Dollar recovered mildly against Euro and Yen but stays weak against other major currencies after Fed chair Janet Yellen's testimony before Senate Banking Committee. Yellen noted a few risks to law makers including "Brexit". She said that "a UK vote to exit the European Union could have significant economic repercussions". Also, "mixed readings on labor market and economic growth" warranted caution together with "vulnerabilities" in the global economy. Nonetheless, she's optimistic that the headwinds will "slowly fade over time" and chances of recessions "are quite low". And overall, the "cautious approach" regarding rate hikes "remains appropriate".In Eurozone, ECB president Mario Draghi said that the central bank is "ready for all contingencies following the UK's EU referendum." He noted it's "very difficult" to predict the ways the vote could impact markets. but the central bank has done all the "preparations". Meanwhile, Draghi said that inflation remained "rather subdued" and without ECB's policy stimulus, "both growth and inflation would be significantly lower". He urged reforms at national level and "restore public investment" where public finances allow.UK is entering the final day ahead of the highly anticipated EU referendum on June 23. Available polls suggest it would be a neck-and-neck race. In case of a decision to leave the EU, GDP growth in the UK would be negatively affected. Business investment, which has been reduced over the past months due to the uncertainty of the referendum, would be trimmed until the cloud is clear. Existing agreements on free circulation of goods, services and persons would be re-negotiated. Over 40% of UK's trade goes to the EU, the impacts of new agreements on different sectors vary. More in If UK Leaves EU,...On the data front, Australia Westpac leading indicator rose 0.2% mom in May. Swiss ZEW expectation is the only feature in European session. Canada will release retail sales later today while US will release house price index and existing home sales.
EUR/GBP's fall from 0.7993 is still in progress and intraday bias stays on the downside. Such decline is seen as the third leg of the consolidation pattern from 0.8116. Further decline should be seen to 0.7564 next. At this point, we'd expect strong support from 50% retracement of 0.6981 to 0.8116 at 0.7682 to contain downside and bring rebound. On the upside, above 0.7745 minor resistance will turn bias neutral first.
In the bigger picture, despite a deep pull back to 0.7564, EUR/GBP drew strong support from 55 weeks EMA and rebounded. The development argues that rise from 0.6935 is possibly not over yet. Nonetheless, the cross is also limited below long term falling channel resistance. Thus, outlook is mixed for the moment. On the upside, break of 0.8116 resistance will revive the case that fall from 0.9799 is completed at 0.6935 and medium term trend has reversed. However, sustained break of 0.7564 will turn focus back to 0.6935 low.
EUR/GBP's fall from 0.7993 is still in progress and intraday bias stays on the downside. Such decline is seen as the third leg of the consolidation pattern from 0.8116. Further decline should be seen to 0.7564 next. At this point, we'd expect strong support from 50% retracement of 0.6981 to 0.8116 at 0.7682 to contain downside and bring rebound. On the upside, above 0.7745 minor resistance will turn bias neutral first.
In the bigger picture, despite a deep pull back to 0.7564, EUR/GBP drew strong support from 55 weeks EMA and rebounded. The development argues that rise from 0.6935 is possibly not over yet. Nonetheless, the cross is also limited below long term falling channel resistance. Thus, outlook is mixed for the moment. On the upside, break of 0.8116 resistance will revive the case that fall from 0.9799 is completed at 0.6935 and medium term trend has reversed. However, sustained break of 0.7564 will turn focus back to 0.6935 low.