Today the first data of the week regarding the US labor market, let’s talk about Jolts Job openings and Job quits. In addition to these data this week there will be the ADP employment change, the Challenger report and then culminating with the release of the unemployment rate. We also remind you that we will have the decision on Thursday ECB interest ratestherefore the currency market could become interesting again especially after the technical dynamics observed on the majors against the dollar.
EURO VS DOLLAR IN THE ECB WEEK
The appetite for forex returns, especially after the monthly closures resulting from a long period of compression on majors such as EUR And GBP. This week we are expecting a rate cut by the ECB, expected on Thursday with a possible reduction of 0.25%, a cut which, according to what Christine Lagarde said during recent press conferences, could also not arrive given that inflation has risen in the latest survey well beyond expectations, just as the unemployment rate has reached its lowest level since 1995. In essence there has never been a better condition in Europe it seems, therefore a cutting rates would be counterproductive in the work of returning inflation to targets. At the moment EurUsd seems well positioned for an upward trend on a monthly basisa dynamic that will have to be tested above all with the release of this week’s data which, in addition to the hypothetical rate cut by the ECB, also focuses on data from the US labor market.
EurUsd and its positive monthly closing for the month of May – Source:XStation
YEN IN REVERSAL
It seems the time has come to see a very long-term reversal on UsdJpy, also thanks to the technical dynamics which also sees the other majors against the dollar reverse against the latter. At the moment the technical dynamics see the selling of highs above 157 and now we test the 156 downwards, a fundamental level to begin a descent worthy of a real reversal. At the moment the BoJ observes the 10-year anniversary which still yields above 1%, therefore it is expected that there will be no further upward movements on JGB yields in order to avoid an extraordinary intervention by the Japanese central bank. Also in this case the dollar is under downward pressure against a major.
UsdJpy daily chart with reversal dynamics highlighted in the box – Source:XStation
EQUITY ON HOLD
Stock market dynamics still being tested regarding the highs we are seeing, a generalized situation across American and European stock markets. In the US, the prices of big tech are adjusting with varied returns ranging from extremely positive stocks like Meta and Nvidia to stocks that are starting to give way like Microsoft and particular technical situations like that of Apple which is experiencing a bullish push with a strength never seen in previous months. European stocks seem to be decidedly less bubbly than US stocks although in some markets such as the Italian one, we find some important stocks in very strong long-term overboughta technical situation that should make us reflect on the current trend of the markets.
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