 Welcome to TICMA Weekly Market Outlook for week commencing the 21st of June with me, Patrick Munley. Dollar index has seen a classic short squeeze, the trigger being that seven of 18 FOMC members felt that a rate hike could come in 2022. Interestingly the response has been felt harder in FX than US Treasury markets, where the search for carries still see strong demand at the long end of the curve. You would say that the chances of a bond tantrum are less but that movements are at the shorter end of the US yield curve are dollar positive, especially against low yielders. The US data calendar is light for the week ahead but there are several Federal Reserve speakers every day. Highlight may be Fed chair Powell's testimony to Congress on Tuesday. Let's see whether the Fed is prepared to adopt a new language on tapering where views to coalesce around tapering actually starting in September, not December, the dollar could rally further. From a technical perspective we broke out of the descending trend line resistance. Now look for any pullbacks to be supported into the 92 area which will bullish reversal pattern set long positions, targeting the equality objective versus this swing structure here now at 93.74 and the yearly pivot just above at 94.15. In terms of the Euro dollar it wasn't really a surprise to see a significant correction. Price action has all the hallmarks of a short sharp position adjustment, suggesting the bulk of the correction may have occurred in the back end of last week yet. I think that FedSpeak could see the Euro dollar correct further to the downside this week. Look out for speeches from ECB President Christine Lagarde and Board Member Isabel Schnabel, likely to repeat remarks by Chief Economist Phillip Lane distancing the central bank from any hawkishness. In terms of the data calendar, Euro zone focus will be on flash, June PMIs and the German EFO. Notice this week that the EFO Institute cut their 2021 German GDP forecast to 3.7% from 3.3% on the back of supply bottlenecks. Let's see whether manufacturing sentiment sows a little in the June surveys. From a technical perspective as the Euro dollar finds resistance at 120, I'm now looking for price to extend to the downside, certainly to get a retest of the prior cycle loads at 117.05 and then down to the equality objective at 116.27. At this stage really only a move back through 121 would delay the downside objectives. Japanese yen actually outperformed in this corrective rally largely because speculators were short yen already. However, the carry trade is not dead. Indeed, it may last until summer 2022 and the yen will be one of the preferred funding vehicles now that funding in dollars carries a healthy warning. Locally, see the Japanese core CPI move back above zero in May, the first positive reading in just over a year. Yet, it is a reminder that the Bank of Japan will be the last in the G10 to hike if at all before the next recession comes along. Look out for June PMIs this week and also whether there is any pickup in foreign buying of Japanese stocks. Suspects foreigners may want to position for Japanese reopening in the third quarter, which could help keep a lid on the dollar yen in an otherwise bid environment. From the technical perspective, the dollar yen continues to find support 109.75 to 109.50. Look for an extension high on our test monthly range resistance up to 111. At this stage really only a loss of 109 would suggest a deeper corrective move to develop. The next few weeks could be a vulnerable period for cable. First, the near-term euro-dollar upside potential has faded and the short-term downside remains in play following the hawkish June FOMC meeting. Second, concerns about the spreading delta variant should prevent any further hawkish repricing of the market outlook for the Bank of England. Thirdly, the political risk factor is back with growing signs that UK government may want to unilaterally extend a grace period for processed meat exports to Northern Ireland that expires at the end of June. This would risk a tariff response from the EU. It's busy week on the domestic data front, but don't expect much surprise from VOE meeting on Thursday and the bank is unlikely to say anything new after signalling it would not speculate on the timing of a first interest rate move. Also note that no new forecasts will be present in the June VOE meeting as for the June PMIs on Wednesday. See a slight increase in the service index again, though the manufacturing PMIs may reverse modestly lower after the meaningful rise last month. From a technical perspective now, as cable finds resistance at the 140 level, I'm looking for a move down to test range support to the 13660 level. That's the next downside objective. And if we extend through there, then we look for a move down to test 135 as the next downside objective. At this stage, really we'd have to recapture 141 to delay these downside targets. Finally, in Australia, the Australian dollar was hit by the hawkish fed this week, but domestically the very strong employment data may unemployment rate fell to 5.1% versus consensus 5.5%. This week is set to make the 7th of July VOE meeting very interesting. The VOE minutes did not reveal anything new, but among the four possible options presented in terms of the future of QE programs, economists favour the one of scaling back the amount purchased or spreading the purchases over a longer period with the RBA moving towards the first step of policy normalisation. This should give support to the Aussie later in the summer. Data-wise, we have May retail sales on Monday and June PMIs on Wednesday, but neither should impact the Aussie too much. In terms of domestic data, the unemployment figures this week should be crucial in terms of external factors. The wider direction of the US dollar will be key in the week ahead, while the downside risks with the Aussie remain for the week ahead. The pace of the decline should be a bit more limited versus the price action we observed to the back end of last week. From a technical perspective, as we find resistance at the 75-50 level, I'm looking for price to extend down to test the equality objective at 74-23. From here we may get a more meaningful bounce and we will have to see then if sellers step back in, certainly around the 76 zone for another length of the downside. If we break this 74 level, then we can really start to think about targeting the yearly pivot back down to the 70 handle. At this stage really only recapturing the 78 handle would delay downside objectives. And that concludes the weekly market outlook for week commencing the 21st of June.