EUR/USD: 1.0819 May Low In Play
Growth Aces | Jul 16, 2015 06:50AM ET
GROWTHACES.COM Forex Trading Strategies
Taken Positions
GBP/USD: short at 1.5670, target 1.5420, stop-loss moved to 1.5670, risk factor **
EUR/CHF: long at 1.0380, target 1.0580, stop-loss moved to 1.0380, risk factor **
GBP/JPY: short at 193.40, target 191.20, stop-loss 194.40, risk factor **
Pending Orders
EUR/USD: sell at 1.0990, target 1.0820, stop-loss 1.1075, risk factor *
USD/JPY: buy at 123.40, target 125.80, stop-loss 122.60, risk factor *
USD/CHF: buy at 0.9460, target 0.9630, stop-loss 0.9400, risk factor *
USD/CAD: buy at 1.2820, target 1.2990, stop-loss 1.2730, risk factor *
AUD/USD: sell at 0.7450, target 0.7250, stop-loss 0.7530, risk factor *
NZD/USD: sell at 0.6620, target 0.6400, stop-loss 0.6710, risk factor *
EUR/GBP: sell at 0.7045, target 0.6920, stop-loss 0.7090, risk factor **
AUD/NZD: buy at 1.1220, target 1.1470, stop-loss 1.1120, risk factor *
EUR/USD: 1.0819 May Low In Play
(sell at 1.0990)
- The European Union's statistics office confirmed that inflation in the Eurozone softened to 0.2% yoy in June from 0.3% yoy in May. Eurostat said that in June more expensive restaurants and cafes, tobacco and rents had the biggest upward impact on the overall year-on-year inflation value, while cheaper gas, heating oil and automotive fuel pulled the index down. Energy costs as a whole were down 5.1%, against a 4.8% drop in May. Excluding the most volatile components of unprocessed food and energy - what the European Central Bank calls core inflation prices were flat percent mom for a 0.8% yoy increase, against a 0.9% yoy rise in May. The ECB expects Eurozone inflation to rise to 1.5% in 2016 and 1.8% in 2017.
- The European Central Bank meets today and is expected to take some small steps towards propping up the Greek banking system while sticking firmly to its message on a campaign of extraordinary monetary easing for the Eurozone as a whole.
- The Greek parliament passed austerity measures demanded by lenders to open talks on a new bailout package to keep Greece in the Eurozone. In exchange for funding worth up to EUR 86 billion, Greece has accepted reforms including significant pension adjustments, increases to value added taxes, an overhaul of its collective bargaining system, measures to liberalise its economy and tight limits on public spending. It has also agreed to sequester EUR 50 billion of public assets in a special privatisation fund to act as collateral on the deal. The package was approved with 229 votes in the 300-seat chamber.
- The EUR/USD did inch up briefly after the Greek vote but the reaction suggests that concerns over Greece are fading and the focus has shifted back to yield differentials between Eurozone and the United States.
- Janet Yellen repeated yesterday her view that the Fed will likely hike interest rates later this year if the US economy expands as expected, and cited improvement in the labor market. Her remarks largely tracked the Fed's policy statement last month.
- In our opinion the EUR/USD is likely to fall further. The close below cloud yesterday puts the 1.0819 May 27 low in play. We have lowered our sell EUR/USD order to 1.0990.
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Significant technical analysis' levels:
Resistance: 1.1014 (100-dma), 1.1033 (10-dma), 1.035 (high Jul 15)
Support: 1.0887 (low Jun 1), 1.0867 (low May 28), 1.0819 (low May 27)
USD/CAD: Buy On Dips, Way Open To 1.3000
(buy at 1.2820)
- The Bank of Canada unexpectedly cut its benchmark interest rate by 25 bps to 0.5% yesterday. We expected an on-hold decision.
- Canada's central bank now expects the economy to have shrunk by an annualized 0.5% in the second quarter instead of growing by the 1.8% projected in April. It contracted 0.6% in the first quarter.
- Bank Governor Stephen Poloz said: “The facts have changed, quite quickly actually, in the last two to three months. One of the big shocks in this outlook is the downgrade of investment intentions by the companies in the oil patch.” He added: “We still have a fair bit of room to maneuver and other tools in our toolkit. Our expectation is that they're not necessary, that we've got things figured out at this stage. (…) Canada and the US. economies would be less correlated than usual ... it's reasonable to expect this divergence for some time anyway between our policies.”
- The USD/CAD jumped to fresh 6-year high at 1.2958 after surprising decision of the Bank of Canada. A fall in crude oil prices added to the upward pressure on the USD/CAD.
- Investors will be now eyeing Canadian inflation data for June (Friday, 12:30 GMT). The market expects CPI inflation at 1.0% yoy vs. 0.9% yoy in May and core inflation at 2.2% yoy, unchanged from May. Our expectations do not differ from market consensus.
- We see an upside potential on the USD/CAD and the momentum remains positive. Technical analysis suggests that small upper shadow on Wendesday’s candlestick line weighs in the short term. We are looking to get long on dips at 1.2820 in anticipation for gains near psychological resistance at 1.3000.
Significant technical analysis' levels:
Resistance: 1.2945 (session high Jul 16), 1.2958 (high Jul 15), 1.3000 (psychological level)
Support: 1.2911 (session low Jul 16), 1.2900 (psychological level), 1.2805 (high Jul 14)
NZD/USD: RBNZ Rate Cut Next Week Is Already A Done Deal
(sell at 0.6620)
- CPI inflation amounted to 0.4 qoq and 0.3% yoy the second quarter, below expectations for a reading of 0.4% yoy. CPI is well below 2%, the mid-point of the Reserve Bank of New Zealand's medium-term target range between 1% and 3%. In its June Monetary Policy Statement, it forecast annual CPI at 1.6% by March 2016, rising to 2.1% in March 2017.
- Let’s remind that quarterly economic growth in New Zealand slowed to 0.2% in the first quarter for annual growth of 2.6%, as the agriculture-based economy was hit by a drought earlier this year, while low prices hit oil production and exploration, offsetting strong domestic activity.
- The benchmark GlobalDairy Trade price index fell 10.6% at auctions held on Wednesday by New Zealand dairy exporter Fonterra, posting its biggest fall of the year and reaching its lowest level since December 2002. The slide in volatile global dairy prices has raised the risk that Fonterra will have to cut its forecast farmgate price for the current season.
- The NZD/USD dropped to a six-year low after plunging dairy prices and underlying soft inflation virtually cemented the case for another rate cut at next week's central bank review (July 22, 21:00 GMT). There is also a chance for a further rate cut in July.
- In our opinion the NZD/USD is likely to fall to 0.6400 soon, which is quite strong support level, just ahead of 0.6396, 61.8% retrace of the 0.4881-0.8846 rise.
Significant technical analysis' levels:
Resistance: 0.6604 (hourly high Jul 16), 0.6675 (10-dma), 0.6724 (high Jul 15)
Support: 0.6498 (low Jul 16), 0.6470 (low Jul 30, 2009), 0.6396 (61.8% of 0.4881-0.8846)
Source: Growth Aces Forex Trading Strategies
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