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The Single currency edged lower to $1.1217 from a high of $1.1287 yesterday despite upbeat June German inflation data, as investors positioned ahead of quarter-end.
Sterling plummeted to a low of $1.2250 on Monday on concerns about how Britain's government will pay for its planned infrastructure program following PM Johnson promised a "Rooseveltian" boost to public emergency spending and tax measures worth an estimated 133 billion pounds.
Japanese yen hammered to 107.87 per dollar on spurring fresh optimism on the U.S. economy, as pending home sales data showed that housing market activity had quickly recovered in May from a plunge triggered by the pandemic.
The Australian dollar ebbed away from yesterday's low of $0.6839 to $0.6860 now after a survey showed China's factory activity expanded at a stronger pace in June, beating expectations of a slowdown from last month.
The South African rand percolated around 17.30 against the greenback despite South Africa reported 6,334 new cases on Sunday after 7,210 new cases the day before, among the steepest daily rises to date. First-quarter gross domestic product data will be released at 13:30.
The pair steadied at 40.50(selling) on the local market.
10:00 - GBP - GDP (YoY) (Q1)
10:00 - GBP - GDP (QoQ)(Q1)
13:00 - EUR - CPI (YoY)(Jun)
16:30 - CAD - GDP (MoM)(Apr)
18:00 - USD - CB Consumer Confidence (Jun)
20:30 - USD - Fed Chair Powell Testifies
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.