Both the euro zone and the U.K. are printing lower-tier reports today.
Will they lead to EUR/GBP extending its uptrend?
Before we get to the setup, let me first show you the top headlines during the Asian session:
Fresh Market Headlines & Economic Data:
- Japan’s May job availability gauge logs biggest drop in 46 years, jobless rate hit three-year high of 2.9%
- Japan factory output slumps as economy sinks deeper in recession
- China’s factory activity quickens, but pandemic drags on exporters and recovery
- New Zealand’s business outlook “nearly up to normal recession levels”
- RBA’s Debelle: Economy will need support for ‘quite some time’
- Asia stocks up as China PMI, U.S. data cheer markets worried over coronavirus surge
- Safe-haven currencies on defensive, sterling soft on spending plan
Upcoming Potential Catalysts on the Economic Calendar:
- U.K.’s final GDP at 6:00 am GMT
- Switzerland’s retail sales at 6:30 am GMT
- France’s consumer spending at 6:45 am GMT
- France’s preliminary CPI at 6:45 am GMT
- Swiss KOF economic barometer at 7:00 am GMT
- Euro Zone CPI estimate at 9:00 am GMT
- Italy’s preliminary CPI at 9:00 am GMT
- Canada’s monthly GDP at 1:00 pm GMT
What to Watch: EUR/GBP
In case you missed it, traders are (very) slowly taking on risks after China’s official PMIs pointed to a bit more recovery in June.
Will London session players get in on the bullish action? EUR/GBP will be an interesting pair to watch especially with both the euro zone and the U.K. printing lower tier reports in the next few hours.Last I checked, markets were not too impressed with Boris Johnson’s plans to “build build build” the economy out of a recession. Meanwhile, euro zone sentiment indicators are slowly inching higher after seeing heavy dips in March and April.
EUR/GBP recently broke above an ascending channel resistance. What’s interesting about today’s setup is that the pair is back at the broken resistance.
If we see better-than-expected CPIs from the euro zone, or if the U.K.’s final GDP and business investment print to the downside, then we could see EUR/GBP make new June highs before the month ends.
If the “breakout” turns out to be a fakeout, though, and if euro bulls drop the ball in the next trading sessions, then EUR/GBP could return to previous areas of interest closer to .9100.
EUR/GBP’s average daily volatility suggests that a 55-pip move in either direction is possible today.
Which direction do you think the pair will go to before the day ends?