CURRENCY HIGHLIGHTS – June 2019
EURUSD currency pair is dropping After a Failed Breakout, Euro Stretched Across Board
EURUSD was continuing the drift lower of the past weeks on concerns that the latest European Parliament elections will see a rise in populism and Euro-skepticism. That’s bad news for the EURO, which could yet lose more ground against a backdrop of trade wars and Brexit.
The tumble that this FX benchmark took last week – particularly through Friday –leaves us with the impression of a tumble that could cascade if only it weren’t so close to more critical technical levels just a short extension lower. While there is a certain degree of influence to be expected from the most heavily traded pairing for a currency, a general market state that is reluctant to foster trends and the presence of chart-based boundaries can kill the critical opening phases of momentum necessary to shift congestion to trend. If we are looking for a significant bear trend to arise for the Euro, we will either need to find a critical level such as 1.1100 fall on EURUSD or otherwise see the other liquid Euro crosses mark a wider and faster decline.
Retail trader data shows 69.6% of traders are net-long with the ratio of traders long to short at 2.29 to 1. In fact, traders have remained net-long since May 03 when USDJPY traded near 111.664; price has moved 3.1% lower since then. The number of trader’s net-long is 20.0% higher from last week.
The combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias.
Brexit Latest: British Pound Forecast Weakens as Hard Brexit Odds Rise. After PM Theresa May resigned from the job, the first round of the UK’s Tory party leadership contest saw Boris Johnson (114 votes) easily blow past other contenders, with the second (Jeremy Hunt – 43 votes) and third (Michael Gove – 37 votes) place finishers falling well-behind. The likely ascendance of Boris Johnson as the next Tory party leader has rekindled fears of a no deal, hard Brexit come October.
Changes in retail traders positioning suggest that more losses may be on the way for the British Pound, no matter where you look. The British Pound is ending the first half of June on weak footing. Selling pressures began in earnest on Thursday after former London mayor, prominent Brexiteer, and hopeful resident of 10 Downing Street Boris Johnson cruised to an easy victory in the first round of the Tory leadership elections.
WHY IS THE BRITISH POUND FALLING?
The likely ascendance of Boris Johnson as the next Tory party leader, and therefore, the next likely opponent to Labour party leader Jeremy Corbyn in a UK general election, has rekindled fears of a no deal, hard Brexit come October. It should be noted that the top five vote getters in the Tory party leadership balloting were all for a no deal, hard Brexit if necessary, and historically for decades, Labour’s Corbyn has been anti-EU (which is part of the reason why we've held the belief that if Corbyn becomes UK PM, the GBP may not recover soon).
Gold price explodes to fresh yearly highs - levels to know.
Gold prices have been on the move over the past two weeks as expectations for rate cuts from the FOMC have gotten priced-in. But this may not be just a near-term stimuli, as gold prices were setting the stage for a significant breakout coming into last month. Gold prices hit a fresh yearly high earlier this month, finding a bit of resistance off of a big batch of prior swing highs that are called »the danger zone«.
BITCOIN and ALTCOINS
Since our recent BTC analysis, after Bitcoin has crushed many resistances between $5000 all the way to $8000. This time we saw a sharp move down to arround $7200 but quickly correcting up filled up with demand. Current price is arround $8650. The general sentiment in the crypto market is very positive and as said many times already, we expect a huge breakout of cryptocurrency.