Market News Report - 01 July 2024
Introduction
The winners and losers in the past week within the FX market were the same as the previous. Yen remains heavily shorted, while the Australian and Canadian dollars reigned supreme against the competition.
While the USD dollar had mixed results on the economic calendar, it held decent strength against a few currencies.
These are a few markets that our latest report will cover to prepare you for the current week.
Market Overview
Below is a brief technical and fundamental analysis breakdown for all major currencies.
US dollar (USD)
Short-term outlook: weak bearish.
Last week's month-on-month CPI (Consumer Price Index) came in lower than expected. Furthermore, the Federal Reserve Bank recently indicated that we should expect at least one interest rate cut this year.
https://www.tradingview.com/x/V9shqJE9/
Despite the sentiment above, DYX made a new weekly high and looks set on its path to test the major resistance at 106.490, some distance away from the major support level at 103.993. Thus, the outlook is weak bearish rather than full-on bearish.
Long-term outlook: weak bearish.
The anticipated Fed rate cut is the primary bearish driver for the greenback. Traders should consider the upcoming ISM (Institute for Supply Management) index and NFP (Non-Farm Payrolls) numbers, both of which analysts predict lower results than previous figures.
Still, if either of these fundamentals turns out better than expected, bullish surprises for the dollar are possible.
Euro (EUR)
Short-term outlook: weak bearish.
While the ECB hasn't decided whether to be hawkish or dovish in the future, the recent rate cut drives the euro's bearish force. The second catalyst is the surprise drop in the PMI (Purchase Managers Index) on June 21 2024.
Another risk to the euro is the far-right National Rally political party amid the French elections.
https://www.tradingview.com/x/zEqtKp0m/
The euro was close to reaching the major support at 1.06494 earlier in the week. The fundamentals suggest that this market will probably attempt to revisit this level instead of the further resistance (at 1.09160), confirming the bearish bias.
Long-term outlook: weak bearish.
Aside from the interest rate, other bearish drivers include the French legislative election. Euro traders should note several high-impact events this week, namely Langarde's speech and new Retail Sales data.
British pound (GBP)
Short-term outlook: bearish.
The Bank of England (BoE) continues to show dovish tendencies, partly due to the recent drop in UK services or PMI data. STIR (short-term interest rate) markets envision a 43% chance of a BoE rate cut next month.
https://www.tradingview.com/x/cYDVWdG9/
The technicals match pretty well with the above sentiment, making low after low in the past few weeks. Although GBP is far from the major support level at 1.24457, seeing another low soon wouldn't be surprising. Meanwhile, the key resistance lies high up at 1.28606.
Long-term outlook: bearish.
The interest rate is the chief bearish driver for the pound amid a mostly bleak economic bleak. As always, any better-than-expected growth data can present some short-term upside.
Japanese yen (JPY)
Short-term outlook: weak bullish.
The 'weak bullish' aspect is due to the Bank of Japan's recent decision to keep the interest rate unchanged. The Bank of Japan Governor, Kazuo Ueda, also recently stated that "depending on economic, price, and financial data and information available at the time, there is a chance we could raise interest rates at the July meeting."
Furthermore, STIR markets see a 60% chance of a rate hike in the meeting at the end of the month.
https://www.tradingview.com/x/311lDMYl/
Despite the slightly bullish outlook, the yen made history by reaching an all-time high of 161.285, breaking its previous major resistance of 160.233. So, it's clear this market is all the way up.
The key support remains at 154.546. However, it would take a miracle for USD/JPY to move above this area.
Long-term outlook: weak bullish
On the one hand, the yen offers mild bullishness due to the expected rate hike. Furthermore, catalysts that push US Treasury yields lower (e.g., weaker jobs data, lower core PCE) would also be positive for the yen. Finally, a big beat in new CPI data is another consideration.
However, things don't look rosy on the charts. To combat this, the Ministry of Finance in Japan has hinted at intervention once the yen exceeds a value of 160.00 (which it already has).
Australian dollar (AUD)
Short-term outlook: weak bullish.
The recent Reserve Bank of Australia meeting on June 17 aligned with the sentiment of unceasing inflation. So, it's a given that the RBA should hike the interest rate next month.
Another point worth mentioning is the CPI print at the end of July, with expectations of a positive outcome.
Finally, the Australian dollar shares an interesting correlation with China. Data indicating growth in this region (stimulus, new infrastructure projects, solid economic data, etc.) should boost the former.
https://www.tradingview.com/x/SYfJNeLY/
While showing some bullish fundamentals, the Aussie's range-bound conditions continue. The key support (0.65580) and key resistance (0.67141) levels remain neither far nor close to each other.
While this market can go either way, the short-term outlook suggests it may lean more towards the upper regions.
Long-term outlook: weak bullish.
The unchanging of the interest rate (along with a potential hike) are the main bullish drivers. However, a weak result in the upcoming CPI may encourage the bears.
Furthermore, the Australian dollar is exposed to slow economic growth in other countries.
