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Daily Technical Insights 21st June 2023


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

EUR/USD (4 Hours)

EUR/USD Falls as China’s Rate Cut Fails to Calm Markets, US Dollar Gains Momentum

The EUR/USD pair experienced a decline, reaching 1.0891, as market sentiment turned sour, favouring the US Dollar. Concerns about China’s economic health intensified after the local central bank, the People’s Bank of China (PBoC), lowered key interest rates by 10 bps. However, financial markets remained skeptical of the effectiveness of the rate cuts and sought refuge in the American currency. European Central Bank (ECB) Governing Council member Olli Rehn’s comments on the gradual easing of underlying inflation did not surprise the market, reinforcing the central bank’s previous message. In addition, disappointing Eurozone data, including the lower-than-expected April Current Account surplus and a decline in Construction Output, contributed to the Euro’s weakness. The US Dollar received a final boost from positive US economic indicators, with Building Permits rising by 5.2% MoM in May and Housing Starts surging 21.7%, surpassing market expectations. As anticipation builds for Federal Reserve (Fed) Chairman Jerome Powell’s semi-annual testimony before Congress, the US Dollar maintains its strength, with his remarks and subsequent Q&A session expected to influence the markets.

Chart EURUSD by TradingView

According to technical analysis, the EUR/USD pair experienced a flat movement on Tuesday and created a narrower range for the upper and lower bands of the Bollinger Bands. The Relative Strength Index (RSI) is currently at 56, indicating that the EUR/USD is back in a neutral stance before deciding on the next movement.

Resistance: 1.0963, 1.1034

Support: 1.0892, 1.0803

XAU/USD (4 Hours)

XAU/USD Plummets as US Traders Return Amid Economic Concerns and Positive US Data

The price of gold (XAU/USD) experienced a significant drop as American traders resumed trading after a long weekend, resulting in a decline of approximately $20, reaching a low of $1,929.94 per troy ounce. This decline was influenced by the strengthening US dollar due to worries about China’s economic slowdown. The People’s Bank of China (PBoC) reduced two key lending rates for the first time since August of the previous year, surprising the market with a 10-basis point cut that fell short of expectations. While the US dollar initially struggled, it gained momentum after the release of optimistic US macroeconomic data, including a remarkable 21.7% surge in Housing Starts and a 5.2% increase in Building Permits for May, as reported by the US Census Bureau. Although Asian and European stock markets experienced minor losses, Wall Street saw a significant decline, with the three major indexes down by around 1% each. Meanwhile, demand for government bonds kept Treasury yields in check, with the 10-year note currently offering 3.71%, reflecting a 5-basis point decrease on the day.

Chart XAUUSD by TradingView

According to technical analysis, the XAU/USD pair is moving lower and has reached the lower band of the Bollinger Bands. There is potential for a slight upward movement, aiming to reach the middle band. Currently, the Relative Strength Index (RSI) is at 41, indicating that the XAU/USD is still in a neutral stance.

Resistance: $1,950, $1,963

Support: $1,932, $1,924

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.