USDCHF FORMS BEARISH PENNANT AHEAD OF SPEECH BY SNB

The US dollar bounced back against key currencies after mixed housing data from the United States. Data showed that existing home sales dropped for the third straight month. They fell by 3.4% on a month-on-month basis to 5.41 million. This decline happened as prices soared. According to the National Association of Realtors, the median home price in the US rose to a record high of $407,600, which was a 14.8% increase from a year ago. With mortgage rates soaring to the highest level in 35 years, analysts believe that the housing sector will continue cooling.

The Canadian dollar rose slightly after strong retail sales data. According to the country’s statistics agency, retail sales rose from 0.2% to 0.9%. This increase was higher than the median estimate of 0.8%. Excluding food and energy, the country’s core retail sales dropped from 2.6% to 1.3%. These numbers show that the country’s economy is slowing down as inflation rises. The statistics agency will publish the latest consumer inflation data later today. Analysts expect these numbers to show that the headline CPI rose from 6.8% to 7.4% while core inflation rose from5.7% to 5.9%.

The economic calendar will have some important events on Wednesday. In the United States, Jerome Powell will start his two-day testimony. He is expected to talk about last week’s interest rate decision and what the bank is prepared to do. Meanwhile, in the UK, the second day of the rail workers strike will continue while the Office of National Statistics will publish the latest consumer inflation data. Analysts expect the data to show that inflation continued rising in May. Other important events will be a meeting by the European Central Bank and US mortgage data.

EURUSD

The EURUSD pair declined to 1.0530, which was lower than this week’s high of 1.0585. The price is along the ascending green trendline and is still above the 25-day moving average. The Relative Strength Index has moved above the neutral point of 50. It has formed what looks like a double-top pattern. Therefore, the pair will likely have a bearish breakout as sellers target the key support at 1.0490.

USDCHF

The USDCHF pair has been in a consolidation phase as investors wait for a statement by SNB’s Thomas Jordan. The pair is trading at 0.9654 which is lower than the parity level. It has moved below the 25-day and 50-day moving average while the Relative Strength Index (RSI) has moved slightly above the oversold level. Notably, it has formed a bearish pennant pattern, meaning that it will likely continue falling.

EURJPY

The EURJPY pair continued its bullish trend and is trading at 143.72. This price is the highest it has been since June 9. The pair has moved above the 25-day and 50-day moving averages while the Average Directional Index (ADX) has moved to a high of 25. The Relative Strength Index has moved above the Overbought level. The pair will likely continue rising as bulls target the key resistance at 144.30.