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Trading ideas for EUR/USD, USD/JPY and BRENT

June 24, 2022

EUR/USD: The euro is weakening against the U.S. dollar. The European currency came under pressure from weak June business activity data. In the manufacturing sector the index declined from 54.6 to 52.0 points, in services – from 56.1 to 52.8 points; in Germany the index was adjusted from 54.8 to 52.0 points. The negative figures confirm the slowdown of the European economy, caused by a decrease in consumer demand. Experts believe that households have already exhausted the need for purchases, accumulated during the pandemic coronavirus, and shifted to savings due to a serious increase in inflation. Further spending cuts will only increase the risk of recession in the European economy.

SELL 1.0510/TP 1.0450/SL 1.0530

 

USD/JPY: The yen is strengthening against its main competitors – the euro, the pound and the U.S. dollar. Preliminary June data on business activity in Japan was released yesterday and turned out to be mixed: the index declined from 53.3 to 52.7 points in the manufacturing sector and rose from 52.6 to 54.2 points in the service sector. Production was pressured by strict quarantine restrictions in China and supply chain disruptions, which reduced demand for Japanese products. At the same time, the service sector is supported by the retreat of the pandemic in Japan, but experts fear that the economy will continue to face high inflation. Prices of goods and services rose rapidly for the second month in a row as higher costs for components and staff wages were partly borne by households.

SELL 134.60/TP 132.50/SL 135.20

 

Brent: Brent Crude Oil prices continued to decline on Thursday, losing more than 2% in value, as investors have revised their estimates of recession risk and fuel demand amid tighter monetary policy in major economies. Last week the US Federal Reserve adjusted its key interest rate by 75 basis points, bringing it to the level of 1.75%, and at the following press conference it was noted that the regulator’s hawkish mood will continue. Bank of England Chairman Jerome Powell confirmed that monetary tightening would continue in a bid to fight an inflation rate that hit a 41-year high as consumer prices soared 8.6% for the first time in nearly three decades. The official stressed the intention to respond quickly to incoming macroeconomic data and the changing outlook, but added that a comfortable decline is unlikely and carries recession risks.

SELL 105.40/TP 102.10/SL 107.50