For EUR/USD, Further Decline to 1.06 Support the Path of Least Resistance

Yields both in the US and Europe almost fully discount two rate cuts this year. In normal times this should help to build some bottoming, but especially in Europe, the risk-off might persist as first opinion polls on the French elections are filtering through. For EUR/USD, a further decline to the 1.06 support remains the path of least resistance.

USDCNH Hits the Ceiling

These data and statistical reports last week failed to lift renminbi volatility. The USDCNH pair seems to have found its ceiling just below 7.27, having been turning downwards from there since the end of March.

Australian Dollar Drifting Ahead of RBA Decision

The Australian dollar is steady on Monday. AUD/USD is trading at 0.6605 in the European session, down 0.14% on the day. Last week, the Australian dollar rose as much as 1.8% but pared most of these gains.

Sunset Market Commentary

A sense of calm returned to European markets for now. Le Pen from the poll-leading Rassemblement National sought to reassure investors on the budgetary front if her party were to win the elections. It may have helped to stop the rout in European/French assets in a daily perspective after a disastrous week. Equities in the region stabilize and in some cases eke out a small gain (EuroStoxx50 +0.5%).

RBA Policy Meeting May Be Muted; Aussie Remains Choppy

The Reserve Bank of Australia (RBA) is scheduled to announce its June policy decision early on Tuesday, likely maintaining the central bank's agenda. The policymakers had anticipated that their responsibilities would become significantly less challenging in the current year. However, persistent inflation and ongoing economic uncertainty have made policy decision-making quite challenging for RBA officials.

Soft Retail sales Could Curb Fed Hawks' Rhetoric

At last week’s Fed meeting, consumer spending featured briefly in Chairman Powell’s press conference. The focus was firmly on the May inflation report and the Fed’s dot plot. Even though Powell tried to reduce the importance of the latter, the Fed members’ median expectation of one rate move in 2024 monopolized the market’s interest.

Euro Steadies After Market Jitters Subside

The euro is steady on Monday. EUR/USD is trading at 1.0714 in the North American session, up 0.10% on the day.

Instrument of the Week (June 17—21): EURGBP Overview

The EURGBP pair, representing the exchange rate between the Euro and the British Pound, encapsulates the economic dynamics of the Eurozone and the United Kingdom. The Euro is influenced by economic growth, inflation, and the monetary policies of the European Central Bank, primarily driven by major economies like Germany and France. On the other hand, the British Pound is affected by the UK’s economic indicators, such as GDP growth, inflation, and decisions made by the Bank of England.

Yen Appreciation and Policy Normalisation are Still Some Way for Japan

A weak Yen is aiding the Bank of Japan's inflation objective for now by dislodging the deflationary mindset. But homegrown inflation needs further wage increases and investment.

Dollar Took a Breather But Shows Resilience Despite More Constructive Risk Sentiment

The dollar took a breather (DXY 105.32 from 105.51) but shows resilience despite a more constructive risk sentiment overall. EUR/USD closed at 1.0734 from 1.07 at the open. Still, the picture looks fragile. EUR/GBP also tries to move away from the 0.84 support area (close 0.845) as markets prepare for tomorrow’s UK CPI data and Thursday’s Bank of England policy decision.