USD/CAD Daily Forecast – Test Of Resistance At 1.2480

U.S. Dollar Moves Higher After Hawkish Comments From Fed’s Bullard

USD/CAD is currently trying to settle above the resistance at 1.2480 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get back above the resistance at 92 and is testing the next resistance level which is located at 92.15. In case this test is successful, the U.S. Dollar Index will move towards the resistance level which is located near the 20 EMA at 90.30 which will be bullish for USD/CAD.

Today, U.S. reported that Personal Income increased by 0.1% month-over-month in June while Personal Spending grew by 1%. Both reports exceeded analyst expectations.

Foreign exchange market traders also had a chance to take a look at the final reading of U.S. Consumer Confidence report for July which showed that Consumer Confidence declined from 85.5 in une to 81.2 in July compared to analyst consensus of 80.8.

U.S. dollar received additional support after Fed’s Bullard stated that Fed should begin to reduce its asset purchase program this fall and finish the program at the beginning of 2022. It should be noted that the recent Fed’s commentary remained dovish, and it remains to be seen whether Bullard’s views are shared by the majority of Fed members.

Technical Analysis

usd cad july 30 2021

USD to CAD managed to settle above the resistance at 1.2450 and is testing the next resistance level at 1.2480. In case this test is successful, USD to CAD will move towards the resistance at 1.2500.

A move above the resistance at 1.2500 will open the way to the test of the resistance at the 20 EMA at 1.2520. If USD to CAD gets above this level, it will head towards the next resistance at 1.2550.

On the support side, the nearest support for USD to CAD is located at 1.2450. If USD to CAD gets back below this level, it will move towards the support at the 50 EMA at 1.2435.

A successful test of the support at the 50 EMA will push USD to CAD towards the support at 1.2420. If USD to CAD manages to settle below this level, it will head towards the next support at 1.2385.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD: Loonie Dips After Early Gains But Set to End Week Strong

The Canadian dollar pared early gains against its U.S. counterpart on Friday as crude oil prices marched higher and the greenback recovered after U.S. consumer spending outpaced expectations in June.

Today, the dollar to loonie conversion rose to 1.2472, up from Thursday’s close of 1.2444. The Canadian dollar had lost about 3% in June – posting the biggest monthly drop since March 2020, the early days of the pandemic, and weakened about 0.5% so far this month. Although, the loonie is set to close this week with a gain

“The CAD has extended its rebound this week, even if gains came more as a reflection of a generally softer USD. Commodity prices strengthened broadly, driving the Bloomberg Commodity Index to a new cycle and six-year high Thursday while US-Canada 2Y spreads remain at a CAD-supportive –26bps. Our fair value models continue to reflect a significant USD overvaluation against the CAD (and a broadly overvalued USD against its major currency peers), although CAD-drivers have turned even more positive this week and our FV estimate has edged to a new cycle low below 1.17,” noted Shaun Osborne Chief FX Strategist at Scotiabank.

“It remains to be seen how far the USD will correct lower, however. We think the Fed has put the market on notice that taper timing is a live debate now among policymakers, which may provide the USD with general support in the coming weeks. Speculative FX traders have largely abandoned short USD positions in recent weeks and heightened equity market volatility—something of a “tradition” in August—will tend to work against the CAD and may lift USDCAD towards the upper reaches of our estimated range for next week (1.2508).”

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, was trading 0.3% higher at 92.145 at the time of writing. Still, it hovers close to this month’s low of 91.782.

The dollar stalled its rally after the Fed in its Wednesday’s monetary policy decision highlighted that the interest rate hike is far away. The U.S. central bank also did not give any hint about reducing its purchases of government bonds.

“In the final week of the Olympics, we think the dollar will at least be able to stabilise after the recent correction. The prospect of the Fed’s tapering should be cemented by good payrolls, while global risk assets may still struggle to look past China’s regulatory clampdown. Elsewhere, the BoE and RBA should not deliver any new guidance,” noted analysts at ING.

However, the risk that the world’s dominant reserve currency, the USD, recovery over the coming year is high, largely driven by the Fed’s expectation of two rate hikes in 2023. A strengthening dollar and growing risk that the Federal Reserve would tighten its monetary policy earlier than expected would push the USD to CAD pair higher.

Canada is the world’s fourth-largest exporter of oil, which edged higher on tight supply and rising demand. High oil prices lead to higher U.S. dollar earnings for Canadian exporters, resulting in an increased value of the loonie. U.S. West Texas Intermediate (WTI) crude futures was trading around $73.51 a barrel.

USD/JPY Weekly Price Forecast – Dollar Continues to Chop Back and Forth Against Yen

The US dollar has fallen hard against the Japanese yen during the course of the week to break down below the ¥110 level. Ultimately, this is a market that I think is essentially “stuck” in this general area, and therefore it is not a huge surprise that we are dancing around yet again. At this point, I do not necessarily think that we are going to make a big move in the short term, because we are heading into the month of August when things are typically very quiet. Most large traders will be thinking more about beaches than they will trading charts.

USD/JPY Video 02.08.21

At this point, there is a massive amount of resistance above where the ¥112 level has pushed this market back down every time, we have tried to approach that level over the last several years. Ultimately, this is a market that I think will continue to see a lot of noise in that area so therefore I think we break out. To the downside, I see the ¥108 level as a support level, and a potential target if we break down.

I anticipate that the next several candlesticks will be back and forth, and therefore it is probably more likely than not to be a scenario where we will be looking towards shorter time frames than anything else, as the range is relatively tight, and is going to be difficult to trade the range with these higher time frames. That being said, it does make for a nice well defined area that you can trade on either the daily or the four hour charts.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Weekly Price Forecast – British Pound Continues to Look Strong

The British pound has rallied significantly during the course of the trading session to show signs of life again, as the market is more than likely going to try to move against the US dollar in one fell swoop. That being said, the 1.40 handle is an area that has been significant resistance in the past, so I would not be surprised at all to see a little bit of a pullback. If and when we can break above that 1.40 level though, then it is likely we go looking towards 1.42 handle, which is where we have seen a massive amount of resistance in the past. Ultimately, this is a market that I think will continue to see choppy behavior, and as we head into August, I think we will see a little less in the way of momentum.

GBP/USD Video 02.08.21

When you look at the 1.42 handle, it is an area that has been like a brick wall for several years, and I think breaking above there would make this market a longer-term “buy-and-hold” type of situation. I do not necessarily see that happening easily, and I do not necessarily see that happening in the next week or two. I think this is more or less going to be a bit of a grind higher, especially as we head into what is traditionally one of the quietest times of the year.

That being said, if we pull back it is likely that we will go looking towards the 1.37 handle underneath, where we launched from earlier this week. Ultimately, this is a market that needs to make up its mind for a bigger move.

For a look at all of today’s economic events, check out our economic calendar.

USD/JPY Price Forecast – US Dollar Continues to Consolidate Against Yen

The US dollar has rallied a bit during the course of the trading session on Friday as we continue to see a lot of choppy noise in this market. The ¥110 level has been a bit of a magnet for price and is nothing on this chart that suggests it is not going to continue to be so. The 50 day EMA sits just below the ¥110 level, so it is not a huge surprise to see that the market would go looking towards that area. If we can break above the ¥110 level, then the ¥110.75 level is also resistance, and then we have the ¥111.50 level. Keep in mind that once we get towards the highs again, we need to pay close attention to the longer-term charts, because we have so much in the way of resistance going back several months.

USD/JPY Video 02.08.21

The USD/JPY pair has a strong correlation to risk appetite, and therefore you should pay close attention to that as well. The NASDAQ 100 melted down late in the day on Thursday, and that caused a little bit of pressure over here. Nonetheless, I think given enough time we are simply going to grind back and forth as we try to figure out the next move longer term. Breaking down below the ¥109 level could open up further selling, but you should also keep in mind that the 200 day EMA is just under there as well, so it could also offer a little bit of psychological and structural support.

For a look at all of today’s economic events, check out our economic calendar.

GBP/JPY Weekly Price Forecast – British Pound Continues to Rally Against Yen

The British pound has initially pulled back a bit during the course of the week but then turned around a break above the ¥153 level. That being the case, it looks as if the market is going to try to continue to grind higher, but keep in mind that this pair is highly sensitive to the risk appetite of markets around the world, so pay close attention to how stock markets behave, as well as other things along the lines of commodities. That being said, the British pound of course is considered to be a currency that people buying good times, while the Japanese yen is considered to be a massive safety currency.

GBP/JPY Video 02.08.21

If we can break above the top of this weekly candlestick, then it is likely we go looking towards the ¥155 level, which was the most recent high. It is also an area where we see a significant amount of resistance at over the months and years pass. On the other hand, if we pull back from here we could go looking towards the ¥150 level, which I think would be massive support and thereby breaking down below the candlestick from the previous week which was the hammer would open up massive selling, perhaps reaching down to the ¥145 level, maybe even as low as the ¥140 level, as I believe that a break down below the hammer from the previous week would of course represent some type of shock to the system and therefore I think the reaction could be rather nasty as it would be a safety trade all across-the-board in my estimation.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Weekly Price Forecast – Euro Wipes Out Significant Losses

The Euro has rallied rather significantly during the course of the week, as we have seen the market recapture the 1.1850 level, and even threatening the 1.19 level late during the week. When you look at this chart, it is obvious that there are a lot of choppy little areas around where we are, and the fact that the Friday candlestick is starting to look like a shooting star does suggest that maybe we get a little bit of a pullback. That being said, it looks as if the Euro is trying to find its footing, so while I anticipate that we are going to go sideways more than anything else in the short term, it is likely that we will make a significant move rather soon.

EUR/USD Video 02.08.21

Looking at this chart, you can see that if we were to break down below the weekly candlestick, we could go looking towards the 1.16 level underneath which is where the 200 week EMA comes into the picture. That is an area where we see significant support coming into the market that extends down to the 1.15 handle. As far as going long is concerned, you need to see this market clear the 1.20 handle in order to have this market really take off to the upside. At that point, then we are looking towards the 1.22 handle.

That is an area that of course is massive resistance as well, so please be advised that it is worth paying close attention to. Keep in mind that a lot of what is going on in this pair in both the US dollar more than anything else, so I do not believe that you can ignore the 10 year note either.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Weekly Price Forecast – Australian Dollar Looking for Support

The Australian dollar has gone back and forth during the course of the week to show a little bit of hesitation with the negativity. If we can break down below the hammer from the previous week, then it is very likely that we go towards the 0.70 level, an area that I do think is a very real possibility as Australia continues to lock down its economy. This could send Australia into a “double dip recession”, which of course will cause major issues for the currency and of course the overall economic health of Australia.

AUD/USD Video 02.08.21

Furthermore, we are starting to see issues with the Chinese economy and therefore the Australians may suffer at the hands of that as well. The economic numbers in China have been less than impressive lately, so ultimately this is a market that I think will suffer. If we bounce from here, then it is likely that the 0.75 level above is going to be a significant resistance barrier based upon the previous action that we had seen and of course the fact that it is a large, round, psychologically significant figure.

One thing is for sure, this is a market that will continue to be very choppy and difficult to say the least, so with that being the case it is possible that the market is one that you are going to have to be very patient with, but it should eventually give us one of the signals to get short. On the other hand, if we were to take out the 0.76 level, then it is likely that the market would go looking towards the 0.78 handle.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Pulls Back From Major Barrier

The British pound has initially rallied during the course of the trading session on Friday, but then pulled back to show signs of exhaustion at the 1.40 handle. That being the case, the market is likely to see a lot of pressure in this area as it is a large, round, psychologically significant figure, and of course the market will be paying attention to it. Quite frankly, if we can break above the 1.40 handle, that would be a very bullish sign for the British pound and could send this market much higher. On the other hand, if we were to break down below the 50 day EMA, that could cause some issues.

GBP/USD Video 02.08.21

Breaking down below the 50 day EMA then opens up the possibility of a move back down to the 1.37 handle, which is where I would also expect to see the 200 day EMA sits at. With that being the case, I think this is a market that will try to break down significantly, perhaps reaching to the 1.35 handle if we do get down there. That being said, the most recent move has been as bullish as it has ever been, so I think it would take something rather ugly to make this a reality.

With this situation, I would be much more likely to buy a pullback on signs of support if we get it than to be short of this market, at least as things stand at the moment. Whether or not we can break above the 1.42 handle above is a completely different question that we may have to ask in the next few weeks. That is an area that has been crucial more than once.

For a look at all of today’s economic events, check out our economic calendar.

GBP/JPY Price Forecast – British Pound Continues to Press Resistance Barrier

The British pound has rallied a bit during the course of the trading session on Friday, as we continue to try to get towards the top of the shooting star from Thursday. The shooting star from Thursday of course shows a lot of resistance, and at this point in time we need to break above it in order for the buyers takeover. Keep in mind that the markets are highly sensitive to risk appetite in general, so keep in mind that the Japanese yen is still thought of as a “safety currency.”

GBP/JPY Video 02.08.21

If we break down below the ¥152.50 level, it is likely that we could reach a little bit lower, perhaps heading towards the ¥150 level over the longer term. If we get down there, then obviously it will be a major negative move and probably would follow right along with other risky assets so it should be a move that a lot of people will notice right away. On the other hand, if we do continue to see more upward pressure, then it is likely that we will see a lot of risk being taken in multiple markets, especially in places like indices, as well as some of the highflying currency pairs.

Pay attention to the British pound against the US dollar, because it can give you an idea as to where the British pound goes against almost everything, including the Japanese yen. All things being equal, we are facing a significant barrier above, so breaking through it of course opens up a pretty big move.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Price Forecast – Euro Pulls Back From 200 Day EMA

The Euro has rallied a bit during the course of the trading session on Friday, but then gave back the gains to show a little less than desirable momentum. That being said, if we do close out like this, then it is very likely that the market could go lower, perhaps reaching towards the 1.1850 level underneath. If we were to break down below the 1.1850 level, then it is likely that the market could go looking towards the 1.1750 level. Breaking down below that level then opens up a flood of selling that could send this market down to the 1.16 level.

EUR/USD Video 02.08.21

If we turn around a break above the top of the shooting star and clear the 200 day EMA, then it is possible that the market could go looking towards the 1.20 handle. The 1.20 handle is of course an area that will attract a lot of headlines, and thereby cause the markets show signs of hesitation in that general vicinity. Ultimately, this is a market that I think continues to see a lot of choppy behavior but that is nothing new for this pair.

Pay close attention to the 10 year yields in America, because they do offer quite a bit more than Germany, so if the German bond market goes even more negative, it is possible that we may see the Euro get punished as a result. Furthermore, the PCE numbers came out less than expected during the trading session, so there is also the possibility that a bit of a “fear trade” could come back into this market.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Continues Consolidation

The Australian dollar has initially tried to rally during the trading session on Friday but then pulled back just a bit to slip back into the previous consolidation. This is an area that the markets have been bouncing around in for well over a week, as the Australian dollar is sitting on the precipice of a bigger move. One thing to keep in mind is that a lot of traders are paying close attention to the fact that Australia is trying to destroy its own economy. After all, you get what you ask for if you ask for it long enough. Locking down the economy is not good for the currency or anything else, so having said that it is not a huge surprise that the Aussie has struggled the way it has.

AUD/USD Video 02.08.21

To the upside, the market will more than likely struggle at the 0.75 level. The 0.75 level is a large, round, psychologically significant figure, and as a result it is very likely that we will see people react to it. Furthermore, we also have the 200 day EMA sitting just above there, with the 50 day EMA trying to break down through it and forming a bit of a barrier in and of itself.

If we break down below the 0.73 level, then it is likely that market would go looking towards the 0.70 level underneath which is a huge figure on the longer-term charts. If there is more of a “risk off move” in the world’s economy, then it makes quite a bit of sense that we would see that move play out in this pair as well as other commodity currencies.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Gains Being Capped Amid Weaker Global Equity Markets

The Australian and New Zealand Dollars are trading lower on Friday, pressured by a drop in demand for higher risk currencies that is being fueled by a plunge in global equity markets.

The Aussie and Kiwi are being underpinned, however, by a weaker U.S. Dollar. Meanwhile, the Covid situation in Australia is worsening, raising fears that the country will experience another virus-related contraction during the third quarter.

At 08:00 GMT, the AUD/USD is trading .7391, down 0.0002 or -0.03% and the NZD/USD is at .7006, down 0.0003 or -0.03%.

Global Stock Market Weakness Fueling Lower Demand for Risky Currencies

Futures contracts tied to the major U.S. stock indexes fell early Friday as a soft earnings report from Amazon threatened to dampen an otherwise strong month ahead of July’s final day of trading.

European stocks retreated Friday as investors reacted to another deluge of corporate earnings and economic data.

Shares in Asia-Pacific declined again on Friday, heading for their worst month since March 2020, as volatile trading continued for Chinese tech stocks and Hong Kong’s Hang Seng index tumbled.

The S&P/ASX 200 in Australia closed 0.33% down to 7,392.60. Markets will be tracking the Covid situation in Sydney, which reported a record daily rise in Covid cases Thursday despite an extended lockdown. Reuters reported that authorities have requested help from the military in enforcing the lockdown.

New Zealand Building Consents Rise in June

The number of new dwelling consents approved in New Zealand rose a seasonally adjusted 3.8 percent in June compared with a 2.4 percent drop in the previous month, data from Statistics New Zealand showed on Friday.

Excluding apartments, flats, and retirement village units, the number of consents for new houses was up 0.1 percent.

Building consents were 24.0 percent higher than the same month a year ago.

Australian Economic Data

Australia’s Q2 Producer Price Index (PPI) rose 0.7% on a quarterly basis, beating the 0.4% growth in Q1. The Private Sector Credit rose 0.9% in June.

US Set to Release Slew of Economic Reports

At 12:30 GMT, traders will get the opportunity to react to U.S. reports on Core PCE Prices, Personal Income and Personal Spending. These reports can move the U.S. Dollar.

Core PCE Inflation is expected to show a 0.6% rise for the month. Personal Income is expected to have declined by 0.4%, while Personal Spending is expected to have risen 0.7%.

At 13:45, the Chicago PMI report is expected to come in at 64.2, down from 66.1.

At 14:00 GMT, Revised University of Michigan Consumer Sentiment is expected to come in unchanged at 80.8.

The direction of the AUD/USD and NZD/USD on Friday will be determined by whether risk sentiment is on or off.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Daily Forecast – Euro Stays Strong Ahead Of The Weekend

Euro Continues To Move Higher

EUR/USD is currently trying to settle above the resistance at 1.1880 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index managed to stay above the 50 EMA at 91.90 but failed to settle above the nearest resistance level at 92. In case the U.S. Dollar Index declines below the 50 EMA, it will gain additional downside momentum which will be bullish for EUR/USD.

Today, foreign exchange market traders will focus on the economic data from EU. Flash reading of the second-quarter Euro Area GDP Growth Rate report is projected to show that Euro Area GDP Growth Rate increased by 1.5% quarter-over-quarter. On a year-over-year basis, Euro Area GDP Growth Rate grew by 13.2%.

Traders will also have a chance to take a look at preliminary Euro Area inflation data for July. Euro Area Inflation Rate is forecast to decline by 0.3% month-over-month. On a year-over-year basis, Euro Area Inflation Rate is projected to grow by 2%. Euro Area Core Inflation Rate is expected to increase by 0.8% year-over-year. Euro Area Unemployment Rate is expected to remain unchanged at 7.9%.

It remains to be seen whether these reports will have a major impact on euro’s trading dynamics as no surprises are expected on the inflation front.

Technical Analysis

eur usd july 30 2021

EUR/USD continues its attempts to settle above the resistance at 1.1880. If EUR/USD manages to settle above this level, it will get to the test of the next resistance level which is located at the 50 EMA at 1.1900.

A successful test of the resistance at the 50 EMA will open the way to the test of the resistance at 1.1925. If EUR/USD gets above this level, it will move towards the resistance at 1.1945. A move above this level will open the way to the test of the resistance at 1.1965.

On the support side, a move below 1.1880 will push EUR/USD back towards the support at 1.1860. In case EUR/USD declines below this level, it will head towards the support at the 20 EMA at 1.1840. A successful test of this level will lead to the test of the next support at 1.1830.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – U.S. Dollar Gains Ground After Yesterday’s Sell-Off

British Pound Is Moving Lower Against U.S. Dollar

GBP/USD is currently trying to settle back below the support at 1.3950 while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support level at the 50 EMA at 91.90 and is trying to get back above the 92 level. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance at 92.15 which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released in the UK today so foreign exchange market traders will focus on the economic data from U.S.

Analysts expect that Personal Income declined by 0.3% month-over-month in June after falling by 2% in May. Meanwhile, Personal Spending is projected to grow by 0.7%.

Traders will also have a chance to take a look at the final reading of Consumer Sentiment report for July which is projected to show that Consumer Sentiment declined from 85.5 in June to 80.8 in July.

Technical Analysis

gbp usd july 30 2021

GBP/USD is testing the nearest support level which is located at 1.3950. In case this test is successful, GBP/USD will move towards the next support at 1.3920.

In case GBP/USD gets below the support at 1.3920, it will head towards the next support at 1.3900. A successful test of this level will open the way to the test of the support which is located at the 50 EMA at 1.3880.

On the upside, GBP/USD needs to get back above 1.3950 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at the recent highs at 1.3980.

If GBP/USD manages to settle above the resistance at 1.3980, it will move towards the next resistance level at 1.4000.

A move above the resistance at 1.4000 will push GBP/USD towards the resistance at 1.4020. In case GBP/USD gets above this level, it will head towards the next resistance level at 1.4040.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis –

The U.S. Dollar fell to its lowest level since June 29 on Thursday, a day after the U.S. Federal Reserve said the job market still had “some ground to cover” before it would be time to ease monetary stimulus, knocking the wind out of a month-long rally by the greenback.

At 20:01 GMT, September U.S. Dollar Index futures are trading 91.875, down 0.442 or -0.48%.

The index, which is still up 1.6% since the Fed’s June 16 meeting, after a hawkish shift from the U.S. central bank, found little support from U.S. economic data on Thursday.

Gross Domestic Product data showed that while the U.S. economy grew solidly in the second quarter, boosted by massive government aid, growth fell short of economists’ expectations.

GDP increased at a 6.5% annualized rate last quarter, the Commerce Department said on Thursday, well below the 8.5% rate economists polled by Reuters had forecast.

Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier on Thursday when sellers took out a pair of main bottoms at 92.075 and 91.995. A trade through the closing price reversal top at 93.195 will change the main trend to up.

The first support is a pair of long-term retracement levels at 91.945 to 91.850.

If the selling pressure continues then look for another steep break into another pair of retracement levels into 91.490 to 91.370.

On the upside, the nearest resistance is a long-term Fibonacci level at 92.495.

The main range is 89.545 to 93.195. The primary target of this current sell-off is its retracement zone at 91.370 to 90.940.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index into the close on Thursday is likely to be determined by trader reaction to 91.950 and 91.850.

Bullish Scenario

A sustained move over 91.950 will indicate the presence of buyers. If this is able to generate enough upside momentum over the short-run, we could see a rebound rally into the Fibonacci level at 92.495.

Bearish Scenario

A sustained move under 91.850 will signal the presence of sellers. This could trigger another acceleration to the downside with the next major area a potential support cluster at 91.490, 91.505 and 91.370.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Test Of Support At 1.2450

Canadian Dollar Rallies As Commodity Markets Move Higher

USD/CAD is currently trying to settle below the support level at 1.2450 while the U.S. dollar is under significant pressure against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the 92 level and is currently testing the support at the 50 EMA at 91.90. If this test is successful, the U.S. Dollar Index will move towards the next support level at 91.80 which will be bearish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at the latest job market data from U.S. Initial Jobless Claims declined from 424,000 (revised from 419,000) to 400,000 compared to analyst consensus of 380,000. Continuing Jobless Claims increased from 3.26 million (revised from 3.24 million) to 3.27 million compared to analyst consensus of 3.2 million.

Second-quarter GDP Growth Rate report showed that GDP grew by 6.5% quarter-over-quarter compared to analyst consensus of 8.5%. Pending Home Sales decreased by 1.9% month-over-month in June while analysts expected that they would grow by 0.3%.

All economic reports from U.S. missed analyst estimates which put additional pressure on the American currency. Meanwhile, Canadian dollar moved higher as commodity markets rebounded.

Technical Analysis

usd cad july 29 2021

USD to CAD managed to settle below the support at 1.2480 and is testing the next support level at $1.2450. If USD to CAD settles below this level, it will move  to another test of the next support level which is located at the 50 EMA at 1.2435.

A move below the 50 EMA at 1.2435 will push USD to CAD towards the support at 1.2420. If USD to CAD declines below 1.2420, it will move towards the support level at 1.2385. A successful test of this level will open the way to the test of the support at 1.2350.

On the upside, the previous support level at 1.2480 will serve as the first resistance level for USD to CAD. In case USD to CAD manages to get back above this level, it will move towards the resistance at 1.2500. A move above this level will push USD to CAD towards the resistance at 1.2520.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD: U.S. Dollar Weakness Pushes Loonie to Two-Week High; Volatility To Last

The Canadian dollar rose against its U.S. counterpart on Thursday as the U.S. dollar tumbled to a month low after the Federal Reserve reiterated that the interest rate will remain zero for a long time.

Today, the dollar to loonie conversion fell to 1.2447, from 1.2527 on Wednesday. The Canadian dollar had lost about 3% in June – posting the biggest monthly drop since March 2020, the early days of the pandemic, and weakened about 0.6% so far this month.

“Canada’s headline inflation faced a slowdown (from 3.6% to 3.1% YoY) in June. That is probably a welcome development by the Bank of Canada as it supports the central bank’s view that inflation spikes will have a transitory nature. That said, it will hardly impact the BoC’s tapering plans, in our view. After all, the jobs market has proven to be very strong in the recovery and core inflation was broadly unchanged (and above target) from May to June,” noted Petr Krpata, Chief EMEA FX and IR Strategist at ING.

“We remain of the view that the BoC will end asset purchases by the end of 2021 and that the case for the first hike in 2022 is getting stronger. From an FX perspective, we think that the central bank’s hawkishness can help CAD outperform once market sentiment improves and investors find fresh interest in entering reflationary/carry trades.”

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, hit this month’s low of 91.910 and was trading 0.42% lower at 91.934 at the time of writing.

Following the Fed’s monetary policy announcement on Wednesday, the dollar lost momentum after it noted that a rate hike in the near future is unlikely. No hints were given by the U.S. central bank about reducing its purchases of government bonds.

“In terms of the dollar, the currency was slightly softer following the meeting. This suggests currency watchers may have been expecting somewhat stronger guidance from the Fed on the ‘tapering’ issue,” noted analysts at AIB.

“As the European session gets underway this morning, the modestly softer dollar tone is reflected in EUR/USD trading up at the midpoint of $1.18-1.19, while GBP/USD has regained some ground in $1.39 territory. Elsewhere, EUR/GBP remains pinned down near to the 85p mark.”

Nevertheless, the USD is at high risk of recovering over the next year. This is partially due to expectations of two rate hikes in 2023 by the Fed. A stronger dollar and growing odds of the Fed tightening monetary policy sooner than expected would push the USD/CAD pair higher.

Oil prices in Canada have edged higher amid hopes of an inventory report that is expected to be bullish. Higher oil prices result in increased U.S. dollar earnings for Canadian exporters, which translate to a stronger loonie. U.S. West Texas Intermediate (WTI) crude futures traded higher by 0.67 cents, or 0.94%, to $73.06 a barrel.

EUR/USD Mid-Session Technical Analysis for July 29, 2021

The Euro hit its highest level against the U.S. Dollar since July 6 on Thursday after the U.S. Federal Reserve’s reassurance that interest rate hikes remain distant. The recent losses in the single-currency had already lost momentum leading into Wednesday’s Federal Reserve meeting and Chairman Jerome Powell’s remark that rate increases were “a ways away” was enough to drive it higher.

At 13:55 GMT, the EUR/USD is trading 1.1882, up 0.0038 or +0.32%.

The EUR/USD was also boosted by disappointing U.S. economic news. The U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis, considerably less that the 8.4% Dow Jones estimate.

Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000.

In the Euro Zone, bond yields rose on Thursday as investor sentiment reached a record high and state-level data hinted that German inflation would exceed expectations.

Euro Zone economic sentiment hit a record high in July, estimates from the European Commission showed, though a drop in optimism among consumers and the slower rate of increase may signal the peak is fast approaching.

Finally, German consumer price increases accelerated in July, with several states reporting annual inflation rates between 3.4% and 4.3%, suggesting a national-estimate would exceed the 3.3% expected in a Reuters poll.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up earlier today when buyers took out the last swing top at 1.1881. The rally stopped just short of the next swing top at 1.1895. A trade through 1.1752 will change the main trend to down.

The short-term range is 1.1975 to 1.1752. The EUR/USD is currently testing its retracement zone at 1.1864 to 1.1890. The latter is a potential trigger point for an acceleration to the upside.

The main range is 1.2218 to 1.1752. If there is an upside breakout then look for the rally to possibly extend into its 50% level at 1.1985.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1864 and 1.1890.

Bearish Scenario

A sustained move under 1.1864 will indicate the presence of sellers. If this move creates enough momentum then look for the selling to possibly extend into 1.1819.

Bullish Scenario

A sustained move over 1.1890 will signal the presence of buyers. Taking out 1.1895 will reaffirm the uptrend. The daily chart indicates there is plenty of room to the upside so watch for a near-term acceleration into 1.1975 and 1.1985.

For a look at all of today’s economic events, check out our economic calendar.

The Inadvertent Debt/Inflation Trap – Is It Time To Face The Music?

What happens to a global economy after 10+ years of global central bank efforts to support a recovery attempt after a massive credit/debt collapse originates from a prior credit/debt housing bubble?  What happens to global economies when they become addicted to easy money policies and central bank activities that support greater and greater risk-taking? What is the end result of these actions after more than 10+ years of excess and central bank support for the markets?

Let’s play this out a bit to think about how the current market environment may be similar to what happened in the mid/late 1990s and see if we can come to any real conclusions. Remember, we are using our research and technical analysis skills to play a “what if” scenario in this research article.  Our current trading systems have not warned us of any major Bearish price trends of price collapses that may take place. Our systems are still trading the US markets based on current market trends.  This research is completely speculative in the sense that we are trying to identify “what if” scenarios based on events in the recent past.

One thing that our research team has been discussing over the past 8+ months, since shortly after the US elections in November 2020, is the idea that the new US President/US Federal Reserve may engage in policies that are initially perceived as supportive of the global markets in a post-COVID world – yet may engage in very dangerous end results.  An example of this is the continued stimulus efforts for a world that has somewhat moved beyond the initial COVID shock and has transitioned into a new form of economic activity.  Another example would be the US Federal continuing to act in a manner to support the US equities market while Inflation and consumer activity have recently shown extreme pricing/buying activities.

One idea that my research team suggested is this activity may be similar to President Ronald Reagan’s Star-Wars project in how Reagan was able to prompt a spending excess between the US and Russia which eventually broke the Russian economy.  The process between that event and what is happening right now are strangely similar.

The Strange Outcome Of Global Central Bank Policies – The US Is The Clear Winner

The US and many foreign central banks have pushed the envelope of easy money policies over the past 8+ years by continuing to run programs to support a stronger economic outcome.  The focus has been on creating an inflationary target to start a more traditional shift away from the ongoing easy money policies.  Inadvertently, these global central banks may have created and supported one of the biggest asset shifts/bubbles in the past 50+ years.

The COVID-19 virus event may have actually pushed the US Federal Reserve and foreign global central banks into an inadvertent process of creating a massive inflation trap at a time when the global economy and corporate world was banking on much more mild inflationary trends.  The reflation trade that came after June 2020 is likely to have pushed assets, commodities, credit & debt cycles beyond any conceivable scope of reason, while putting unimaginable pressure on foreign central banks in Asia, South America, Africa, and most of the emerging markets.

