Once the situation in regards to Greece had subsided and there was a deal in place that mitigated the potential of a Grexit, focus rapidly shifted to the Dollar. The Dollar has been gaining consistently since the end of 2014. Market participants saw the USdollar hit the highs of 12,162 before a slight decline in May 2015. The Global economy has observed the United States improving, what really magnetised investors the most was the potential of an interest rate hike before the end of the year.
This was big news which further gave strength to the Dollar whilst simultaneously weakening Gold. The heavy sell observed in Gold a few weeks back fortifies this statement. The last time the FED increased rates was back in June 2006, almost 10 years ago. A monumental event is in the making which will attract volatility and various trading opportunities on the USD and commodities.
Last week ended with a bang for the USD. Unemployment claims were released on Thursday with very good results which pushed sentiment closer to a stronger dollar and potential hike. July 27 -31 will be a very heavy fundamental week for the USD. Core durable goods will be released this afternoon. For 2 consecutive months, they have been with expectations and the same will be expected today with a figure of 0.4% to match forecasts. On Tuesday, there will be CB consumer confidence. With the increasing value of the dollar and fewer people claiming unemployment, there may be a possibility of positive figures above expectations.
The highlight this week will be the FOMC which will be released on Wednesday. This could either lift the USD or drop it. Most investors will be looking for any words or indication of the date of the potential rate hike. There have been talks that things could start as early as September hence the appreciation of the USD, but nothing is on paper as of yet. The week finishes up with Advanced GP and another batch of unemployment Claims on Thursday, in which positive results are expected.
If July ends green for the USD, investor sentiment may remain dollar bullish with the preparation of the impending rate hike in September.
EURUSD trades in a limbo. Driven by the USD strength the pair trades back into the sticky 1.107X regions. Prices hovered around these levels back in June 2105. Focus has been taken away from the EUR with a potential deal in place with Greece, the rise seen may simply be a relief rally before normality kicks back in. Fundamentally the EURUSD is more bearish than bullish, especially if the rate hike does materialise. With an array of USD focused news releases this week, positive results drag the EURUSD lower. Technically prices have breached the 1.1040 resistance discussed last week. A daily close above this level will suggest that the daily bearish downtrend has come to a halt with first targets of the monthly pivot which is coincidentally the previous lower highs of 1.1255. The MACD has already crossed to the upside and prices reside above the daily 20 SMA. Leading and lagging indicators also suggest a move up, a daily close above the 1.1040 may seal the deal.
Intraday – Bulls took the front seat taking the EURUSD to the daily R3. The positive German Ifo Business climate which printed above expectations was the cause of this. Higher highs and higher lows have been created on the hourly timeframe. Prices reside above the daily pivot and hourly 20 SMA. EURUSD remains intraday bullish as long as prices can keep above the 1.1000 level. The US session has opened and Core durable goods will be released. I will be observing the markets for potential entries post release.
There may be a tug of war with the GBPUSD. Both the GBP and USD have been appreciating across the board. Both central banks are planning of a potential rate hike and this sentiment can be seen on the monthly and weekly timeframe of this pair. A strong dollar all week may simply pull the GBPUSD lower. The daily timeframe is flat. There is resistance at 1.5650 and support around the 1.5500 regions. Leading and lagging indicators also suggest that the GBPUSD is currently range bound. Prices reside below the weekly and monthly pivot, but the MACD Is flat. A daily close below 1.5500 may be the first signal for a potential shorting opportunity on this pair.
Intraday – GBPUSD is intraday flat. Last week it was discussed that there was support at 1.5500 and resistance at 1.5535. The best strategy may be to simply wait for a breakout/down on the hourly before moving forward.
Since the SNB event back in January, some normality has been found with the USDCHF. The continual appreciation of the USD mixed with the passive nature of the CHF has seen prices trade back to the 0.9648 high. Prices breached the 0.9520 pivotal level in mid-July. Previous resistance may become support which should take prices to the monthly R2 of 0.9680 technically. The MACD trades to the upside and prices healthily ride the 20 SMA. The next move for the bulls may be a breakout above the 0.9648 top. As stated earlier, this is a US news fuelled week with the FOMC statement on Wednesday. Things can either move up very quickly or come tumbling back down.
Intraday - The USDCHF experienced a sharp decline this morning with prices piercing the daily S2 and weekly S1. As long as prices can keep below the daily pivot of 0.9608 we may see a further decline back below 0.9550 in a technical sense. There will be Core durable goods released in the US session which will heavily affect this pair and because of this, I remain an observer until after the release.
The USDCAD has enjoyed a bullish period. Falling commodity prices in addition to the interest rate cut decision in Canada has made the USDCAD fundamentally bullish. The daily timeframe still points to the upside. Prices have found some support at the weekly pivot and the MACD has crossed to the upside. The trend healthy rides outside 1 standard deviation of the Bollinger and prices reside above the 20 SMA. Prices can still move up, but there seems to be some room for a healthy correction before bulls take control once more. Eyes will be on the 1.2900 support. A solid breach above the 1.3050 may open a path to the weekly R1 of 1.3130.
Intraday – Earlier today USDCAD sank to the 1.2978 levels before correcting back above the weekly pivot. Prices may trade to the 1.3050 pre-release. Post core durable release this pair will be re accessed for further intraday opportunities.
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