Daily market analysis

June 15, 2022

US markets were mixed on Tuesday as investors continued to brace for further rate hikes from the Fed and wait for the tier-1 economic data on Wednesday. The S&P 500 fell for a fifth day, dropping 0.38%. The Nasdaq Composite slightly rose 0.18% to close with 10,828.35 while the Dow Jones Industrial Averages declined 0.5%, settling at 30,364.83 at the end of the day. The downside in equities came as rates surged again in anticipation of more aggressive tightening monetary policies from the Fed. Major sell-off would possibly not stop until the rates are settled.

Moving on to currency markets, two of the biggest currencies, Bitcoin and Ethereum, sank more than 17% in a week. Investors worried about another possible winter and collapse, bringing down other key players, like lending firm Celsius. Celsius recently moved to pause all withdrawals due to the liquidity crisis, sparking fears that Celsius might confront some financial problems. In the meantime, Coinbase has announced that it will cut 18% of its full-time jobs as its executives are preparing for recession and currency winter.

Main Pairs Movement

The 10- year benchmark Treasury yield hit its highest level, 3.475%, in 11 years as investors continued to assess the prospect of the Fed, imposing more aggressive interest rate hikes. At the same time, the 2- year Treasury yield jumped to 3.437%, the highest since 2007.

GBP/USD declined 1.11% and finished at 1.19958 at the end of the day. The cable plunged following the disappointing figures from the UK unemployment rate and the Claimant Count Change; the UK unemployment edged higher to 3.8%, higher than expected, while the Claimant Count change figure was worse than the estimate.

Gold fell for a two-consecutive day, holding slight above $1,800 ahead of the FOMC meeting. Gold remained downside and under pressure following the rumours that the Fed might consider hiking rates by 75 basis points in response to the inflationary pressure, thus giving the bullion a downside look.

EUR/USD flirted with 1.0400 ahead of the FOMC meeting. However, further price movement might start reacting before Thursday’s meeting, as the US will publish the tier-1 data, and retail sales figure on Wednesday.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD has temporarily rebounded after a three-day losing streak. Market sentiment, however, continues to look bearish for the Euro as market participants are now pricing in a possible 75 basis point interest rate hike by the Fed. The Federal Reserve is set to convene tomorrow and provide forward guidance on the U.S. economy. Important retail sales figures are also due tomorrow during the American trading session.

On the technical side, EURUSD has found support near the 1.04038 price region. The secondary support level sits at 1.03783. RSI for the pair has dropped to 35.5, as of writing. On the four-hour chart, EURUSD is trading below its 50, 100, and 200-day SMA.

Resistance: 1.07454

Support: 1.04038, 1.03783

GBPUSD (4-Hour Chart)

GBPUSD extends its losing streak as market participants continue to sell off the British Pound. The National Statistics of the U.K. reported a higher unemployment rate for May, thus exerting more pressure on the U.K.’s economic outlook. While the Federal Reserve is set to announce its interest rate policy tomorrow, the BoE continues to find itself in a hard place, facing soaring inflation while the economy is contracting. Risk-averse market sentiment further supports the U.S. Greenback in the short term. The U.S. 10-year Treasury yield has marched past 3.44%.

On the technical side, GBPUSD has reached its lowest point in two years. The short-term support level at 1.20824 seems weak, but the next level support level sits close at 1.19189. RSI for the pair sits at an oversold territory of 15.52, as of writing. On the four-hour chart, Cable trades well below its 50, 100, and 200-day SMA.

Resistance: 1.25944

Support: 1.20824

USDJPY (4-Hour Chart)

The U.S. Greenback continue to gain appeal as global market sentiment continues to sour. Global equities have retreated significantly since the start of the month. Red hot U.S. PPI has market participants pricing in a 75 basis point hike by the Fed. As of writing, the U.S. 10-year Treasury yield has soared past 3.45%. The further interest rate differential between the U.S. and Japan will continue to provide upward momentum for the USDJPY pair.

On the technical side, USDJPY has found a near-term support level around the 134.1 price region. The short-term resistance level at around 135 seems weak as the Fed is due to announce monumental monetary policy statements tomorrow. RSI for the pair sits at 62.5, as of writing. On the four-hour chart, USDJPY trades above its 50, 100, and 200-day SMA.

Resistance: 134.56

Support: 133.5, 132.5

Economic Data

CurrencyDataTime (GMT + 8)Forecast
CNYIndustrial Production (May)10:00-0.7%
USDCore Retail Sales (May)20:300.8%
USDRetail Sales (May)20:300.2%
USDCrude Oil Inventories22:30-1.2M