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Volkov Yuriy · June 6

Fundamental market analysis for 06/06/2024 EURUSD

Events to watch out for today:

15:15 GMT+3. EUR - Publication of the ECB's decision on the key interest rate

15:30 GMT+3. USD - Number of initial applications for unemployment benefits

15:45 GMT+3. EUR - ECB Press Conference

EURUSD:

The EUR and USD pair is strengthening around 1.0890 despite the US Dollar (USD) rebounding during the early Asian session on Thursday. The European Central Bank's (ECB) interest rate decision and President Christine Lagarde's press conference will take center stage in today's euro economic developments.

The ECB is expected to cut interest rates by 25 basis points (bps) at its June 6 meeting, reducing the main refinancing rate, margin lending rate and deposit rate to 4.25%, 4.50% and 3.75%, respectively. Financial markets had anticipated that the ECB would cut the rate by 43 bps by September and by around 60 bps by the end of the year. The divergence between the ECB and the US Federal Reserve (Fed) could put pressure on the Euro (EUR) and create a headwind for EUR/USD.

Across the ocean, speculation is mounting for the Fed's first rate cut in September as the US economy slowed in the first quarter. According to the CME FedWatch tool, traders now estimate the probability of a Fed rate cut in September at nearly 70%, up from 54.9% earlier in the week. The expectation of a Fed rate cut is likely to weigh on the US dollar in the near term.

However, the release of stronger-than-expected ISM Services Purchasing Managers' Index (PMI) data for May provided some support for the dollar. The index rose to 53.8 in May from the previous reading of 49.4, beating the market consensus forecast of 50.8. On Friday, investors will turn their attention to the US Non-Farm Payrolls (NFP) data, which is estimated to add 185,000 jobs to the US economy in May. Stronger-than-expected US jobs data could further strengthen the dollar and limit EUR/USD gains.

Trading recommendation: Trade mainly with buy orders at the price level of 1.0920. Consider sell orders at the price level of 1.0855.

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Volkov Yuriy · June 6

What are FreshForex traders profiting from?

This week, the financial news market is buzzing with mixed events. Oil prices continue to fall, while American stocks are delighting investors with unexpected rises.

FreshForex traders have quickly capitalized on these events to make profits. Let's take a closer look at what’s happening and why.

Black gold is getting cheaper

At the beginning of this week, oil prices fell again, causing concern among investors. Market volatility is increasing due to fears about future demand and a possible easing of production restrictions by OPEC+ by the end of the year. Brent crude oil fell below $77 per barrel on Tuesday!

Oil prices declined following decisions made by OPEC+ at their June 2 meeting. The organization announced a gradual lifting of oil production restrictions, affecting market sentiment. Moreover, disappointing figures from the US manufacturing PMI (ISM) also played a role: at the end of May, the index dropped below 50 points to 48.7, indicating a decline in the sector. The rise in borrowing costs, limited investments, and increased raw material costs are challenging American industry.

Experts are divided: Goldman Sachs sees potentially negative consequences for the market from OPEC+'s decision, while UBS and RBC analysts believe that the cartel will manage the market flexibly, gradually easing restrictions.

Rises in the US stock market

Meanwhile, optimism reigns in the US stock market. The price of tech giant Apple (#Apple) exceeded a 5-month high, surprising Wall Street once again. The company’s profits surpassed expectations, causing a buzz among investors that continues to this day.

Microsoft (#Microsoft) shares continue to rise. Microsoft is developing and training its own AI model, MAI-1, which could compete with models from Google, Anthropic, and even OpenAI, according to a Yahoo report. The company's first-quarter revenues were supported by high demand for AI products.

Micron (#Micron) shares are soaring. The company is poised to become one of the largest beneficiaries of AI demand in the chip industry. Micron announced strong quarterly results and an optimistic earnings forecast for the current quarter.

Once again, GameStop Corp (#GameStop) became sensational news. As we mentioned earlier, the company’s shares soared following new content from popular YouTube streamer Keith Gill, known as Roaring Kitty. In a recent Reddit post, Gill shared a screenshot of his investment portfolio, which included a significant holding of GameStop shares and call options. This information sparked another explosive interest in the stock, doubling its price to $47 on the New York Stock Exchange (NYSE) on Monday, June 3. We already mentioned GameStop in May, so for our regular readers and active traders, the latest surge was no surprise.

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Volkov Yuriy · June 7

Fundamental market analysis for 06/07/2024 USDJPY

An event to look out for today:

15:30 GMT+3. USD - Change in the number of employed in the non-agricultural sector

USDJPY:

The Japanese Yen (JPY) is under pressure, the reason could be due to information about the decline in Japan's foreign exchange reserves released by the Ministry of Finance for May. Foreign exchange reserves fell significantly to $1,231 billion in May from $1,279 billion, the lowest since February 2023, as the government conducted currency intervention operations to defend the Japanese yen.

Japan's Finance Minister Shunichi Suzuki said Friday he would take measures against excessive currency volatility if necessary and evaluate the effectiveness of the interventions. Suzuki emphasized the importance of maintaining market confidence in public finances, noting that there is no limit on funds for currency intervention, Reuters reported.

The US dollar (USD) struggled as a drop in United States (US) jobs data fueled hopes of two interest rate cuts by the US Federal Reserve (Fed) in 2024. A Reuters poll conducted between May 31 and June 5 showed that nearly two-thirds of economists now predict an interest rate cut in September. In addition, according to CME FedWatch Tool data, the probability of a Fed rate cut of at least 25 basis points in September rose to nearly 70.0%, up from 51.0% a week earlier.

Trading recommendation: Trade mainly with buy orders at the price level of 155.70. We consider sell orders at the price level of 155.00.

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