USDJPY SOARS TO 20-YEAR HIGH AS JAPAN ECONOMY CONTRACTS

The Japanese yen continued its crash after mixed economic data from the country. According to the statistics agency, the country’s economy contracted in the first quarter. It declined by 0.1% on a QoQ basis and by 0.5% on a year-on-year basis. This contraction was better than the median estimate of -0.3% and 1%. According to the statistics agency, capital expenditure declined by -0.7% while external demand fell by 0.4%. Private consumption rose by just 0.1%. These numbers mean that the Bank of Japan will maintain a dovish tone in a bid to support their economy.

European stocks and American futures declined as concerns about interest rates remain. Futures tied to the Dow Jones and S&P 500 indices declined by more than 0.40%. In Europe, the key mover was Credit Suisse, the giant Swiss bank. In a statement, the firm said that it will continue cost-cutting measures. It also issued its third profit warning since January of this year. It expects to report a loss in Q2 as investment banking revenues dip. Another top mover was Wizz Air, the low-cost airline that warned of losses as travel chaos remain. Inditex, the biggest clothing retailer, said that its profit increased by 80% in Q1.

The British pound declined after a warning by OECD about the country’s economy. In a report, the organization said that the country’s economic growth will stall in 2023 as high inflation squeezes households and corporate spending. Also, it cited the upcoming tax hikes in the UK that will represent about 2% of the country’s GDP. According to OECD, the UK will be the second-worst performer in G20. Meanwhile, data by Halifax showed that the house price index rose by 1% in May. Other important events were the relatively stronger GDP numbers from the euro area. The economy expanded by 5.4% on a year-on-year basis.

EURUSD

The EURUSD pair rose to a high of 1.0727, which was the highest level since Monday. On the four-hour chart, the pair has moved above the ascending trendline shown in red. It also rose above the 25-day moving average while the Relative Strength Index (RSI) has moved above the neutral point. The pair will likely remain in this range ahead of the upcoming ECB decision.

USDCHF

The USDCHF pair rose to a high of 0.9786, which was the highest level since May 17. The pair has risen above last month’s low of 0.9548. The main catalyst was the latest Swiss unemployment rate data that showed that the unemployment rate remained at 2.1%. The price moved above the 25-day and 50-day moving averages while the MACD has moved above the neutral level. The RSI has moved to the overbought level. The pair will likely keep rising as bulls target the key resistance at 0.9850.

XBRUSD

The XBRUSD pair rose to a high of 120.55, the highest level since March 9. The pair moved above the upper side of the ascending channel. It rose above the 25-day moving average while the MACD moved above the neutral level. The pair will likely keep rising as bulls target the key resistance level at 122.