We’ve heard from various central banks over the past two weeks and the takeaways remain the same: wait for more data to give further insight into the development of the economy and determine whether further rate hikes are necessary. We have the likes of Fed Chairman Powell and Bank of England governor Bailey speaking this week as well as the latest US PCE index out on Friday, but let’s take a look at some of the key FX charts and what they’re telling us.
EUR/USD
On the daily chart, we can see EUR/USD had climbed to a 6-week high and erased the pullback seen in May but got rejected at the 1.10 handle. The moving averages are still pointing to the upside, with the 20-day having just crossed above the 100-day SMA, and the RSI is also showing signs of a further bullish drive, but the momentum has started to weaken. The recent resistance at 1.10 is going to be tough to break but even if the pair manages to push above it then it will likely face renewed resistance between 1.1032 and 1.1090.
USD/JPY
The bullish run in USD/JPY remains strong with the pair trading at a 7-month high. That said, the recent push from 138.90 to 143.70 looks slightly over-extended with the lack of any meaningful pullbacks, evidenced also by the RSI hovering into overbought territory. The trading bias remains to the upside, but buyers should be cautious of any technical pullbacks to re-test the appetite to move higher. The pair is also approaching the highs seen in October last year, which could start to offer increased resistance around 145.50.
AUD/USD
AUD/USD has seen significant bearish momentum as the rising geopolitical tensions have weighed on the Aussie in favour of the Dollar. The pair had managed to break above its descending trendline resistance on June 9th to reach a 4-month high a week later, but it was unable to break the 0.69 barrier, at which point the heavy selling commenced. It is now resting within a confluence of moving averages in an attempt to find support to break higher once again, so far having used the descending trendline to its advantage to limit the pullbacks below 0.6660.
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GBP/USD
GBP/USD has been trading in a descending channel for the past 10 days after facing resistance at 1.2850. Within this trend, the bearish momentum has started to stall with the daily candlesticks shying away from the lows of the day, which has been breaking the series of lower lows in place for the past week. The longer-term bias remains to the upside as the ascending channel from the September 2022 lows continues to dominate the scene, with a pullback below 1.2550 to invalidate the bullish trend. For now, we may see GBP/USD continue to consolidate around 1.2745 as buyers test the waters to find further support to continue pushing higher. 