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Forex Market Analysis

Daily Market overview: Currency Devaluation Game

 

News Events

President Trump accused China and Russia of depreciating their currencies, breaking from his own administration’s view that no major trading partners are currency manipulators.

Trump took to Twitter on Monday to declare that China and Russia are playing what he called a “currency devaluation game” at a time when the U.S. Federal Reserve is raising interest rates. “Not acceptable!’’ Trump wrote.

The attack added fuel to the brewing trade dispute between the U.S. and China and drew swift criticism from Russia, which the White House recently imposed sanctions on and collided with over Syria. The Bloomberg Dollar Index moved down to its lowest level since March 26 after Trump’s tweet, while Treasuries fluctuated.

On the other side, the release of China’s GDP is 6.8 % after the forecast which was 6.8% too.

Eyes will be on US building permits on 12:30 GMT

 

EUR/USD

On the daily chart, as shown, there’s a consolidation area which narrows with time until presently reached 1.2395

With a breakout of the channel from the low of October 2017 which the price has rejected

So we overview a retest to this area that will be critical as it decides whether to fall back again or it was a false break

Also, the pair’s near the lower trend line from the high of 2008 and the resistance 1.2515

 

 

On 4H chart, the price is at a crucial point as it hit the broken up channel along with lower trend line (as shown)

If there’s any rebound from these level, bears will be ready to attack

 

USD/JPY

On the daily chart, the price has accomplished a correction to the 38.2% Fibonacci level which is located at the same resistance level 107.8

Last February, the pair had broken the upper trend line from the low of 2011, maybe it has not enough potential to retest it now

The price has formed a very decisive continuing pattern (flag), that maintain the bearish bias

On 1H frame, the price broke the lower trend line which is considered as wedge too (reversal pattern)

 GOLD

On the daily chart, Gold is struggling to break through the resistance level 1362.4

As we see, there are many tops that couldn’t make some bullish noise

As the price is walking through a rectangle, there is a possible correction waving ahead. 

On 1H frame, the price broke the trend line that connected the higher lows,  then broke up the rising channel  rebounding from the resistance 1348.9.

 

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Forex Market Analysis

Review for Dollar volatility

Daily events

U.S. Retail Sales Rebound in Sign Consumer Weakness is Transitory

U.S. retail sales rose by more than expected in March in the first gain in three months, suggesting consumer demand regained steam on the back of tax cuts and refunds.

Retail sales have strengthened to 0.6. after a forecast of 0.4%

Although the dollar has weakened against the currency basket, as Investors also remained cautious as the U.S. prepared to announce a fresh round of economic sanctions on Russia, related to its involvement in Syria’s use of chemical weapons.

 

EUR/USD

On the daily chart, there’s a bullish candle towards the 1.2465 level to approach the downtrend from the high of 2008

On 1H frame, the price is near the resistance area (1.2995-1.242) with breaking the triangle

Now we are at a very critical level as we reached strong demand zone

If the price rebounds with convincing price action, we can see 1.23 & 1.2265 levels again

Otherwise, the price breaks through we can see 1.27 level

GBP/USD

On the daily chart, there’s a rally through 1.433 level generating descending triangle

On 1H the price is also at a crucial level (such as EUR/USD). If the price breaks through, the 1.453 is waiting for us

Most likely that we will witness a correction to 1.42 level

 

US index

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Forex Market Analysis

Dolar Index closes bearish helped by mixed CPI data

Hot Topics:

  • Dolar Index closes bearish helped by mixed CPI data.
  • EUR-USD is losing momentum.
  • Manufacturing Production (YoY) falls, and pound closes slightly upward.
  • BoJ – Kuroda keeps the promise of monetary policy.
  • Crude Oil climbs to the highest level since 2014.

Dolar Index closes bearish helped by mixed CPI data.

The index of the greenback yesterday closed down 0.04%, finding support at level 89.03 weighed down by mixed inflation data. On the one hand, Core CPI (YoY) rose to 2.1% in March from 1.8% registered in February. On the other side, the Consumer Price Index CPI (MoM) fell to -0.1% in March, while in February it recorded an advance of 0.2%. We continue to observe the lateral range in which the price is with a bearish bias. (Click on the chart for full resolution).


 

EUR-USD is losing momentum.

The pair of the single currency is losing momentum, in the fourth consecutive trading session, the euro advanced 0.10% finding resistance at 1.2395. In an interview with Reuters, the ECB lawmaker Ardo Hansson said that the ECB “needs to be patient and eliminate its stimulus very gradually.”

Although the ECB has kept the interest rate at low levels and has maintained its policy of buying bonds, lawmakers are debating that it is time to start cutting this policy. ECB legislator Ewald Nowotny, meanwhile, said he would have “no problem” in raising the deposit rate from -0.4% to -0.2% as a means to normalise monetary policy.

In this macroeconomic context, the euro is reaching a key area in the range 1.2412 – 1.245. Should not exceed the level 1.2476, the pair could make a new bearish leg. In the long term, we still have our eyes on 1.26 as the end zone of the EUR / USD bullish cycle.

Manufacturing Production (YoY) falls, and pound closes slightly upward.

Manufacturing Production (YoY) fell to 2.5% in February well below the consensus that estimated an advance of 3.3%. The sector that was most affected was the construction sector with a decline of 1.6% in February. The National Statistics Office attributes to a large extent these low figures to the effect of severe weather.

On the technical side, we are observing a possible corrective process that could begin to be developed from area 1.42 – 1.425 with a potential level of invalidation in over 1.4345 coinciding with the highest level of the year.

 

BoJ – Kuroda keeps the promise of monetary policy.

The Governor of the Bank of Japan, Haruhiko Kuroda, reiterated his optimistic view on the expansion of Japan’s economy, affirming that “With the improvement of the product gap and the medium to long-term inflation expectations observed, we expect that inflation will accelerate as a trend and go to 2 percent. ”

On a technical level, on the one hand, the USD-JPY is still in a limited lateral range between 106.64 and 107.49, the predominant bias is bullish and increases its probability of strength as it closes above 108. The level The invalidation of the bullish sequence is 105.66.

On the other hand, by a positive correlation concerning USDJPY, we see in the Nikkei 225 Index within a long-term bearish pattern developing an ascending diagonal formation, which in case of exceeding 21,957 could lead to exceeding 22,500 pts.

 

Crude Oil climbs to the highest level since 2014.

First, it was the turn of the Brent oil; now it is the turn of the Crude oil that has climbed to the highest levels since 2014, reaching 67.36 US $ / Barrel, while the Brent oil climbed to new highs reaching $72.69.

For the Brent Oil, although the trend is bullish, the closest resistance is $72.91, while the level of invalidation of the bullish cycle is below $67.

As with the Brent Oil, the Crude Oil is in a free climb up to $ 70.7 as long as it remains above the $64 level.

On the opposite side, by inverse correlation, the Loonie remains in free fall with a target at the base of the bullish channel, the impact zone could be between 1.2456 to 1.235.