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June 8, 2019

First, a review of last week’s events:

  • EUR/USD. It seems that Mario Draghi has already lost the ability to influence the market, which is waiting for the arrival of the new head of the ECB to replace him. At least, the rather soft rhetoric of Draghi and his reasoning about a possible quantitative easing, sounded last Thursday, was perceived quite calmly by investors. The euro was not weakened by the statement that it was not worth expecting a rate increase until the middle of next year either. As a result, surprisingly, the press conference of the ECB leadership played into the hands of the European currency, and the pair went up to the level above 1.1300. There followed a smooth rollback to the level of 1.1250 and ... a new breakthrough to the north at the time of publication of data on the labor market in the US on Friday, June 07.
    Experts were prepared for the fact that the NFP indicator (the number of new jobs created outside the agricultural sector) could “shrink” by about 30%, but almost no one expected a reduction of 3 times (from 224K to 75K). As a result, the pair soared to the level of 1.1345, and the weekly swing was 180 points. As for the end of the five-day week, at the end of the trading session, 1 euro was worth $1.1333;
  • GBP/USD. They say that no news is good news. Following the resignation of Prime Minister Theresa May, there were no significant events in the British Isles, which allowed the pound to strengthen its position during all week, step by step. President Trump's visit to Queen Elizabeth II hit the front pages of the secular, but not the economic chronicle. And Mrs. May's efforts, who directed the remnants of her influence in order to prevent the "hard" Brexit, could only slightly support the uptrend of the British currency. The same applies to weak statistics on employment in the United States. As a result, the pair returned to the highs of a week ago, putting the final chord practically where the analysts who were waiting for correction indicated, at the level of 1.2733;
  • USD/JPY. Recall that the votes of the experts last week were divided as follows: 50% sided with the bears, 25% sided with the bulls, and 25% stood in the middle confused. We can say that it is this discrepancy that is reflected on the pair chart.
    Quotes of the yen against the dollar are strongly correlated with the US Treasury bonds. The fall of the latter stopped on Monday, June 3, stopping the pair from falling below the mark of 107.80. Then the dollar began to regain its position, and by the time of the NFP data publication reached the height of 108.65, after which the pair sharply went down, felt the bottom at the level of 107.88, and finished the week at 108.18;

As for the forecast for the coming week, summarizing the opinions of a number of analysts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

  • EUR/USD. Speech by Mario Draghi on June 6 pushed the euro up. On Wednesday, June 12, we are expecting his next speech, from which investors still hope to get clearer guidelines on the ECB’s monetary policy for the foreseeable future. Another source of operational information for the market is President Trump's Twitter, in which he often shares information and plans regarding his trade wars, primarily with China.
    As for the exact figures, the upcoming week will be devoted to inflation. On Wednesday, the CPI index values will be published by the National Bureau of Statistics of China, on Wednesday and Friday, consumer price indices in the USA will become known, and on Thursday, June 13, the German ones.
    In the meantime, expert opinions are divided as follows. 60%, supported by graphical analysis on D1 and 20% of oscillators that give signals the pair being overbought, expect that it will try to break through the support of 1.1215 and retest the lows in the 1.1100 zone. The alternative point of view is held by 40% of experts and the vast majority of oscillators and trend indicators. In case they are right, the pair will be able to consolidate above the level of 1.1400, aiming at the resistance of 1.1525;
  • GBP/USD. At the beginning of the coming week, candidates for the post of the UK Conservative Party leader will likely be known. It will also become more or less clear, how many votes they can get by moving to the post of Prime Minister, and to what extent the likelihood of a “hard” Brexit and exit from the EU without an agreement is likely.
    Currently, 55% of the experts, supported by graphical analysis on H4, continue to side with the bulls and 45% side with the bears. The trend indicators have exactly the same ratio: 55% are for the growth of the pair and 45% stand for its fall. Oscillators have a slightly different picture. There, despite the overwhelming advantage of the “green”, 10% of the indicators on H4 and D1 give signals the pair is overbought, which can indicate either a fairly strong correction or a beginning of a downward trend.
    Some impact on the behavior of the pair may be exercised by the data on the labor market in the UK, which will be published on Tuesday, June 11. But, with a high degree of probability, it can be assumed that this influence will be mild and short-lived;

  • USD/JPY. It is also unlikely that the GDP data in Japan, which will be released on Monday, June 10, will have an impact on the market. The main drivers are still the yield of US government bonds, oil prices and the course of the US-China negotiations. In such a situation of uncertainty, 40% of analysts have turned their eyes to the north, 40% to the south and 20% to the east. The main support levels are 107.75 and 107.00, resistance levels are 109.15, 109.65, 110.35 and 110.65;


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