Nice-to-have is going to be really hard to sell in a downturn.
The fiber was hemmed into a narrow range around $1.1220 as traders awaits data on Germany's manufacturing sector, retail sales, and the jobless rate to gauge the health of the eurozone economy.
Sterling rebounded on Tuesday from early losses at $1.2258 exacerbated by worse than expected UK GDP data, to $1.2360 due to some probable end-of-quarter re-balancing portfolios, unrelated to news and economic development.
The Japanese Yen escalated from 108.16 to 107.61 against the greenback after Tankan Large Non-Manufacturers Index for the second quarter rose more than expected in Asian sessions.
The Aussie surged to $0.6898 buoyed by Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.2 last month, the fastest pace of growth since December, and up from May's 50.7. The 50-mark separates growth from contraction on a monthly basis.
South Africa's rand fell to 17.36 against the U.S. dollar on Tuesday as data showed the domestic recession deepened in the first quarter of this year, with first-quarter gross domestic product contracted 2% from the previous three months, led by declines in mining and manufacturing.
The Mauritian rupee stayed put at 40.50(selling) on the local market.
11:55 - EUR - German Manufacturing PMI (Jun)
11:55 - EUR - German Unemployment Change (Jun)
12:30 - GBP - Manufacturing PMI (Jun)
16:15 - USD - ADP Nonfarm Employment Change (Jun)
18:00 - USD - ISM Manufacturing PMI (Jun)
18:00 - USD - Crude Oil Inventories
22:00 - USD - FOMC Meeting Minutes
On the hourly chart, in an Elliott wave perspective, the upward correction that started on 18th of May 2020 to 11th June high of $1.2815 appeared to be a wave B within the April-June 2020 irregular flat decline (a)-(b)-(c) . A flat is a sideways, three-wave corrective pattern labelled A-B-C. Wave A (1.2078-18th May) and Wave B are always corrective waves (3-wave decline), while wave C is always a motive wave (5 wave structure). Actually, Wave C seems to be underway with one or two legs to the downside, completing wave 2, while a bearish contracting Diagonal pattern looming ahead.
Technically, we expect the bearish scenario on the GBP/USD to find its first strong support near $1.2170 printed on 7th April 2020 , as the Wave principle holds that the limit of any market correction tend to register their maximum retracement within the span of travel of previous fourth wave of lesser degree. However, a break below that level could open the door for further decline near $1.1888 (a 61.8% Fibonacci percentage of previous March-April 2020 impulsive rally).
On the other hand, a bullish move on the GBP/USD is expected to meet interim contention around $1.2694 and a breach of this area on a sustainable basis could open the door to a probable visit to the high of $1.2815 printed on 10th of June.
From an Elliott Wave trading standpoint, USD/CHF indicates a violent recoil higher in compelling impulse Wave (3) trajectory on a test of support marked by the confluence of a former counter-trend support at Wave (2) at 0.9372 of June 11th, percolating since late March 2020. As we have continued to highlight, the trend USD/CHF remains bullish overall.
Looking at the hourly chart, the pair may propel into Wave (3) targeting 1.0084, which represents 100% Fibonacci projection of impulsive Wave (1) through corrective Wave (2). Peeking through 0.9553 of Wave (1) would further validate the upside momentum. On the flipside, a set-back of recent low at 0.9418, then 0.9372 would render the count obsolete. If the pair fails to clear the latter, it could catalyse an aggressive decline.