The probable direction of some currencies-Photo from pixabay.com
While the stock markets continue to sail at the highs of the period (Europe is a few percentage points away). Some probability calculations make us be very cautious about this trend. Where do some currencies go?
Ebury’s view on foreign exchange markets
Recent elections in Mexico, South Africa and India have brought volatility to domestic and currency markets, also impacting the Eurozone following European Parliament elections that favored far-right parties. In France, the early legislative elections called by Macron combined polls and political games with macroeconomic data and monetary policy, overshadowing the ECB’s rate cut. The G10 currencies had a mixed performance, except for the Japanese yen, weakened by the Bank of Japan’s dovish approach, while the South African Rand strengthened.
With few major macroeconomic events, the focus is on political events, with little volatility expected for the UK elections on 4 July, while in France the first round of legislative elections on 30 June could influence markets.
EUR: European Parliament elections and early legislative elections in France weigh on European assets and business optimism. Eurozone PMIs for June were weak, the euro posted a decent performance, falling less than 1% against the dollar.
USD: US economic news was mixed, with disappointing retail sales but better-than-expected PMIs. The uncertainty of the French elections helped the dollar marginally. The week will be quiet, but the presidential debate between Biden and Trump could influence the markets.
GBP: The Bank of England kept policy unchanged, signaling possible rate cuts in August. Inflation news and weak PMIs support this forecast. The prospects of a Labor victory are positive for the pound, favoring closer ties with the European Union.
Where do some currencies go? Short term focus on the euro dollar with our algorithms
The exchange rate has moved in the 1.0720 area in recent days, after having reached a minimum of 1.0601 and a maximum of 1.1054 during the year. The Alligator Indicator on the daily and weekly time frames is set to the side. In recent days, prices have been resting on the 600-day moving average. Failure to decline in the next few days/weeks below the 1.0667 area (low of 14 June) could lead prices in the next few days towards the 1.08/1.0850 area from where the 200-day moving average passes. Prices are currently in close contact with the 200-day moving average.
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