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June 2st, Dollar buyers try to reverse the market

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notesfortrader
@notesfortrader
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On Tuesday, June 1, by the end of the day, the euro fell against the US dollar by 0.09% to 1.2213. The trades were quite volatile in a limited range. During the day, the euro has formed three session highs. In strengthening it was helped by British and European statistics. Supported by the crosses, the price rallied to 1.2254.

The Briton came under pressure after the release of the PMI in the UK manufacturing sector, which in May turned out to be worse than expected and the previous value. In Germany and the Eurozone, PMIs were higher. The strengthening of the euro was restrained by a strong ISM report on the index of business activity in the manufacturing sector.

In May, the manufacturing PMI rose to 61.2 from 60.7 in April (the forecast was 60.9). The increase in the main index reflected the acceleration in the growth of new orders. The new orders index climbed to 67.0 in May from 64.3 in April. On the other hand, the report showed that the manufacturing index fell to 58.5 in May from 62.5 in April, indicating a slowdown in growth. The employment index fell to 50.9 from 55.1 in April. The main index rose, but the situation in the sub-indices is ambiguous.

Scheduled statistics (GMT +3):

  • 12:30, Britain will announce changes in M4 money supply, approved mortgage applications and net loans to individuals for April.
  • 12:00, the eurozone is to publish the PPI for April.
  • 15:30, Canada will provide data on changes in the issued building permits for April.
  • 20:10, ECB President Lagarde will deliver a speech.
  • 21:00, The Fed's Beige Book will be released in the US

Current situation:

The euro fell from 1.2251 to the balance line. At the time of this writing, the euro is worth 1.2208. Yesterday, the euro rose in price on the growing yield of US Treasury bonds (US10Y) and eventually fell by the end of the day. Today, the yield on US10Y is declining, and the euro rate is falling along with it. The EUR / GBP cross is in a corrective phase, therefore, it puts additional pressure on the main pair. If the fall in US10Y intensifies at trading in Europe, then the major currencies will turn up. This can happen when the value falls below 1.60% per annum.

Of the important events for today, one can single out only the speech of the head of the ECB, K. Lagarde. It is unlikely that she will say anything new, but the performance itself constrains the activity of market participants.

Support is the level of 1.2198 (45 degrees, 3). The projection line (4) from the lows passes through the level 1.2193. It enhances the 45th degree. If buyers protect it, an upward movement can be expected with targets at 1.2250 (2) and 1.2272 (1). If they surrender without a fight, then we are waiting for a fall to 1.2172 (67 gr.).

Summary: on Tuesday the euro closed with a decline and continues to lose ground to the US dollar at the auctions in Asia. And this is happening on the falling yield of Treasury bonds. Support is the level of 1.2198 (45 degrees). If buyers protect it, an upward movement with targets in the 1.2250 and 1.2272 areas can be expected. If they surrender without a fight, then we will fall to 1.2172 (67 gr.). The news background for Europe is poor. The head of the ECB K. Lagarde, who speaks at 20:10 (GMT +3), may increase volatility in the market

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