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    IronFX Essential Intraday Comment | 14/07/2015

    • The dollar traded mixed against its G10 peers during the European morning Tuesday. It was higher against NOK, SEK and CAD, in that order, while it was lower vs CHF and EUR. The greenback was virtually unchanged against AUD, NZD, GBP and JPY.

    • The UK inflation rate fell back to zero in June, following a rise to 0.1% yoy in the previous month. The figure was in line with the market consensus, thus the reaction to the news was minimal. The CPI data came ahead of the BoE Governor Carney comments at a parliamentary hearing that the time for a rate increase is moving closer. This pushed GBP higher against all its peers, as investors bring forward their rate hike expectations. Investors’ attention now shifts on the employment data to be released Wednesday. Expectations are for another pick up in average weekly earnings, which could support GBP.

    • German ZEW survey for July added to the recent weak data coming out from the country. The expectations index declined from the previous month, while the moderate increase in the current situation index was not enough to strengthen EUR. EUR/USD advanced a bit but remained way below our 1.1085 resistance line. Even if we see a test around that area, I still see a somewhat negative short-term picture. Therefore, I would consider any further minor advanced to provide renewed selling opportunities.

    • CAD came under renewed selling pressure as oil prices tumbled after Iran and six global powers reached a nuclear deal that could ease sanctions against the former. This could increase the global oil supply and suppress further the prices. On top of that, we have a BoC meeting on Wednesday and market consensus is for a 25bps rate cut. In such case, CAD could weaken further.

    USD/CAD traded higher during the European morning Tuesday and is currently testing the 1.2800 (R1) resistance line. The price structure is higher peaks and higher troughs above both the 50- and the 200-period moving averages, and therefore I would consider the short-term outlook to be positive. However, I would wait for a clear move above 1.2835 (R2), the high of the 18th of March, before I get more confident on the upside. Such a break is likely to set the stage for extensions towards the psychological area of 1.3000 (R3). Tomorrow, the BoC decision could be the catalyst for the aforementioned break. Our short-term oscillators detect accelerating upside speed and amplify the case for further advances. The RSI raced higher and is now approaching its 70 line, while the MACD, already positive has bottomed and crossed above its trigger line. On the daily chart, as long as USD/CAD is trading above the uptrend line taken from the low of the 10th of July 2014, I see a long-term uptrend.

    • Support: 1.2650 (S1), 1.2535 (S2), 1.2425 (S3)

    • Resistance: 1.2800 (R1), 1.2835 (R2), 1.3000 (R3)


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