Forex Market Analysis

Daily Market Update: FED Decision To Rate Hike, ECB Meeting


News Commentary




The FED delivered the widely expected rate hike overnight, with a hawkish statement and economic projections. FOMC raised the Fed funds to 2.00%.

Greenbacks have been erased due to fresh concerns about the U.S.-China trade relations were seen weighing on the dollar, which is often sought in times of political tensions.

U.S. President Donald Trump will meet with his top trade advisors on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods, a senior Trump administration official said.

The ECB rate decision and press conference is the biggest focus today with Eurozone inflation picked up again in May. The ECB should be much more comfortable to end the asset purchase program later this year.

Stopping the program right after September is certainly Euro positive.

The Australian Dollar is trading as the weakest currency today as it is pressured by its own data miss as well as weaker than expected China data. Australia employment rose 12k seasonally adjusted in May, below the consensus of 19.2k. The unemployment rate dropped to 5.4%, as participation rate also dropped to 65.5%.

From China, retail sales rose 8.5% in May, slowed from 9.4% and missed the expectation of 9.6%. Industrial production slowed to 5.8%, down from 7.0% and missed expectation of 7.0%.

Positive data came from Great Britain to enhance the sterling, with the retail sales reading 1.3%, higher than the expected 0.5%.



Chart Analysis




As we can see on the daily chart, the price had bounced from the key resistance level of 95.15. The price is expected to go down to meet the 92.6 level according to many reasons:

Breaking the reversal pattern “wedge”, meeting the broken ascending trend from the high of 2017, meeting the broken ascending channel, heading the B level of the ABC Elliot waves, divergence on RSI followed by breaking the upper line as shown.

According to Elliot, we can see a spike from that level to 97.9.



On the daily chart, the pair had broken the ascending channel followed by bouncing from the descending trend from the high of 2017 and the key resistance of 111.1.

The price also broke the support 110.05 to reach the next support 108.15 to get back up again from this level to retest the level at 110.05.

As you can see on the chart, the price is moving according to Elliot waves. By forming the A & B waves, we are waiting for the next move down to hit the C level which is located at the support 106 and also to meet the ascending trend from the low of 2016.

So, a bounce is expected to be on its way.



On the daily chart, the pair had formed a wedge which had been broken to reach the support zone 81.2-80.5, to make the price ranges in sideways between 80.5 & 84.4.

The price is about to have a bearish bias according to:

reaching the resistance zone 84.4-93.9, forming continuous pattern “flag”, near the moving average 200, and ABC Elliot waves

So, watch for any price action in these levels to head for 76.25.



The pair is about to take a bearish rally to the 1.274 level according to many reasons:

locating in the resistance zone 1.3-1.38, near the descending trend line from the high of 2016, shaping the reversal pattern “wedge”, and finally the harmonic pattern “Gartley.

So watch for any price action in these levels.



On the daily chart, a reversal pattern wedge has been broken to reach 0.747 to form a flag pattern.

The price is expected to go up to the resistance zone, then it will have a strong bearish rally to the support 0.7155 according to five causes;-

the descending trend line from the high of February, the upper edge of the flag, the retest of the broken wedge, the resistance zone, and eventually the B level of the ABC Elliott waves



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