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The main events of the week, fundamental and technical analysis for the key currency pairs and gold.
The week doesn’t have a lot of US data. A PPI figure will be out on Thursday. CPI and Core CPI data will be released on Friday.
The end of the week will be a good time to trade the British pound. GDP, prelim GDP and manufacturing production data will be out on Friday.
Days will be tough for commodity currencies. The Reserve Bank of Australia will release the interest rate on Tuesday. No changes are anticipated but hints on the monetary policy will make the market volatile. On Wednesday, the Governor of the central bank will give a speech about the recent monetary policy. On Friday, the central bank will present the monetary policy statement.
Traders of the New Zealand dollar will get data as well. Inflation expectations figure will be released on Wednesday. The central bank will meet on Thursday. Although the bank isn’t anticipated to change the interest rate this time, the market needs clues on the future monetary policy as risks of the rate cut still exist. Traders will get a chance to trade the Canadian dollar. Employment change and unemployment rate data will be released on Friday.
It’s time to look at the technical side. The US dollar index has been trying to stay above $95. If the economic data are encouraging, the index will break above $95.50. Moreover, on weekends, President Trump defended his use of tariffs, more news on a trade wars escalation will push the index up. Otherwise, the index will return to $95.
The pound needs support as worries around the Brexit deal are growing. According to the UK International Trade Secretary, the Brexit negotiations are more likely to end in failure. Up to now, GBP/USD is moving to the support at 1.2925. More negative comments on the Brexit negotiations will pull the pair further down. If the economic data on Friday are greater than the forecast, the pound will be able to recover. A break above the pivot point at 1.3050 will be a good signal for the pair.
The New Zealand dollar has been trading within the horizontal channel of 0.6685-0.6860. Negative economic data will pull the New Zealand dollar/US dollar pair to the bottom line of the channel. Moreover, MAs signal the continuation of the downward movement. In case of the supportive data, the pair will reach the trendline.
The US dollar does not want to give up and remains close to the highs of 2018. America enjoys solid economic growth despite trade tensions with other countries. It accelerated from 2% to 4.1% in Aril-June. We can see that the USD is strongly rising versus the Chinese yuan and we expect this trend to continue.
EUR/USD dropped down from resistance around 1.1750 and approached 1.16. The European Central Bank continued with the policy of low interest rates and monetary stimulus. The US central bank is on the contrary increasing rates. As a result, the euro is under negative pressure. EUR/USD spent the whole July between 1.1780 and 1.1570. It will now press to the lower part if this range. The key support is at 1.1505.
GBP/USD keeps moving in a downtrend as the European Union rejected key elements of Britain’s new trade proposals. At the same time, the Bank of England’s policy has been preventing the pound from bigger declines. A decline below 1.3075 will open the way down to 1.2950 and 1.2780. Resistance is at 1.3215.
The USD has difficulties versus the Japanese yen. USD/JPY fell to 111.00. The Bank of Japan tried to limit the yen’s increase. Above 111.00, the pair will have a chance to recover to 112.00. A break below 110.80 will trigger a decline to 110.20 and 109.40.
Let’s now have a look at the economic calendar. On Tuesday, there will be a meeting and a press conference of the Bank of Japan, and Canada will release economic growth figures. Given the latest volatility in USD/JPY traders will be very interested in what the Bank of Japan will do. Wednesday will be an important day for the USD, with the publication of ADP employment report, ISM manufacturing PMI and the meeting of the Federal Reserve. The Fed will not change its policy. However, for the USD to stay strong, the bank’s statement should contain plans to raise rates 2 more times this year. Britain will release PMIs every day since Wednesday. On Thursday, there will be a meeting of the Bank of England. The market expects the central bank to raise the rate. If this forecast comes true, the pound will get support, especially against the euro. If not, the British currency will fall dramatically. Finally, the week will end with yet another opportunity to trade on the news – US jobs data, also known as NFP. The most important thing is not to forget about the risk management.
Let’s start with a look at the economic calendar for the upcoming days. The US dollar needs additional support to stick at high levels, however, this week won’t offer a lot of events for the USD. Core Durable Goods Orders data on Thursday and the Advance GDP figure on Friday may support the USD.
It will be an important week for the euro. The European Central Bank will release the interest rate on Thursday. Although the market doesn’t expect a change in the rate. The speech of Mr. Draghi will have an impact. If the Central Bank gives clues on the soon tapering of the quantitative easing, the euro will appreciate. Otherwise, the euro will weaken.
The Australian dollar is highly volatile because of the trade wars tensions. To gain a foothold it needs positive economic data. CPI and Trimmed Mean CPI figures will be released on Wednesday.
The oil market suffers a lot because of a big amount of negative news. Crude oil inventories data on Wednesday will define the direction of the market. The decline in the data will support oil prices. Otherwise, there are risks of the market’s fall.
It’s time to look at the technical side. The US dollar index has managed to break above the psychological level at $95. So far the index has chances to gain a foothold above this level and move further. Positive economic data will support the rise. The resistance is at $95.50. In case of the weak data, supports are at $95 and $94.50.
