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Sterling extends weakness below pivotal support at 1.2700 on Tuesday, as Monday's strong upside rejection at daily cloud top and close in red weighed on market.

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EUR/USD

Current level - 1.1159

The outlook here is bearish below 1.1180 resistance, for a slide through the local low at 1.1132, towards 1.1020 major support.

Profit-taking affects gold curbing silver and platinum

Resistance Support
intraday intraweek intraday intraweek

1.1180

1.1360

1.1108

1.1022

1.1300

1.1610

1.1020

1.0838

 

USD/JPY

Current level - 111.58

The violation of the previous high at 111.40 signals, that the uptrend is renewed, heading for a break through 112.10 area, towards 113.00 zone.

Resistance Support
intraday intraweek intraday intraweek

112.10

112.10

111.40

109.08

113.00

114.30

109.10

108.12

 

GBP/USD

Current level - 1.2739

My outlook here remains bearish below 1.2825, for a slide through 1.2634 low, towards 1.2480 support area. 

Resistance Support
intraday intraweek intraday intraweek

1.2825

1.2970

1.2685

1.2610

1.2880

1.3050

1.2610

1.2480

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GBPAUD bias is to the downside after a break below the 50-day moving average and below the key psychological 1.7000 level on June 9.

Momentum oscillators are showing that the downside bias is gathering momentum. RSI is trending down and is below 50 in bearish territory, while MACD is also showing bearishness as it is below zero and falling.

Prices are currently testing the 200-day moving average at 1.6654. It is expected to provide support but a daily close below it would bring about more weakness in the market and accelerate a further decline. Next support would come into view at 1.6240 before 1.5902 (March 16 low).

To the upside, major resistance is provided by the psychological 1.7000 level. A break above this opens the way towards 1.7200 and 1.7500.From here, we could see a re-test of the high at 1.7650. This would bring about a bullish bias and a resumption of the uptrend from 1.5902.

As long as the market can stay above the 200-day moving average, the uptrend that took place from 1.5902 to 1.7650 will likely remain intact. But the short-term bias is to the downside. Looking at the bigger picture, the pair has a neutral outlook.

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The US dollar was firmer on the back of hawkish comments from Federal Reserve officials. Sterling held onto Monday's losses as all eyes turn to the mansion House speeches later by Bank of England Governor Mark Carney's speech and UK Chancellor Philip Hammond. The aussie rose despite mixed RBA minutes.

The greenback rose to a 3-week high against the yen at 111.76 as higher US Treasury yields helped lift the US currency. Comments from New York Fed President William Dudley and Chicago Fed President Charles Evans on Monday suggested the US central bank will continue on its rate hike path. Vice-Chair Stanley Fischer speaks later today.

The aussie rebounded after Australia's central bank released minutes of its latest policy meeting. The minutes showed the RBA remains concerned about high household debt and its threat to financial stability but despite this, the central bank gave a relatively upbeat assessment of the economy, suggesting to markets that it will not cut rates in the near future. This helped the Australian dollar rebound to eventually rise above the key $0.7600 level by late session trading.

The pound will be in focus today as the UK's finance minister and Bank of England governor are due to speak later at Mansion House. Any hint by Governor Carney that suggests he sees no rush to raise interest rates would be negative for the pound. Meanwhile, markets are eager to see what Philip Hammond will say regarding Brexit. Cable touched a session low of $1.2722 before rising towards $1.2750.

The euro traded near lows of $1.1140, close to 2-week low of $1.1131 touched on June 15.

In commodities, gold fell to $1242.76 an ounce, its lowest in a month, while WTI crude oil continued to trade below the key $45 a barrel level.

Source: Author: XM

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Investors fell in love again with tech stocks. The sector which was held responsible for the pullback in equities in the last two weeks is driving indices to record highs. Suddenly valuations are no longer a worrying factor, and Fed tightening is less of a concern. It seems like bargain hunters were waiting for the opportunity to dive in. Although many market participants considered tech stocks either expensive or bubble-like after the S&P 500 information technology sector soared 22% from the beginning of the year to 9 June, it still doesn't make sense to compare this rally with the tech bubble burst in 2000. The current leaders in the sector are the FAAMG's 'Apple, Alphabet, Microsoft, Amazon, and Facebook'. Their aggregate average forward P/E ratio stands at around 23.5, which is less than half the forward P/E for big tech stocks in 2000. Cash balances are more than six times higher than the levels of 2000 and cash flows are in a much better shape. Although valuations are not comparable to 2000, they are still high in contrast to previous levels. Given that earnings are expected to continue growing at a rapid pace, the overstretched valuations are justified, and any dip will be seen as an opportunity to buy.

Comments from New York Fed President William Dudley provided the dollar with a boost yesterday. He seemed confident that inflation would return as the jobs market pushes wages higher. More interestingly, he said that he is not paying too much attention to signals of concern from bond markets, which has been flattening for some time. Fixed income traders were sending negative messages more recently, the most obvious being that they don't believe the tightening cycle path will continue as expected. Although yields on ten-year bonds moved higher after Dudley's comments, they are still not signaling high confidence in economic growth. Thus, economic data in the next couple of weeks should be robust enough to convince bond investors that the economy is on the right track, and for the dollar to continue appreciating. Fed Vice Chair Stanley Fischer is due to speak today. If he shares Dudley's views, the dollar is likely to continue rallying.

Brexit talks began yesterday. The first day of the negotiations ended calmly with both sides agreeing to focus on Britain's exit bill and the rights for EU citizens living in the UK and vice versa. It will probably take some time for negotiations to start influencing the Pound's direction. Instead, investors today will focus on what BoE's Mark Carney has to say after three MPC policymakers voted to raise interest rates last week. Rising prices and falling wages is one of the biggest challenges a central bank can face, and investors need more clarity on what tools are available to tackle these problems.

Source: ForexTime

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