INTRADAY TECHNICAL ANALYSIS 30 MAY (observation as of 08:45 UTC)
Important Levels to Watch for:
- Resistance line of 1.07770 and 1.08459.
- Support line of 1.06392 and 1.05703.
The euro was holding firm at $1.07597 on Monday, recorded a 1-month high on the dollar.
The steadier market mood has seen the safe-haven dollar declined, while the euro was boosted by hawkish comments from ECB officials who have been flagging a rate hike as early as July.
With U.S. economic data appear to be slowing, ECB officials are debating even faster initial rate hikes, and front-end rate differentials have started to move in the euro's favour.
That underscores the importance of this week's major U.S. data which includes the ISM survey of manufacturing on Wednesday and the May payrolls report on Friday.
The dollar also weighed after a sharp rally in stocks curbed liquidity demand for the dollar.
The EUR/USD pair begins to provide new positive trades now, motivated by the positive overlapping signal provided by stochastic now, waiting to surpass 1.0770 to open the way to head towards our next target that reaches 1.0845.
Bullish trend will continue to be suggested, on continuous support by the EMA50 unless breaking 1.0640 and holding below it.
Important Levels to Watch for Today:
- Resistance line of 128.158 and 128.817.
- Support line of 126.026 and 125.367.
The dollar was steady against the Japanese yen. Was at 127.344 yen having found solid support around 126.37 in the past week.
With U.S. inflation expectations have been coming off, hence fading expectations for Fed tightening has weighed on the USD/JPY, which the yen is quite sensitive to yield differentials.
Minutes from the Fed's May meeting, released Wednesday, showed that most participants believed 50 basis-point hikes would be appropriate at the June and July policy meetings, but many thought big, early hikes would allow room to pause later in the year to assess the effects of that policy tightening.
The divergence in monetary policy between the Federal Reserve and the Bank of Japan continue to be a major tailwind for the greenback.
The USD/JPY pair keeps its stability below 128.158 level, to keep the negative pressure valid on the intraday and short-term basis, noticing that stochastic provides negative signals now, waiting to motivate the price to resume the correctional bearish trend that targets 126.026 as a next main station.
In general, the negative scenario will remain valid conditioned by the price stability below 128.158.