The euro is trying to recover and stick above 1.17. The weaker USD will support EUR/USD. Positive comments of the Central Bank on Thursday will pull the pair up as well. Resistances lie at 1.17 and 1.18. If the euro doesn’t find support, the fall below 1.16 is anticipated. MAs warn about the further fall of the pair.
The pound plunged because of weak economic data and the strong USD. GBP/USD has reached lows of September 2017. Only the weakening USD and positive news on the Brexit deal will support the pound. The resistance is at 1.3240. The support lies at 1.2865.
Despite the escalation of the trade wars tensions and the unstable environment in the economic world, the Japanese yen has been suffering. USD/JPY reached the highs of the beginning of January 2018. Moving Averages signal the upward movement. Resistances are at 113 and 113.40. If the USD is weaker, the Japanese yen will have chances to recover. Supports lie at 112 and 111.
Early on Tuesday, the US dollar index was weak, however, it managed to recover and surge above the psychological level at $94.50. If the index is able to close above this level, the further rise will be more likely. Tuesday and Wednesday are important days for the USD as the Chairman of the Fed Mr. Powell present the Monetary Policy Reports (17:00 MT time). If Mr. Powell sounds hawkish, the US dollar index will be able to stay above $94.50 and the next resistance will lie at $95. Otherwise, the index will appear below $94.50. The next support is at $94.
The pound couldn’t stick above the pivot point at 1.3235 as the USD has strengthened. Up to now, GBP/USD has been trading near 1.3155. On Wednesday, traders will take into consideration CPI, PPI input data (11:30 MT time). The forecast is mixed, so, if the actual data are greater than the forecast ones, the pound will have chances to recover. Resistances are at 1.3235 and 1.3180. Otherwise, risks of the further fall are high. The support is at 1.31.
Brent and WTI are strongly suffering. On Monday, both oil benchmarks plunged on the negative news about the increased global supply and a slowdown in the economic growth. As a result, Brent fell to the lowest levels since the middle of April, WTI plunge to the lowest level in three weeks. Tomorrow traders will look at the crude oil inventories data (17:30 MT time). If the decline in the number of inventories is greater than anticipated, Brent and WTI will have chances to recover. Otherwise, the further fall is anticipated. Brent has been trading near $71.80. Positive data will pull it up. The resistance is at $73.10 (100-day MA) and the next resistance will lie at $75.65. Otherwise, there will be a risk of the fall to $68.80. WTI is trading near the 100-day MA at $67.10. Positive news will pull WTI to the resistance at $68.30. The further resistance is at $69.35. Otherwise, WTI will break the support at $67.10 and will fall further to $66.
The US dollar started playing the role of a safe haven amid the increased trade tensions between the United States and China. In addition, American inflation data allows expecting that the Federal Reserve will raise rates 4 times this year. If the USD index rises above 95.00, the next resistance level will be at 96.00. Support is 94.15.
USD/JPY tested levels above the long-term resistance line. Resistance is at 113.25 (200-week MA) and 113.75 (December highs). Support is 111.00.
EUR/USD turned down from 1.18. The euro is moving towards the lower edge of the trading range at 1.1520. If this support is breached, the pair will make another big leg down.
British pound had rough times. Prime Minister Theresa May outlined her Brexit proposals. She suggested a “soft Brexit” deal which would allow Britain to keep the closest possible trade ties with the European Union. Yet, Brexit secretary David Davis and foreign secretary Boris Johnson resigned as they were against this plan. The position of Theresa May looks shaky now. GBP/USD was limited on the upside by the declining 50-day MA and met resistance at 1.3350. Support is at 1.3075 (100-week MA) and 1.3040 (October lows).
Concerns about trade wars didn’t keep the Bank of Canada from raising its interest rate to 1.5%. Yet, the Canadian dollar failed to hold gains on the news as traders doubt that Canadian central bank will continue raising interest rates in the future. USD/CAD consolidated after its fall late in June. Support is located at 1.3130. Resistance is at 1.3280 and 1.3330.
The new week will start with the meeting of US President Donald Trump and Russian President Vladimir Putin. The outcome of the summit will influence global risk sentiment. Chinese statistics and US retail sales will come out on Monday. New Zealand’s CPI, Australian monetary policy minutes, and British average earnings will be released on Tuesday. On Wednesday, CPI will set the way for the GBP and US building permits will bring some volatility to the USD. The highlights on Thursday will be Australian employment figures and British retail sales. Friday will offer an opportunity to trade the CAD on the news: Canada will publish CPI and retail sales.
