EURUSD and GBPUSD: Global recession
- During the Asian session, the euro weakened against the dollar.
- During the Asian trading session, the British pound weakened against the dollar.
- UK PMI fell to 53.4 in June from 53.7 expected and 54.6 in May.
EURUSD chart analysis
During the Asian session, the euro weakened against the dollar. The dollar is rising again, capitalizing on its position on money flows to safe havens. Fed President Jerome Powell said in a testimony to the US Congress yesterday that the central bank is fully committed to bringing prices under control even if it risks an economic downturn. He said the recession was “certainly possible”, reflecting fears in financial markets that tightening the Fed’s tightening monetary policy pace would slow growth.
The euro is exchanged for 1.05180 dollars, weakening the common European currency by 0.41% since the beginning of trading tonight. The address of the chairman of the US Federal Reserve, Jerome Paul, is expected to continue today before the US Congress. We need a new positive consolidation and a jump to the 1.06000 resistance zone for the bullish option. If EURUSD stays up, there would be a chance to see a break above and continue further towards the 1.07000 level. For the bearish option, we need a drop in the euro below the 1.05000 level. After that, the euro could weaken further and fall to lower levels of support. Potential lower targets are 1.04500 and 1.04000 levels.
GBPUSD chart analysis
During the Asian trading session, the British pound weakened against the dollar. Currency traders and investors are becoming increasingly concerned about the global recession as major central banks remain on track to tighten their monetary policies to fight inflation. The pound is exchanged for 1.22000 dollars, which is a weakening of the British currency by 0.48% since the beginning of trading last night. For the bearish option, we need to continue the negative consolidation and fall below the 1.22000 level. After that, we will test this morning’s low again at the 1.21700 level. A pound break below would take us to support at the 1.21000 level. And if she doesn’t make it, we move on to the 1.20000 psychological level. For the bullish option, we need positive consolidation and a return above the 1.22500 level in order to try to attack the 1.23000 resistance zone.
UK PMI report
UK PMI fell to 53.4 in June from 53.7 expected and 54.6 in May. The chief business economist at S&P Global Chris Williamson commented on the following: “The economy is starting to look empty. Current business growth is supported by orders placed in previous months, as companies report near-stagnation in demand. Manufacturers, in particular, are struggling with falling orders, especially for exports. The service sector is already seeing signs of recent rapid growth due to halted pandemic demand that is reversing amid rising living costs. Business confidence has now fallen to a level that usually marked an imminent recession in the past. The weakness of the overall flow of economic data indicates a decline in GDP. PMI data which looks to the future will gain momentum in the third quarter.