It was only a few weeks back that the situation in Greece was the talk of the town. There were various discussions and speculations of a Grexit, followed by a contagion effect with the Euro idea being antagonised. The Greek saga had hit its 3rd season with the EUR clipping above the 1.0800 support. A breakdown was in the books. In the hour of need, Greece was granted a further €86bn bailout package with an additional 900m emergency liquidity assistance, shifting the attention to other developments globally.
Like Chinese whispers, the new topic was of the potential rate increase in both the FED and BoE. We saw both the USD and GBP appreciate exceedingly against other pairs. Whilst the likes of the RBNZ and BoC cut their interest rates in order to promote domestic economic growth. This has truly been a hiking/cutting season for central banks. The CVIX volatility index currently trades around the 9.25 level and is still increasing with each passing day. Volatility is an important entity in the FX market which grants potential trading opportunities.
This has been a relatively quiet week on the data front. The RBNZ did in fact cut rates once more by 0.25bp from 3.25 to 3.00, but this was already priced in and many market participants were expecting such. New Zealand has taken a hit and this cut was the only logical step to take to ensure economic growth and stability. Earlier today Retails sales for the GBP were released. Figures printed quite badly at -0.2% and we saw GBP weaken across the board.
Below we have covered the 4 major pairs both technically and fundamentally –
EURUSD – Fundamentally this pair is bearish. The Greece issue will rear its ugly head in the latter future thus weakening the EUR. The USD has been appreciating and will keep appreciating. Things are well in the US and the coming NFP in August should confirm this statement. Technically on the daily timeframe the EURUSD remains bearish as long as prices keep below the 1.104X inflection point. This level was quite sticky a few weeks back and also acted as previous support. Intraday EURUSD is bullish, we had a breakout above the 1.09650 resistance. Prices may trade to the daily R2 of 1.1017 before the end of the day.
GBPUSD – Fundamentally this pair is bullish. When Carney suggested that rates may be increased the GBP accelerated across the board. A rate increase may be likely, on the flipside as chief analyst Jameel Ahmed stated, the BoE acts on strict measures and if inflation keeps at its current level then this rate hike may be held off until mid-2016. Technically on the daily timeframe GBPUSD reside within a range. We have support at 1.5530 and resistance at 1.5670. Intraday post retail sales, the GBPUSD is bearish. A breakdown below the 1.5580 support may signal a further decline to 1.5500.
AUDUSD – Fundamentally this pair is bearish. As a commodity pair, the crumbling prices of Gold fused with the Strength of the USD has sent this pair to new yearly lows. The next relevant support is at 0.7000. Technically this is also bearish. Prices are currently trapped within a range. We see support at 0.7350 and resistance at 0.7450. Intraday the AUDUSD resides just below the daily R1 of 0.7240 which looks like an end of day target.
USDJPY – Fundamentally this pair is looking neutral. The JPY has been passive whilst the increasing USD strength has taken this pair to the highs just below 124.50. Technically we can see an obvious resistance at 124.50. A breakout above this level may offer a further in line to the 125.50 resistance. Intraday post retails sales USDJPY declined back below the daily pivot. This level may act as resistance which should send prices to the daily S1 of 123.60.
Other markets will be covered as the day goes by and the US open makes an entry onto the stage.
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