Chart of the Day EURUSD

EURUSD Two Way Trade - Probable Price Path

US equities remain in a holding pattern just under the recent highs, despite the escalation of violence in US cities and the threat of military action by President Trump. The USD seemingly taking all the pressure at this moment, while US yields remain locked in well-defined ranges. The commodity currencies continue to outperform this week, with the CAD and NOK benefitting from oil prices grinding higher as we await the latest OPEC+ decision later in the week, while AUD holds onto gains after the RBA left rates unchanged. While it stands ready to increase bond purchasing if necessary, the statement mimicked recent comments by Governor Lowe that the damage to the economy may not be as bad as first thought. Meanwhile in the UK, reports suggest that the government is looking at ways to relax the 14-day quarantine requirement for entrants from abroad. 

Today is meant to be the start of the next round of talks between the EU and UK before we reach the end-June deadline to ask for an extension to the transition period beyond year-end. The current round of talks are expected to focus on fisheries, “a level playing field for open and fair competition” and on “governance” of a deal. So far media reports have suggested the two sides are some was from an agreement on some of the key issues. The UK government has said that it will not ask of an extension. Further reports suggest that PM Johnson is planning to hold talks with Ursula von der Leyen later this month. EU leaders are likely to discuss the talks at the European Council meeting on 19th June, although focus will probably be primarily on Covid-19. Today’s data calendar is very light. The BoE money and lending data for April are likely to be a little mixed, whilst showing the negative impact from Covid-19 crisis, they will also probably highlight a boost from some forms of emergency lending. 

From a technical and trading perspective, as discussed in the last analysis of this pair prices have duly extended higher and now look poised to test the primary equality objective sighted at 1.1240 from here it is reasonable to expect some profit taking which should see price pullback to test symmetry swing support 1.11 before making a final push higher to complete the sequence to ultimately test offers and stops to 1.13 which represents the 78.6% retracement of the pandemic crisi declines, it is from this level that we likely see a corrective cycle develop to ultimately retest and hold pivotal 1.10 support as  anew higher range develop in the coming weeks

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