New month, same scenarios

Monday 1 July 2024

The Greenback has found some sell interest again but with JPY selling too overall on the cross dips, along with the carry flows, and helping to underpin core pairs as I've been warning for a while. The threat of MOF/BOJ intervention remains real but only verbal action still so far.

Mixed data out of the US on Friday with softer PCE and stronger Michigan Sentiment consumer confidence and the selling of US bonds/yield increase did little to bolster the Greenback. Today sees US ISM numbers and tomorrow brings Fed Chair Powell to the rostrum. The first round on French elections saw Le Pen's National Rally party post good support as expected but analysts don't see Macron out the frame just yet and the Euro has rallied, perhaps more in hope than actual outcome. Next round to follow on July 7. UK General Election on Thursday also in the mix with expectations of a strong Labour Party win.

While the CB and poltical second-guessing continues remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows especially in days like today with thin liquidity. Don't get greedy or over-analyse.

Equities remain underpinned but fell on Friday with sellers still lurking. WTI dip demand seen again but capping at $82.00-20 after a hold of $80.80 this time with more two-way expected. Gold still finding a base at $2310-20 but failing at $2340 this time. Dip demand should remain but profit-takers/sellers still poised.

GBPUSD: Support coming in at 1.2620-30 again but capping into 1.2690 helped by EURGBP demand outstripping GBPJPY demand. EURGBP: Holding 0.8460 on Friday and gapped higher in Asian on the French election outcome/relief rally with EUR notable generally but capping at 0.8500. EU politics still casting a shadow as we move on to Round 2. GBPJPY: Holding 202.80-00 again amid the general JPY selling but capping at 204.25 in the extended rally.

EURUSD: Capping at 1.0775 in the general EUR rally after a hold of 1.0700 and Asian gap above the pivotal 1.0730. USDJPY: Support coming in at 160.25-30  then 160.60 amid the ongoing JPY supply and outstripping the USD selling. Capping around 161.20 again so far. MOF/BOJ intervention fears remain.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk