InvestMacro

By ForexTime

News that Boris Johnson has resigned as UK Prime Minister offered scant relief for the British Pound.

Though climbing some 0.4% at the time of writing, GBPUSD is straining to hang on to the psychologically-important 1.20 level.

Today’s bounce could be down to some price action surrounding the rumour and the fact, noting that expectations surrounding Johnson’s resignation had been bubbling for some time now.

Technical forces could even be at play today, with GBPUSD’s 14-day relative strength index pulling away from the 30 threshold which denotes oversold conditions.

Overall, today’s headlines out of 10 Downing Street hasn’t resulted in a seismic move for GBPUSD.

To be fair to the beleaguered Sterling, it is set for its largest single-day gain so far this month – scant consolation when put into its proper context, as seen in the chart above.

The British Pound though is registering an advance against all of its G10 peers for the day, except against commodity-linked currencies such as the Australian dollar and the New Zealand dollar.

And yet, there are other more-pressing factors that are set to keep the Pound on the back foot for the months ahead.

For one, the UK may already be in a recession, considering that its economic data has made for some dismal reading:

• UK economy saw an unexpected contraction back in April, shrinking by 0.3% compared to March – its sharpest drop in over a year. Q2 data suggests another quarterly contraction – fulfilling the criteria for a technical recession.
• The UK is running a massive current account deficit, which ran at 4.2% of its GDP in the first quarter this year – one of the largest such deficits in the world!
• UK inflation is at its highest in 40 years. The May consumer price index (CPI – which is used to measure top line inflation) rose by 9.1% in May – its highest reading since Q1 1982. Inflation is also forecasted to reach double-digits in Q4 2022.

And although the Bank of England (BOE) appears committed to hiking its rates in the name of cooling scorching-hot inflation, such aggressive moves only ramp up the prospects of a UK recession, given such weak underlying economic fundamentals.

In fact, the BOE had already issued a warning back in May of a possible recession.

Also back in May, our article featured this line: “A path towards 1.20 may prove likelier for this currency pair known as ‘cable’, rather than a path back up to 1.30.”

But wait, there’s more.

There are still Brexit risks to contend with, while surge in Covid-19 cases in the UK aren’t helping matters.

Of course, the fiscal outlook (how the government can support the UK economy) is very much dependent on the policies of the incoming UK Prime Minister, and it could be weeks or months before Johnson’s replacement is determined, with more time needed for their policies to be formed, and later still to be enacted before showing up in the real economic data.

As things stand, markets are pricing in a 60% chance that we could see GBPUSD reach 1.15 sometime in Q4.

In short, there’s hardly any reason to be optimistic about the UK economic outlook, which is set to expose GBPUSD to more downside, while hampering cable’s ability to register any significant recovery over the near term.

Article by ForexTime

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Article By RoboForex.com

USDCAD, “US Dollar vs Canadian Dollar”

As we can see in the H4 chart, after forming a Harami reversal pattern close to the resistance level, USDCAD may reverse in the form of another correctional impulse. In this case, the downside correctional target may be the support area at 1.2980. Later, the market may rebound from this level and resume growing. However, an alternative scenario implies that the asset may grow to reach 1.3145 and continue the uptrend without testing the support area.

AUDUSD, “Australian Dollar vs US Dollar”

As we can see in the H4 chart, AUDUSD has formed a Hammer reversal pattern near the support area. At the moment, the asset is reversing in the form a new rising impulse. In this case, the upside target may be the resistance level at 0.6875. After testing the level, the price may rebound from it and resume the descending tendency. At the same time, the opposite scenario implies that the price may fall to reach 0.6715 and continue the downtrend without any corrections.

