Weekly Technical Outlook – GBPUSD, AUDUSD, USDCHF

GBPUSD holds a bearish bias ahead of UK inflation, BoE rate decision. AUDUSD retains neutral outlook as all eyes turn to the RBA policy decision. USDCHF sustains 0.8890 floor; Will the SNB trigger the next bull wave?
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BoE rate decision --> GBPUSD

UK CPI inflation and the Bank of England’s rate decision could produce a new wave of volatility for GBPUSD on Wednesday and Thursday, respectively.

Given the rebound in the Eurozone CPI inflation and the stickiness in the US measures during the month of May, the UK could face a similar inflation pattern, disappointing those who expect a fast drop to 2.0% y/y from 2.3% previously. If that proves to be the case, the central bank might keep interest rates steady as expected and fuel some uncertainty about the timing of rate cuts.

On the other hand, if forecasts are correct, this would still be in line with the central bank’s projection. Moreover, Andrew Bailey would not like to influence political sentiment with a surprise rate cut ahead of the general election on July 4th, despite saying that a June reduction should not be ruled out.

In any case, GBPUSD might have an opportunity for a rebound near 1.2645 before plunging towards the 200-day exponential moving average (EMA) at 1.2590 and the 1.2560 barrier. Technically, the risk is skewed to the downside and only a bounce above 1.2743-1.2800 could motivate more upside.

 

RBA rate decision --> AUDUSD

The Reserve Bank of Australia (RBA) will precede the Bank of England in announcing its policy decision on Tuesday, but no changes in interest rates are expected, especially after the surprise pickup in quarterly and monthly inflation readings. For the same reason, investors will look to whether discussions for a rate hike persisted. However, new economic projections will not be available before August, making any policy shifts unlikely this week.

A rebound in AUDUSD could be possible if the RBA underlines inflation risks, but any gains could be short-lived as futures markets suggest that investors are already prepared for steady rates this year. Perhaps if the hawkish group of policymakers grows, the pair could finally break its short-term sideways trajectory above 0.6700. Specifically, a clear close above 0.6728 could be meaningful too, though the technical signals are indicating otherwise at the moment.

 

SNB rate decision, US data -->USDCHF

The Swiss National Bank (SNB) could face a dilemma about whether to cut rates for the second time on Thursday or to save some stimulus for later in the year, as futures markets see only one more rate cut by December 2024.

Swiss inflation rotated higher to 1.4% y/y, but it’s still below the central bank’s 2.0% target and is much lower than inflation readings in other major economies. Nevertheless, policymakers might take some time to ensure that inflation pressures are not heating up again before preparing investors for the next rate cut. Besides, lower interest rates could import more inflation through a weaker swissie.

USDCHF has stabilized its recent bearish wave near the 200-day simple moving average (SMA) at 0.8890, but the technical picture cannot guarantee an upside reversal in the near term as the 20- and 50-day SMAs have already posted a bearish cross. If selling forces resurface, the pair could plunge towards 0.8820 or lower to 0.8770-0.8750.

Still, it’s worth mentioning that futures markets provide a probability of 75% for a June rate cut. If the central bank does otherwise, the pair could still attempt to reach the 0.9000 psychological level.

The US calendar could also initiate a bull wave in USDCHF If there is another upbeat stream of data releases.

The spotlight will fall on US retail sales on Tuesday, while the Philly Fed and the flash S&P Global business PMI surveys will make headlines on Thursday and Friday, respectively. Housing starts due on Thursday and existing home sales released on Friday might attract greater attention too following Powell’s cautious answers over the state of the housing market, although he highlighted the solidness of the banking sector.

विनियम: CySEC (Cyprus), ASIC (Australia), FSC (Belize), DFSA (UAE), FSCA (South Africa)
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