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Wednesday economic data were positive for the USD but couldn’t pull it up. PPI and core PPI data were greater than the forecast. The US dollar index tested the resistance at $94.50 but couldn’t stick above it. Up to now, the index has been trading near $94.10. Later in the evening, members of the Fed will give speeches at 19:30 and 23:30 MT time. However, it’s unlikely they will affect the USD a lot. More important economic data will be released on Thursday. CPI and core CPI figures will be out at 15:30 GMT time. The forecast is neutral. If the actual data are greater than the forecast, the USD will be able to recover. Otherwise, it will fall further. Key levels for the US dollar index are supports at $94 and $93.50 and the resistance at $94.50.
The euro suffers high volatility as trade war tensions weigh on the market. Moreover, the ECB President Mr. Draghi didn’t cover the monetary policy in his speech early on Wednesday. EUR/USD tested two supports at 1.1735 and 1.17, however, managed to recover. Up to now, the pair has been trading above 1.1735. 50-day MA seems to be the strong support for the pair. The rise of the pair is mostly caused by the weak USD. On Thursday, traders will look at the ECB monetary policy meeting accounts. The Central Bank will explain its recent decision. If traders catch some positive clues on the future monetary policy, the euro will be able to strengthen. The resistance lies at 1.1810. Otherwise, risks of the fall to 1.17 remain high.
The pound doesn’t have enough support to break the resistance at 1.3280. Tuesday economic data weren’t encouraging for the British currency. Moreover, there are more resignations in the UK government and the Brexit deal uncertainties are escalating. All these pull the pound down. On Wednesday, the Governor of the BOE Mr. Carney will give a speech at 18:35 MT time. If he gives some positive comments on the future monetary policy, GBP/USD will be able to break the resistance. Otherwise, the further fall is anticipated. On Thursday, traders will pay attention to BOE credit conditions survey. If it’s optimistic, the pound will appreciate. However, the USD will have more impact on the GBP/USD. Stronger USD won’t let the pair rise. In case of the weaker USD, GBP/USD will have chances. Key levels are supports at 1.3225 (50- and100-hour MAs) and 1.3155, resistances at 1.3280 and 1.3355 (50-day MA).
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The USD index declined last week. It went down from resistance. There’s potential for a further slide to June lows at 93.20. If the greenback falls below this support, it will signal a double top on the chart and we’ll see a bigger decline.
The US dollar didn’t like US labor data. Although NFP showed a solid gain, wage growth slowed down and the unemployment rate increased. It means that the American central bank will be less eager to increase interest rates in the long-term. In addition, trade tensions between the US and China escalated as America imposed tariffs on $34 billion worth of Chinese goods. This will make it harder for USD/JPY to get higher. Resistance is at 110.60 and the pair risks retesting 110.0. This week the most importance US data release will take place on Thursday as the CPI comes out. The forecasts are good. The same day will bring the accounts of the European Central Bank’s last meeting: it will have an impact on the EUR. In addition, notice that the ECB president will speak on Monday and Wednesday.
Despite concerns about global trade, markets started the week with optimism. Stock markets rose ahead of the US earnings season. Currencies like AUD, NZD, and CAD can rise more before they hit resistance. Let’s have a look at the news from Britain. British Brexit Secretary David Davis had resigned. This is a blow to Prime Minister Theresa May. She risks losing her majority in parliament. GBP/USD is holding ground for now as the market is waiting for what will happen next. There’s a bullish engulfing pattern on the weekly chart and the pair is above April-June resistance line. However, the pair needs to overcome resistance at 1.3350. Next targets will be at 1.3420 and 1.3550. Support is at 1.3220. EUR/USD is also in the positive territory. The pair can rise to 1.1850 and 1.1880. Support is at 1.1700.
Although Wednesday’s US economic data were positive, the greenback continues to lose positions. The US dollar index declined to the support at $93.50. No significant data will be released on Thursday. As a result, there are risks of the further fall.
On Wednesday, the US dollar strongly depreciated against the Canadian dollar. The weakening greenback and encouraging Canadian economic data caused the USD/CAD pair’s fall. USD/CAD broke the support at 1.2930 (50.0 Fibo level) and tested the next support at 1.2860. The further direction of the pair will depend on Wednesday’s crude oil inventories data. If the figure is negative, the oil will increase, and as a result, the Canadian dollar will rise. Moreover, on Thursday, investors will take into consideration a speech from the Bank of Canada Governor Mr. Poloz (18:15 MT time). If the Governor gives some positive clues on the future monetary policy, the Canadian dollar will be able to strengthen more. Moreover, on the 4-hour chart, the pair tested the 100-hour MA and the 200-hour MA. If the pair is able to close below the 200-hour MA, the further fall is anticipated. Next supports are at 1.2860 and 1.28. However, if the US dollar becomes stronger on Thursday and the news for the Canadian dollar isn’t encouraging, the pair will return to 1.2975.
Despite the depreciation against other currencies, the US dollar is still strong against the Japanese yen. USD/JPY rebounded from the support at 109.70. Up to now, the pair is trading near the 200-day MA (110.20) and the 50-week MA, they are a strong resistance. If the pair isn’t able to break the resistance, the pair will continue to trade within 109.70 – 110.20. Otherwise, the pair will move further to 110.85.
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