USDCHF, “US Dollar vs Swiss Franc”

As we can see in the H4 chart, after testing the resistance area, the pair has formed several reversal patterns, for example, Doji. At the moment, USDCHF may reverse in the form of a new correctional impulse. In this case, the downside correctional target may be at 0.9655. After testing the support level, the price may rebound from it and resume trading upwards. Still, there might be an alternative scenario, according to which the asset may grow to reach 0.9760 and continue the ascending tendency without any pullbacks.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

AUDUSD, “Australian Dollar vs US Dollar”

AUDUSD is rebounding from Tenkan-Sen. The instrument is currently moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 0.6820 and then resume moving downwards to reach 0.6575. Another signal in favour of a further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 0.6905. In this case, the pair may continue growing towards 0.7005.

BRENT

Brent is falling within the bearish channel. The instrument is currently moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 106.05 and then resume moving downwards to reach 95.25. Another signal in favour of a further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 111.25. In this case, the pair may continue growing towards 117.05.

USDCAD, “US Dollar vs Canadian Dollar”

USDCAD is rebounding from the cloud’s upside border. The instrument is currently moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test the cloud’s upside border at 1.2925 and then resume moving upwards to reach 1.3345. Another signal in favour of a further uptrend will be a rebound from the rising channel’s downside border. However, the bullish scenario may no longer be valid if the price breaks the cloud’s downside border and fixes below 1.2920. In this case, the pair may continue falling towards 1.2825.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

By JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.0266
• Prev Close: 1.0180
• % chg. over the last day: -0.84%

The euro fell to a new low in two decades as rising energy prices strengthened the attractiveness of the US currency as a safe haven and the Eurozone economy slipped into recession. Germany is running its first trade deficit since 1991. A significant difference in interest rates between the US Fed (1.75%) and the ECB (0.00%) negatively affects the EUR/USD exchange rate.

Trading recommendations

• Support levels: 1.0188
• Resistance levels: 1.0229, 1.0284, 1.0365, 1.0415, 1.0504, 1.0564, 1.0611

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving averages, the MACD indicator is in the negative zone, and there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.0229 or 1.0284, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.0188, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.0415 resistance level and fixes above, the uptrend will likely resume.

News feed for 2022.07.07:

• – Eurozone German Industrial Production (m/m) at 09:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting (m/m) at 14:30 (GMT+3);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US FOMC Member Bullard Speaks at 20:00 (GMT+3);
• – US FOMC Member Waller Speaks at 20:00 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.1933
• Prev Close: 1.1921
• % chg. over the last day: -0.10%

More than 35 members of the British government resigned in less than 24 hours. One in five members of parliament who have held public office left his post. Boris Johnson is ignoring calls to step down despite the massive layoffs of officials. “The prime minister’s job is to lead the country through difficult times,” he said. Mr. Johnson added that millions voted for him and wondered if any potential successors could replicate his success in the next election. Despite the political problems, the Bank of England’s chief economist Hugh Pill is confident that the Bank of England will return inflation to its target level of 2%. However, he did not clarify when this would happen.

Trading recommendations

• Support levels: 1.1929
• Resistance levels: 1.2021, 1.2065, 1.2095, 1.2137

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The situation is very similar to the euro, with the difference that the pound shows more stability. The price is trading below the moving averages, the MACD indicator is in the negative zone, and there are signs of divergence. Under such market conditions, sell deals can be considered from the resistance level of 1.2021, but only after the additional confirmation. Buy trades are best to look for on intraday time frames from the support level of 1.1929, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.2137 resistance level and fixes above, the uptrend will likely resume.

There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev Open: 135.72
• Prev Close: 135.93
• % chg. over the last day: +0.15%

Japanese households’ inflation expectations have intensified over the past three months, with the share of homes expecting prices to rise next year, reaching the highest level in 14 years. At the same time, the Bank of Japan said it would not cancel its monetary stimulus because inflation is caused by a sharp rise in fuel and commodity prices caused by Russia’s invasion of Ukraine.

