In the last couple of day’s global stock markets fluctuates between gains and losses amid growing debt concerns and hopes for more stimulus. Over the weekend Spain requested 100 billion bailout, which caused choppy discussions about the outcome of this step. Initially the markets spike higher believing that this will help Spain to handle with its financial system, but fears about the ability to repay the rising debt overshadowed the positivism. In the following days Fitch cut the credit rating of 18 Spanish banks, while Moody’s lowered Spain’s long-term issuer rating to Baa3 to A3. As a result Spain’s 10-year government bond yields have reached 6.99%, which is the highest level since the acceptance of the euro.
Meanwhile in U.S. market participants saw macroeconomic data in favor for further stimulus. Lower retail sales and higher initial jobless claims combined with lower inflation levels make many to believe that next week Fed will hint for new quantitative easing. On the other hand these hopes could be disappointed. In longer term consumer spending power will be fairly stagnant until households start to borrow more and/or save less or receive money from the government. But how far the government can go with already huge budget deficits and enormous debt? It seems that the private sector has to come up with solutions where higher domestic growth is unlikely until the process of deleveraging has progressed much further and enough savings have been achieved. However, once the private sector starts to grow faster, the public sector will need to contract in order to aid deficit reduction. Therefore in short-term U.S. economy could potentially remain stable, while in long-term consistent growth is uncertain.
Leaving the long term picture aside, this weekend all eyes will be on the Greek elections. Binary option investors have the chance to make big profits speculating with the outcome from the vote, which is scheduled for Sunday 17th of June. Two scenarios could be pointed out. In the first one Greece votes for the euro and, form new government without any problems and accepts EU, ECB and IMF conditions. As a result binary eur/usd will rise sharply towards 1.30. Speculations with “call”, “touch up” and “no touch down” options will be highly profitable. In the second scenario the Greeks vote for the anti-euro party or split the vote like in the previous elections. Then the outcome will be negative for the eur/usd with target below 1.20 towards parity. Binary option players could profit from this outcome with “put”, “touch down” and “no touch up” options.
Binary eur/usd remains on the negative trend. Last two weeks the currency pair tried to extend the positive correction but it met resistance at 1.2668, which is 38.2% Fibonacci retracement of the 1.3282-1.2288 drop. On the upside 1.30 is considered as the crucial point, with short term resistance expected around 1.2820. On the opposite direction 1.2440 is seen as intraday support, followed by the key bottom at 1.2288.
Despite the 10-figures drop from May on the long-term picture the sterling remains in wide range consolidation. Only break below the key resistance at 1.5232 will put negative pressure upon binary gbp/usd. On the upside first resistance is seen at 1.6300, followed by the crucial resistance zone around 1.6750.
The U.S. dollar remains under 80.00 with main target of the downside movement at the psychological 76.00. Break below this level will potentially extend the negative trend from the last couple of years. Short term support is expected around the recent low at 78.00. On the upside first resistance is seen at 80.55, followed by 81.77. Break above the latter will move the target higher towards the one year top at 84.17.
Binary aud/usd reached one month high extending its positive correction above the parity level. First resistance is expected at 1.0070, which is 38.2% fibo retracement of the 1.0855-0.9584 drop. Next key resistance is seen at 1.0219 (50.0% fibo), followed by 1.0472. On the other hand the overall picture is still negative with main target on the bottom at 0.9584.
Gold is trading around $1625 levels. Near term support is the psychological $1600 levels, whereas strong resistance can be seen near $1634 levels. Gold remains bearish with crucial support at $1520. On the opposite direction break above $1700 will change the overall picture.
The U.S. market indicator extends its short range trading around 1320. Key resistance remains at 1335, which is 25% fibo retracement of the 1074-1422 movement. Next resistance is expected at 1360, followed by the top at 1422. On the downside 1306-1308 is causing support in the last couple of sessions, followed by the bottom at 1267.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.