Sunrise Market Commentary - Forex | PriceONN
Markets Close to consensus and partially irrelevant; yesterday’s European flash PMIs had little impact on markets. An improvement in the services sector lifted the composite indicator to a still below-neutral 49.5. But most of the responses were collected prior to the signing of the US-Iran agreement June 17, setting the stage for upward revisions to […] The post Sunrise Market Commentary appeared first on ActionForex.

Markets

Close to consensus and partially irrelevant; yesterday’s European flash PMIs had little impact on markets. An improvement in the services sector lifted the composite indicator to a still below-neutral 49.5. But most of the responses were collected prior to the signing of the US-Iran agreement June 17, setting the stage for upward revisions to the final PMI’s due early July. The price gauges meanwhile have come off their recent multi-year highs. While comforting news for the ECB, its chief economist was cautious. Appearing before the European Parliament yesterday, Lane warned that inflation risks being above the 2% target in the medium-term for quite some time, possibly into the first half of 2027. In a speech last week, he projected 3%+ readings for the remainder of the year. He defended the June rate hike by saying that “even in the milder scenario considered by Eurosystem staff in preparation in June, inflation is set to remain above target for long enough to warrant a measured response.” His slide pack shows energy prices (oil and gas combined) now hovering between the ECB’s milder and base scenario. Euro area money markets hold expectations for another hike to 2.5% later this year with views unaltered by the PMIs. German bunds slightly outperformed US Treasuries. Yields fell 2.1-3.6 bps but finished off the lows. US yields lost 0.3-2.8 bps. Core bonds were mainly supported by dented risk sentiment. Stocks slid further on both sides of the Atlantic. Tech in particular still has a target on its back with investors harvesting strong YtD gains going into the close of the first half of the year. Industrials and small caps seem better protected. Currency markets finally look unchained. After months of stoic trading we’re seeing technical breaks occurring in many dollar pairs. The USD turned into the market’s darling ever since Warsh at the June Fed policy meeting took a big step in restoring the institution’s credibility (ie. political independence). Risk premia that previously weighed the greenback down are now going in reverse. Add a solid economy & labour market, and you have EUR/USD losing the critical 1.1392 support area as of yesterday. The pair is currently trading around 1.1370 with next support zones appearing in the 1.12 and then 1.11 area. DXY pierced through 101.138 resistance to fill bids at the highest level since May 2025. USD/JPY’s ascent halted near multidecade highs just south of 162. Investors are wary for possible interventions. Sterling is edging ever closer to EUR/GBP 0.86 support in what is turning into a GBP bullish closing triangle. Burnham as next PM is reducing political uncertainty in the short run even though he has yet to unfold his plans. Losing EUR/GBP 0.86 means a return to 0.8468 (61.8% retracement on the 2024-2025 rally) from a technical point of view. With the eco calendar empty today we expect the technicals to dominate trading. The risk backdrop remains an important market driver as well. Further repositioning and rotation could occur as we head into the quarterly close.

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EURUSD Technical Analysis | PriceONN
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Australian headline inflation fell more than expected in May (-0.7% M/M) with the Y/Y-reading unexpectedly slowing from 4.2% to 4%. On a monthly basis, automotive fuel prices fell by 11.9%, after falling 7% in April. These falls include the impact of the halving of the fuel excise and lower world oil prices. As such volatile items often blur the inflation picture, the Reserve Bank of Australia tends to look at the trimmed mean CPI measure which excludes items with largest price swings in both directions. This core gauge accelerated to 0.4% M/M in May and rose from 3.4% Y/Y to 3.6% Y/Y (highest since monthly series started in April of last year). The RBA has a 2-3% inflation target. The largest contributor to annual inflation was housing, which rose by 6.5%. This was followed by a 3.3% rise in food and non-alcoholic beverages and a 3.3% rise in transport. The Aussie dollar didn’t respond to the higher core CPI. AUD/USD yesterday lost the 0.70-barrier on genuine dollar strength. From a technical point of view, support stands at 0.6833 (March low).

Minutes of the June Bank of Japan meeting affirmed the central bank’s tightening stance: “As for the future conduct of monetary policy, given that underlying CPI inflation has been approaching 2% and financial conditions have been accommodative, it is appropriate for the bank to continue to raise the policy interest rate”. Japanese money markets currently discount a move from 1% to 1.25% by the December meeting. Japanese services price inflation, also published this morning, remained unchanged at an upwardly revised 3.3% Y/Y in May. The Japanese yen continues to hover just below the 2024 top of USD/JPY 161.95 as USD strength is currently balanced by verbal intervention threats by Japanese officials. Risks of a break higher are rising which would lift the pair to strongest levels since 1986.

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