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    IronFX Essential Intraday Comment | 22/07/2015

    •The dollar was virtually unchanged against almost all of its G10 peers during the European morning Wednesday. It was higher only against SEK, while it was lower vs GBP and EUR, in that order.

    •GBP started strengthening ahead of the BoE July minutes, after MPC member David Miles said that the time for a rate hike is coming. Following last week’s hawkish comments by Gov. Carney, these comments raised the possibility that in the August meeting we could see again a split among the policymakers. In addition, the minutes showed a growing number of members who seemed concerned about rising inflation pressures, suggesting increasing momentum toward the first lift-off. If this is the case, we would expect GBP to extend its bullish trend, mainly against the commodity related currencies and EUR.

    •The Reserve Bank of New Zealand (RBNZ) is expected to meet tonight and the market consensus is for a 25bp rate cut. Nevertheless, speculation about an even a more aggressive 50bp cut has started to feed through the market. In such event, NZD is expected to come under renewed selling pressure and fall below 0.6500 again. On the other hand, given the increased expectations for an easing, any disappointment is likely to cause an even bigger opposite market reaction than the anticipated cut.

    •NZD/USD traded somewhat lower on Wednesday, after it hit resistance at the 0.6660 (R1) obstacle. The pair has been trading within a downside channel since the 23rd of April, and therefore I would consider the outlook to stay negative. Having that in mind and that the RBNZ is expected to cut rates when it meets tonight, I would expect the decline to continue and perhaps challenge once again the psychological zone of 0.6500 (S1). A clear break below the psychological line of 0.6500 (S1) could extend the bearish wave and perhaps target the 0.6430 (S2) zone, marked by the lows of the 19th and 20th of July 2009. The RSI has fallen below its upside support line and is now headed towards its 50 line, while the MACD shows signs of topping slightly above its zero line. These sings corroborate my view that further declines are on the cards. Switching to the daily chart, I see that after breaking below the lower line of a rising wedge formation on the 1st of May, NZD/USD accelerated lower. The price structure has been lower peaks and lower troughs and this keeps the overall outlook negative as well, in my opinion.

    •Support: 0.6500 (S1), 0.6430 (S2), 0.6390 (S3)

    •Resistance: 0.6660 (R1), 0.6770 (R2), 0.6885 (R3)


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