Trading recommendations

• Support levels: 135.41, 134.11, 133.35, 131.67, 131.00, 130.12, 129.48, 128.76
• Resistance levels: 135.87, 136.48

The medium-term trend on the USD/JPY currency pair is bullish. Buyer’s pressure in recent days is increasing again. The MACD indicator has become inactive as the price continues to form a wide balance. Under such market conditions, buy trades can be considered from the support level of 135.41, but with confirmation. A resistance level of 135.87 is good for sell deals, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes below 133.35, the downtrend will likely resume.

There is no news feed for today.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.3022
• Prev Close: 1.3034
• % chg. over the last day: +0.09%

The Canadian dollar is a commodity currency, so it highly depends on instruments like the dollar index and oil. The American dollar continued to rise yesterday, while WTI oil prices dropped below $95 a barrel. As a result, USD/CAD quotes increased at the opening session but began to decline by the end of the day due to the recovery of oil prices. It should be noted that the Bank of Canada is on the way to tightening interest rates and is practically moving in step with the US Federal Reserve. The Fed rate is now at a 1.75% level, and the Bank of Canada rate is 1.50%. This means that the Canadian dollar has a basis for strengthening, especially if oil rates start to rise again, which is very likely as the supply shortage is still there.

Trading recommendations

• Support levels: 1.2998, 1.2959, 1.2934, 1.2894
• Resistance levels: 1.3035, 1.3052, 1.3077

In terms of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator fell to zero level. Under such market conditions, waiting for a small pullback is better, as the price has strongly deviated from the average lines. It is best to look for buy trades on the lower time frames from the support level of 1.2998 or 1.2959, but better with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3035, but it is also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates below the 1.2894 support level, the downtrend will likely resume.

News feed for 2022.07.07:

• – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustForex

Investors looked closely at the Federal Reserve’s latest FOMC protocol, which provided new data on the Central Bank’s monetary policy and the fight against inflation. According to the latest FOMC minutes, the Fed will also raise interest rates by 0.75% at its July meeting. The committee also lowered its growth forecast for the second half of 2022 and 2023. The minutes reflect participants’ concerns that a rate hike has a “greater than expected” impact on economic growth. Participants have not seen enough evidence that supply constraints have loosened enough to help control inflation.

According to analysts, a 50 basis point rate hike at the July meeting indicates a final rate of 3%, and a 75 basis point hike suggests a peak of 3.25% or 3.5%. At 3.5%, there is about a 50% chance of recession.

The ISM US Services PMI Index was 55.3 in June, down from 55.9 in May but better than expected at 54 points.

As the stock market closed yesterday, the Dow Jones Index (US30) increased by 0.23%, and the S&P 500 Index (US500) added 0.36%. The technology index NASDAQ (US100) gained 0.35% on Wednesday. All three indices ended the day in the green territory.

IStock markets in Europe mostly rose yesterday. German DAX (DE30) gained 1.56%, French CAC 40 (FR40) jumped by 2.03%, Spanish IBEX 35 (ES35) decreased by 0.14%, British FTSE 100 (UK100) was up by 1.17%.

More than 35 members of the British government resigned in less than 24 hours. One in five members of parliament who have held public office left his post. Boris Johnson is ignoring calls to step down despite the massive layoffs of officials. “The prime minister’s job is to lead the country through difficult times,” he said. Mr. Johnson added that millions voted for him and wondered if any potential successors could replicate his success in the next election. Despite the political problems, the Bank of England’s chief economist Hugh Pill is confident that the Bank of England will return inflation to its target level of 2%. However, he did not clarify when this would happen.

All oil and gas fields affected by the strike in Norway’s oil sector are expected to return to full operation within days. Analysts expect oil prices to recover quickly as supply shortages persist. Goldman Sachs raised its natural gas price forecasts, saying that full restoration of Russian gas supplies via Nord Stream 1 is no longer a likely scenario. On the other hand, Citigroup says WTI could fall to $65 a barrel by the end of this year and fall to $45 by the end of 2023 if demand declines.

