GBP/USD, DAX Analysis: European open – 27th June 2023

Asian Indices:

• Australia's ASX 200 index rose by 41.2 points (0.58%) and currently trades at 7,119.90
• Japan's Nikkei 225 index has fallen by -233.62 points (-0.71%) and currently trades at 32,465.19
• Hong Kong's Hang Seng index has risen by 292.82 points (1.56%) and currently trades at 19,086.95
• China's A50 Index has risen by 6.84 points (0.05%) and currently trades at 12,464.10

 

UK and Europe:

• UK's FTSE 100 futures are currently up 24.5 points (0.33%), the cash market is currently estimated to open at 7,478.08
• Euro STOXX 50 futures are currently up 11 points (0.26%), the cash market is currently estimated to open at 4,291.57
• Germany's DAX futures are currently up 33 points (0.21%), the cash market is currently estimated to open at 15,846.06

 

US Futures:

• DJI futures are currently up 67 points (0.2%)
• S&P 500 futures are currently up 9.75 points (0.22%)
• Nasdaq 100 futures are currently up 23.75 points (0.16%)

 

Volatility remained on the lower side today with a lack of economic data during the overnight session. Although as we suspected heading into the Asian session, risk-off moves appear to have lost enough steam for us to consider technically-driven bounces (even if it is not exactly a risk-on move). AUD is the strongest currency overnight and the only FX major to not remain rangebound. USD/CAD remains near its 9-month lows ahead of Canada’s inflation report today, which is arguably the highlight of today’s otherwise quiet calendar.

Japan’s MOF (Ministry of Finance) ha again been making some noises about ‘one way’ currency moves as it aims to spook yen bears, but as of yet traders are taking little notice.

Elsewhere in the forex space, China’s central bank have reportedly intervened to support the yuan which has sent USD/CNH back towards Monday’s lows after its rally stopped just shy of the November high.

 

Dax Daily Chart

The DAX fell in a relatively straight line after printing a fresh ATH (all-time high), and exceeded our 16k countertrend target. Two lower wicks formed around 15,720 to show a reluctance for it to push lower, and prices have held above the 100-day EMA and 15,625 lows. Furthermore, a bullish RSI divergence has formed from within the oversold level to suggest a swing low is near (if it has appeared already).

Any immediate concerns surrounding Putin’s loss of control in Russia seem to be in the rear-view mirror for now, and we’ve already seen Asian indices and AUD rise from support levels overnight as sentient appears to be on the mend. At least over the near-term.

• The bias is for an initial move to 16,000 as risk assets lift themselves from their lows.
• Bulls could seek to enter within today’s range or wait for a break above yesterday’s high to assume bullish continuation.
• Sentiment could be further supported if we’re treated to soft inflation reports from Canada and Australia over the next 24hr, in which case a move towards 16,200 could be on the cards.

 

GBP/USD daily chart:

 

GBP/USD may have lost its crown as the YTD’s best FX major performer (which is now USD/JPY), but it does still remain in a strong uptrend on the daily chart. Having retraced for the past six days and holding above the May high, we suspect a swing low could may have arrived – if not, it may be close.

A Rikshaw man Doji formed yesterday o the daily chart and the potential reversal candle formed as RI (2) was oversold. Momentum has turned higher in Asia, so we’re no looking for an initial move to the 1.280 area or the 1.2850 highs (near the upper 1-week implied volatility band).

 

Economic events up next (Times in GMT+1)

 

 

 

 

 

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge