Investors continue to lock in profits after the recent gains posted in the dollar, causing it to drop to three-week lows on Wednesday, even though it was a quiet trading session free of significant economic announcements from the U.S. The main stock indices in Europe as well as in the U.S. posted a sharp rise together with oil and precious metals, following the drop in the dollar, gains in the energy sector and some positive developments that brighten the future of Greece. Germany is reportedly considering offering some debt relief to Greece if the country commits to at least one economic reform, sources told Bloomberg. The reforms include: a higher imposition of taxes, the issuance of less generous retirement benefits to municipal workers and increased state asset sales. For today, investors will be focusing on U.S. retail sales report for May, on trade balance data as well as the jobless claims, for fresh indications on the strength of the U.S. economy and the timing of a potential rate hike.
The euro ended the day slightly higher against the dollar in a quiet trading session on Wednesday, supported by news that Germany is approaching a deal with Greece that could help the country avoid defaulting on its debt. In Wednesday's key meeting in Brussels key meeting in Brussels, German Chancellor Angela Merkel proposed some reforms that involve taxes, retirement benefits and state asset sales and in exchange for accepting some of these reforms Greece will receive a small disbursement of the remaining €7.2 billion of a €240 billion bailout. The amount of the disbursement however is uncertain if it will be enough to cover obligations to the IMF and the ECB. For today, investors will be focusing on U.S. retail sales report for May, on trade balance data as well as the jobless claims, for fresh indications on the strength of the U.S. economy and the timing of a potential rate hike.
Pivot: 1.122
Support: 1.122; 1.1175; 1.1115
Resistance: 1.1385; 1.1465; 1.153
Scenario 1: Long positions above 1.122 with targets @ 1.1385 & 1.1465 in extension.
Scenario 2: Below 1.122 look for further downside with 1.1175 & 1.1115 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
OIL/USD
Crude oil prices posted a sharp increase on Wednesday ending the day above 61$ per barrel, following some positive data from the EIA that indicate a recovery in demand for the fuel. According to the EIA, crude oil inventories fell dramatically last week by 6.8 million barrels when analysts expected a drop of only 1.7 million. Markets will now be focusing on developments with Iran's as the country has a deadline on June 30 to reach a final agreement with Western powers on a nuclear deal. Iran's oil minister told OPEC last Friday that his nation has the capability to double oil exports within a period of six months if longstanding economic sanctions are lifted this summer.
Pivot: 60.5
Support: 60.5; 59.8; 59
Resistance: 62; 62.7; 63.65
Scenario 1: Long positions above 60.5 with targets @ 62 & 62.7 in extension.
Scenario 2: Below 60.5 look for further downside with 59.8 & 59 as targets.
Comment: The RSI lacks downward momentum.
The main U.S. stock indices surged on Wednesday, supported by gains in the energy sector and by developments that seem to brighten Greece's future. The S&P 500 ended the day more than 1% higher with all 10 major sectors ending higher with technology, financial shares and energy taking the lead. With Greece and its Eurozone creditors nearing a solution that may help the country to avoid defaulting on its debt, investors will now be waiting for the June 18 meeting where a cash for reform deal could be announced. For this week, the main focus for equity traders will be Thursday's U.S. retail sales report for May, as well as Friday's consumer sentiment data, for fresh indications on the strength of the economy.
Pivot: 2067
Support: 2067; 2021; 1972
Resistance: 2135; 2180; 2215
Scenario 1: Long positions above 2067 with targets @ 2135 & 2180 in extension.
Scenario 2: Below 2067 look for further downside with 2021 & 1972 as targets.
Comment: The RSI is supported by a rising trend line.