iFOREX Daily Analysis : July 22, 2016

The dollar pared losses against the other major currencies on Thursday, as strong U.S. housing sector data lent support and as upbeat remarks by European Central Bank President Mario Draghi failed to sustainably ease global growth concerns.

Data showed that U.S. existing home sales increased by 1.1% in June to 5.57 million units, from the 5.51 million units in May. The report came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 16 fell by 1,000 to 253,000, from the previous week’s total of 254,000, while analysts expected jobless claims to increase by 11,000 to 265,000 last week. Separately, the Federal Reserve Bank of Philadelphia said that its manufacturing index fell to -2.9 this month, from June’s reading of 4.7, while analysts had expected the index to improve to 5.0 in July.

Elsewhere, the yen slightly recovered on Thursday, but remained under pressure, amid mounting expectations for additional monetary easing by the Bank of Japan in its monetary policy statement next week.

Today the euro zone is to release data on private sector business activity; the U.K. is to release survey data on activity in the manufacturing sector and Canada is to round up the week with data on retail sales and consumer inflation.

EUR/USD

On Thursday the euro spiked 4% to 1.1052 against the dollar during ECB head Mario Draghi presser, but after it slipped 0.14%, re-approaching Wednesday’s one-month low of 1.0979.

At the conclusion of its policy meeting, the ECB left all of its main rates unchanged, with its key refinancing rate remaining at 0%, and the key deposit rate at -0.4%.

Commenting on the decision, ECB President Mario Draghi said the euro zone recovery faces several headwinds, and the risks remain tilted to the downside, citing the UK referendum, slowing emerging markets and the slow pace of structural reforms as key threats. Draghi also said that European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

Today investors’ focus will be on the euro zone data on private sector business activity.

Pivot: 1.105Support: 1.098 1.0935 1.091Resistance: 1.105 1.108 1.11Scenario 1: short positions below 1.1050 with targets @ 1.0980 & 1.0935 in extension.Scenario 2: above 1.1050 look for further upside with 1.1080 & 1.1100 as targets.Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

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Gold

Gold bounced off three-week lows after the European Central Bank stood pat on Thursday, as Mario Draghi emphasized that policymakers need more time to assess the long-term ramifications of the U.K's decision to leave the European Union, before deciding whether to implement further easing measures.

The precious metal is up by more than $70 an ounce since the decision jolted markets worldwide, and more broadly, it is up by more than 24% since January 1 and is on pace for one of its strongest years over the last decade.

Pivot: 1320Support: 1320 1316 1310Resistance: 1336 1340 1347Scenario 1: long positions above 1320.00 with targets @ 1336.00 & 1340.00 in extension.Scenario 2: below 1320.00 look for further downside with 1316.00 & 1310.50 as targets.Comment: The rising 50-period moving average is playing support role and maintains the upside bias.

WTI Oil

Global oil futures fell sharply on Thursday, erasing gains from the previous session, as persistent concerns related to the supply glut in crude and refined product remained in focus.

Crude prices fell considerably as investors continued to digest to data from the U.S. and China from Wednesday's session. In June, China's exports of refined fuels surged 38% to a record-high of 4.2 million tons, as reported by the nation's Customs Administration in a monthly report. On an annual basis, Chinese refined exports are up by 45% from the same level at this time last year.

Today Baker Hughes will release weekly data on the U.S. oil rig count, which will be closly watched by energy traders.

Pivot: 45.9Support: 44.2 43.9 43.35Resistance: 45.9 46.38 46.8Scenario 1: short positions below 45.90 with targets @ 44.20 & 43.90 in extension.Scenario 2: above 45.90 look for further upside with 46.38 & 46.80 as targets.Comment: the RSI lacks upward momentum. Prices are capped by a declining trend line. Additionally, the descending 50-period moving average maintains the downside bias.

US 500

U.S. stocks fell sharply on Thursday, as the Dow Jones Industrial Average halted a nine-day winning streak, after European Central Bank president Mario Draghi hinted that the Governing Council could be ready to implement new easing measures following Thursday's decision to hold interest rates steady.

Intel (NASDAQ:INTC) shares were down 4.2% after it reported slowing revenue growth at its key data center business. The stock was the biggest drag on the three major indexes.

The Dow lost 0.42%, while the S&P 500 Composite index fell by 0.36%, and the NASDAQ Composite index, meanwhile, fell 0.31%. Both the Dow and S&P 500 suffered their worst one-session declines in more than two weeks.

Pivot: 2072 Support: 2072 1992 1950 Resistance: 2190 2220 2250 Scenario 1: long positions above 2072.00 with targets @ 2190.00 & 2220.00 in extension. Scenario 2: below 2072.00 look for further downside with 1992.00 & 1950.00 as targets. Comment: the RSI is bullish and calls for further advance.

Written By: iFOREX