Gold hit a 10-month low on the back of hawkish US Federal Reserve policy, pushing up the dollar and government bond yields. According to the minutes of the Central Bank meeting, the Fed believes there is a real danger that high inflation will take root in the US economy and that an appropriate increase in interest rates will be the only way to balance unrestrained prices with growth. In other words, gold and silver have no fundamental reason to rise.

Asian markets closed lower yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.20% yesterday, Hong Kong’s Hang Seng (HK50) ended the day down 1.22%, and Australia’s S&P/ASX 200 (AU200) fell by 0.52% on Wednesday.

China’s economy is expected to gradually overcome the negative effects of the epidemic in the second half of this year, with economic indicators showing improvement amid a series of supportive policy measures, according to a report from the People’s Bank of China. According to the report, employment in the country remains stable despite the problems, and price growth is kept in a moderate range, giving the authorities more room for maneuver in macroeconomic policy. The report suggests using soft monetary policy to help businesses overcome difficulties, expand efficient investment and stabilize growth.

S&P 500 (F) (US500) 3,845.08 +13.69 (+0.36%)

Dow Jones (US30) 31,037.68 +69.86 (+0.23%)

DAX (DE40) 12,594.52 +193.32 (+1.56%)

FTSE 100 (UK100) 7,107.77 +82.30 (+1.17%)

USD Index 107.06 +0.53 (+0.50%)

• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+3);
• – Eurozone German Industrial Production (m/m) at 09:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting (m/m) at 14:30 (GMT+3);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3);
• – US FOMC Member Bullard Speaks at 20:00 (GMT+3);
• – US FOMC Member Waller Speaks at 20:00 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

After breaking the consolidation range downwards, completing the descending wave at 1.0300, and then forming a new consolidation range around the latter level, EURUSD has broken it to the downside as well and may continue falling with the target at 1.0220 or even extend this structure down to 1.0000. Later, the market may start a new correction to return to 1.0300.

GBPUSD, “Great Britain Pound vs US Dollar”

Having broken the consolidation range downwards and reaching the predicted target at 1.1990, GBPUSD has broken this level as well and may later continue falling towards 1.1860. After that, the instrument may return to 1.1990 to test it from below and then form a new descending structure with the target at 1.1822.

USDJPY, “US Dollar vs Japanese Yen”

After completing the descending structure at 135.50 and then forming a new consolidation range around this level, USDJPY has broken it to the downside and may continue falling towards 134.55. Later, the market may start another correction up to 135.77.

USDCHF, “US Dollar vs Swiss Franc”

Having completed the ascending wave at 0.9630 and forming a new consolidation range around this level, USDCHF has broken it to the upside to reach 0.9703. Possibly, the pair may correct to test 0.9630 from above and then resume growing with the first target at 0.9766.

AUDUSD, “Australian Dollar vs US Dollar”

After finishing the descending wave at 0.6800 and breaking this level, AUDUSD has finished the descending wave at 0.6760 along with the correction up to 0.6800. Possibly, today the pair may resume trading downwards with the target at 0.6717.

BRENT

Having completed the descending wave at 111.00 and breaking this level, Brent has reached the short-term correctional target at 103.88. Today, the asset may form one more ascending wave to test 110.74 from below and then resume trading downwards with the target at 102.00.

XAUUSD, “Gold vs US Dollar”

After rebounding from 1814.00, reaching 1784.60, and then breaking the latter level, Gold is expected to continue falling with the short-term target at 1755.30. Later, the market may correct to test 1784.60 from below and then resume falling to reach 1700.00.

S&P 500

The S&P index is still consolidating around 3787.0. Possibly, the asset may expand the range down to 3700.0 and then form one more ascending wave to reach 3910.0 or even extend this structure up to 4100.0. On the other hand, if the price breaks the range to the upside, the market may resume trading downwards to reach 3500.0.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.