty in France worries investors, and even the rally of American stock indexes through currency correlation does not help the euro. And when the Nasdaq and the Dow Jones index go in opposite directions, the situation for the single currency becomes critical.In such circumstances, can stock indexes be indicators of the state of the US economy and influence the growth of global risk appetite? Doubtful. Unsurprisingly, the movements of the S&P 500 often do not coincide with the EURUSD. A drop of the pair below 1.07 will strengthen the short positions opened at 1.0735.Technical analysis of EUR/USDEUR/USD is falling, developing a short-term downtrend. The sellers' immediate target is the 1.0670 level. If this goal is fulfilled, then sellers will go to test the Target zone 1.0664 - 1.0638. If this area does not withstand the onslaught of the "bears" and is broken down, then the next target will be the Golden Zone 1.0580 - 1.0571.An alternative scenario is possible if EUR/USD strengthens above the 1.0760 level. In this case, the correction may continue to the border of the short-term downtrend 1.0806 - 1.0793. When this zone is reached, it will generate sales.

FOREX Fundamental analysis for EUR/USD on June 25, 2024The market is tired of selling euros, tired of France with its eurosceptics. I'm tired of being afraid of China's retaliatory measures against EU tariffs on electric vehicle imports. Investors are ready to get rid of the US dollar, as they expect the Fed's monetary policy easing cycle to begin soon. This is how the EURUSD rebound from two-month lows can be explained. But will the buyers have enough strength to develop an offensive?China has offered Germany to reduce import duties on cars equipped with large-volume engines from 15% to zero in exchange for the EU canceling new tariffs on electric vehicles from China. Prior to that, there were rumors of a new trade war in the market, since an increase in European duties to 48% could cause a rise in Chinese duties to 25%. The German car industry would be under attack. But the worst was avoided, and EURUSD took advantage of this situation.The conciliatory rhetoric of the French National Rally party, which is leading in the polls, also supported the euro. The party calls for calm and criticizes Finance Minister Bruno Le Maire, as well as President Emmanuel Macron for stirring up passions about the crisis and the civil war. The national rally intends to follow the trajectory of deficit reduction so that France meets the criteria of the EU Financial Stability Pact.This position reassures investors who feared that the coming to power of Marine Le Pen would increase the budget deficit and public debt, which currently amount to 5.5% and 111% of GDP. This could increase the yield spread of French and German bonds to 100 bps. It is clear that the higher the political risks, the more likely the EURUSD will fall.But if the euro sheds fears about trade wars and the crisis in France, the US dollar has remembered its weaknesses. The president of the Federal Reserve Bank of San Francisco, Mary Daly, noted that the situation in the labor market is deteriorating. Unemployment is growing slowly, but it may soon jump sharply. High inflation is not the only problem for the Fed, and lowering the federal funds rate could mitigate the effects of a cooling labor market. German colleague Isabelle Schnabel noted that the policy differences between the ECB and the Fed are insignificant and temporary.The black streak for the euro may end. But for the EURUSD to grow steadily, signals of further cooling of the US economy are needed. Nevertheless, we do not change our forex trading strategy and we will consider the pair's return below 1.0735 as a signal for sales, since the old risks may return at any moment.Technical analysis for EUR/USDEURUSD remains in a short-term downtrend. After an unsuccessful resistance test (A) of 1.0760 - 1.0751, which ended with a rebound, the pair went down to the sellers' first target of 1.0714. The second target is the minimum of June 14th. In case of an update of the extremum, EURUSD will go to test the target zone in the range of 1.0664 - 1.0638.At the same time, we note that yesterday closed with an increase. We decided to close the rest of the sales at breakeven, as we expect buyers to try to break through the resistance area (A) up. If successful, the pair may reach the resistance area (B) 1.0806 - 1.0793 within the correction. We do not think that the bulls will be able to push the quote higher, so we will form short positions from zone B.

FOREX Fundamental analysis for EUR/USD on June 24, 2024Politics, through financial markets, certainly affects the economy. Thus, the increase in the cost of borrowing increases the burden on servicing the national debt and slows down GDP growth. This is also reflected in business activity, as expectations of an alarming outlook negatively affect purchasing managers' indices. The situation in France, where political instability has widened the yield spreads of French and German bonds and lowered the European PMI, clearly demonstrates the reasons for the fall of the EURUSD.Until June, the pair showed steady growth against the backdrop of a slowdown in the US economy, while Europe showed signs of recovery. The gap in GDP growth between the United States and Europe was narrowing, American exceptionalism was becoming a thing of the past, and investors began to focus on synchronizing the global economy. However, in the summer, forex currency trading changed its positioning againAlthough the US economy continued to cool, as evidenced by the decline in the Citigroup economic surprise index to a low of mid-2022, the snap elections in France, the US trade conflicts with the EU and China, as well as the slowdown in the Eurozone economy turned the EURUSD down.In France, the National Rally is gaining momentum, which, according to polls, is supported by 36% of voters, while the New Popular Front and the Revival of Emmanuel Macron receive 27% and 20%, respectively. If the right gets a majority in parliament, this could lead to a confrontation with the EU, although the situation is likely to develop according to the Italian scenario with compromises.If Marine Le Pen's party does not achieve a convincing victory, a minority government will be formed, which will calm the markets, but slow down the French economy. In any case, there are no favorable scenarios for EURUSD, and the pair will remain under pressure before the first round of elections on June 30.The decline in economic activity in the United States and the rally of American stock indexes, due to artificial intelligence technologies, mitigated the fall of the EURUSD. However, with the acceleration of business activity in the United States, the pair fell below 1.07. Until the Fed starts talking about cutting rates, the difference in yields between U.S. Treasury bonds and their German counterparts will support the dollar.Normalization of the political situation in France and a further slowdown in the US economy are necessary to stabilize the EURUSD. But new problems for the euro are already on the horizon. An increase in EU import duties on Chinese electric vehicles may trigger retaliatory measures by Beijing, and the upcoming US presidential election will increase the risks of anti-globalist policies. The inability of the EURUSD to return above 1.0715 indicates the weakness of the bulls and gives a signal to build up short positions.Technical analysis for EUR/USDEUR/USD is trading in a short-term downtrend. Last week, buyers tested the resistance area (A) 1.0760 - 1.0751, but sellers were able to hold this milestone. As a result, the pair declined and reached the first target of the bears - 1.0714. The next target is the minimum of June 14. We are holding previously opened short positions and will increase them on upward pullbacks and correctionsHowever, if the situation changes dramatically, the pair returns to growth and breaks through the resistance (A) upwards, then we believe that the upward correction will continue to the resistance area (B) 1.0806 - 1.0793. The trend line also runs here. From this area, we will also consider sales.