Financial market research and analysis

The EURUSD dropped the most in a week, below 1.1300 mark, after ECB President Mario Draghi confirmed that the inflation dynamics in the Euro-zone remain ‘subdued’. Draghi also confirmed that a new TLTRO is in the pipeline, aimed to encourage banks to provide credit to companies and families. Fed Chair Yellen, in the meantime, pushed optimism in the US economic growth, despite a more dovish tone.

On broad based USD weakness following the Fed Chair Yellen’s semi-annual testimony, the USDJPY slid below the 105.00 mark. Today, USD 1.555 billion worth of option expiries are waiting to be expired at 105.00. A survey by Reuters is showing that 61% of Japanese firms support the decision to delay sales tax hike, while the 60% are concerned over currency swings due to the Brexit vote. A critical support is seen at 103.54 (June 15th low), if broken, we expect a drop towards 100.00 mark.

New polls on the Brexit vote showed the Remain camp still ahead, even if the gap with the Brexit camp is narrowing. The GBPUSD approaches a five-month high, but the renewed strength of the US dollar, after Yellen’s testimony, pulled Cable back below the 1.4700 mark. Surpassing 1.4783 (June 21st high), the pair could rally to the 1.50 mark. A drop below the 1.4615 support (June 21st low) could bring the pair back to 1.4557 (200-day moving average).

Drop in commodities and a renewed strength in the US dollar pushed the AUDUSD down to its 100-day moving average, 07454. Support held at this level, and the pair is now rising towards the 0.7500/0.7595 (Fibonacci retracement). A break below 0.7448 (100-day moving average) could cause a further slump towards 0.7330 (Fibonacci retracement), then 0.7290 (200-day moving average).

Gold tanked 20$ an ounce following Fed’s Yellen speech yesterday. At the same time, the Brexit scenario seems to be fading as we enter the last 48 hours before the result of the UK referendum. In the absence of risk aversion, gold could further cheapen towards the 1252 (Fibonacci retracement). On the flip side, renewed tensions in the market could bring the investors back to safe haven assets and encourage a recover in gold prices. The first resistance is seen at the 1300 mark, then at 1317 (June 15th high).

Oil prices rose during Asian hours. The American Petroleum Institute (API) showed a greater than expected contraction in oil inventories (5.2M barrels against 1.7M expected). WTI trades above $50 mark, next resistance is seen at 51.64 (June 8th high).