The incredible rally in commodities, asset values (homes, stocks, US equities, and others) prompted capital to shift towards the strongest and most capable outcomes on the planet.  This created a liquidity trap in many foreign markets where traders moved assets into US equities, Cryptos, US ETFs, and other assets while shunning less dynamic and secure global assets.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/07/2021-07-16_WorldMarketCap-1.jpg

(Source: https://data.worldbank.org/indicator/CM.MKT.LCAP.CD)

What has transpired over the past 10+ years is that the US equities markets have risen to levels above the 2007~08 peak levels. US equities have also continued to skyrocket higher as foreign investors seek to move assets into US Dollar-based equities and ETFs, and away from stagnant, under-performing local equities and assets.  Currently, the US stock market total capitalization makes up nearly $48T of the total global market capitalization. The next closest foreign market exchange is China, which makes up nearly $12T in total capitalization.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/07/2021-07-16_GlobalStockMarketCap-2.jpg

(Source: https://www.advratings.com/companies/the-largest-stock-exchanges)

When one takes into consideration the massive expansion of state, corporate, consumer, and global credit/debt that has taken place over the past 10+ years in China (and the risks associated with servicing that debt as well as increased commodities/asset costs which have taken place over the past 24+ months) one starts to consider if China may suddenly turn into Russia of the late 1990s.

At that time, the inflation rate in Russia reached over 120% and took place after a number of key economic events set up an almost perfect storm. The aftermath of this event continued to create moderate global market crisis events.

  • 1973 & 1979 Energy/Oil Crisis
  • 1982 US Interest Rate Peak/Recession
  • 1983 Israel Bank/Stock Crisis
  • 1987 Black Monday
  • 1991 India Economic Crisis
  • 1994 Mexican Peso Crisis
  • 1998 Russian Financial Crisis

Although the names and dates of these events are much different than what is set up today, imagine the 1973/79 oil/energy crisis was the peak in oil prices in 2018.  Imagine the 1982 peak in US interest rates was the peak in interest reached in 2018.  Imagine the Israel Bank/Stock Crisis and the 1987 Black Monday was the 2020 COVID crisis.  Imaging the 1991 India Economic Crisis, and 1994 Mexican Peso Crisis were the post-COVID economic and current crisis events that have taken place over the past 14+months throughout the world.

Now, imagine that China is the new 1998 Russian Financial Crisis taking place.  One of the biggest and strongest economies in the world is now at risk of entering a severe inflationary period where excess credit/debt of the past few decades may be washed away – just like what happened in Russia.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/07/russia_inflation_rate2.jpg

(Source: https://www.timetoast.com/timelines/financial-crisis-1900s-2017)

Lastly, remember what came about after these events took place and how isolated the world was from the Russian economic collapse in the late 1990s. The world is not so isolated any longer.  If China initiates a credit/debt crisis event, there is a very strong likelihood that the global markets will react to this event moderately violently.

The Hang Seng Index May Foretell A Collapse In The Making

The typical process of the unwinding of this excess credit/debt/liability usually takes place in a common process.  First, individuals, corporations, and state-run agencies load up on cheap debt while inflation and costs are relatively consistent.  Then, as the economy heats up, inflation, commodity prices, and equipment/material costs begin to skyrocket – eating into operational profits for these entities. Meanwhile, the need to service the debt/credit persists.  As fractures in the system become evident (usually starting with isolated debt defaults by some large entities), investors start pricing greater risks into the credit/debt markets – further complicating the issues for these entities that are burdened with excess debt and diminishing profit margins.

Looking at the Russian Inflation Rate chart, above, any type of major inflationary increase will usually push these entities over the edge in terms of sustainability.  Once the cost of refinancing the debt and ongoing profit margins have been squeezed beyond limits, the crisis escalates to a point of implosion.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/07/HSI_W_F.png

Given the rise in Real Estate, Commodities, Oil/Energy costs, and other factors, we believe this event may be unfolding right before us in current market trends.  China may be the focus of what Russia was in the late 1990s with extensive credit/debt issues, massive imports of raw materials, commodities, and food, and extensive global foreign debt/credit issues related to the Belt Road project.  If a global event were to unfold, which we are only speculating MAY happen at this point, China and Asia would become the focal point for this process.

More than ever, right now, traders need to move away from risk functions and start using common sense.  There will still be endless opportunities for profits from these extended price rotations, but the volatility and leverage factors will increase risk levels for traders that are not prepared or don’t have solid strategies.  Don’t let yourself get caught in these next cycle phases unprepared.

Want to know how our BAN strategy is identifying and ranking various sectors and ETFs for the best possible opportunities for future profits? Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

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Have a great day!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com