New Zealand dollar (NZD)
Short-term outlook: weak bullish.
Like the RBA, the Reserve Bank of New Zealand (RBNZ) is also battling inflation. So, there is an incentive to be hawkish. However, as with the Aussie, the Kiwi is a pro-cyclical currency with high sensitivity to developments in China.
https://www.tradingview.com/x/iE8BFCTm/
After showing similar price action to AUD, the New Zealand dollar has just broken a notable support level. The next target would, of course, be down at 0.58746, while the key resistance is at a higher level at 0.62220.
So, the technicals seem to contradict what is fundamentally happening with the Kiwi.
Long-term outlook: weak bullish.
The hawkish stance suggested by the RBNZ is the key bullish catalyst. Still, any out-of-consensus CPI prints in the near term and sensitivity to other global economies like China could derail the currency.
Canadian dollar (CAD)
Short-term outlook: weak bearish.
STIR markets indicate a 50/50 chance for the Bank of Canada to cut rates this month. The Governor of the Bank of Canada, Macklem, has also suggested this would happen if inflation became stickier.
Interestingly, last week's CPI numbers were all positive for the Canadian dollar - hence the 'weak bearish' outlook.
https://www.tradingview.com/x/8FgtP59j/
CAD remains in full-on range mode. Just as it looked to break the key support at 1.35896, it quickly reverted. The key resistance is at 1.37919. Based on the chart dynamics, it's anyone's guess where the price will go this week.
Long-term outlook: weak bearish.
The long-term outlook is the same as the short-term. Expectations of a rate cut remain the centre of bearish attention. However, CAD may be redeemed by encouraging oil prices.
Swiss franc (CHF)
Short-term outlook: bearish.
STIR markets were predictably accurate with their 76% chance of the Swiss National Bank (SNB) cutting the interest rate last Thursday. Secondly, SNB expects a moderate improvement in inflation and GDP (Gross Domestic Product) and unemployment to rise slightly in the near term.
https://www.tradingview.com/x/SRgUwwjl/
The market recently attempted to break a key support area for the Swiss franc. However, the latest expected rate cut for the Swiss franc's interest rate caused a U-turn.
Now, USD/CHF's key support and resistance levels lie at 0.88268 and 0.91582, respectively.
Long-term outlook: bearish.
The expected rate cut in the next SNB meetings (in September and December 2024) is the key bearish driver for the Swiss. However, the bank's willingness to intervene and geo-political events may give the latter some upside.
Conclusion
On the technical side, it will be interesting to see if Aussie and CAD could breach their ranges. Let's also see if the yen may find some strength for a change this week.
The key news to diarise this week includes the minutes by the RBA and Fed, the year-on-year euro inflation rate, and the CAD unemployment rate.
So, that's it for this report - we hope you are well-prepared!
The winners and losers in the past week within the FX market were the same as the previous. Yen remains heavily shorted, while the Australian and Canadian dollars reigned supreme against the competition.
While the USD dollar had mixed results on the economic calendar, it held decent strength against a few currencies.
These are a few markets that our latest report will cover to prepare you for the current week.
Market Overview
Below is a brief technical and fundamental analysis breakdown for all major currencies.
US dollar (USD)
Short-term outlook: weak bearish.
Last week's month-on-month CPI (Consumer Price Index) came in lower than expected. Furthermore, the Federal Reserve Bank recently indicated that we should expect at least one interest rate cut this year.
https://www.tradingview.com/x/V9shqJE9/
Despite the sentiment above, DYX made a new weekly high and looks set on its path to test the major resistance at 106.490, some distance away from the major support level at 103.993. Thus, the outlook is weak bearish rather than full-on bearish.
Long-term outlook: weak bearish.
The anticipated Fed rate cut is the primary bearish driver for the greenback. Traders should consider the upcoming ISM (Institute for Supply Management) index and NFP (Non-Farm Payrolls) numbers, both of which analysts predict lower results than previous figures.
Still, if either of these fundamentals turns out better than expected, bullish surprises for the dollar are possible.
Euro (EUR)
Short-term outlook: weak bearish.
While the ECB hasn't decided whether to be hawkish or dovish in the future, the recent rate cut drives the euro's bearish force. The second catalyst is the surprise drop in the PMI (Purchase Managers Index) on June 21 2024.
Another risk to the euro is the far-right National Rally political party amid the French elections.
https://www.tradingview.com/x/zEqtKp0m/
The euro was close to reaching the major support at 1.06494 earlier in the week. The fundamentals suggest that this market will probably attempt to revisit this level instead of the further resistance (at 1.09160), confirming the bearish bias.
Long-term outlook: weak bearish.
Aside from the interest rate, other bearish drivers include the French legislative election. Euro traders should note several high-impact events this week, namely Langarde's speech and new Retail Sales data.
British pound (GBP)
Short-term outlook: bearish.
The Bank of England (BoE) continues to show dovish tendencies, partly due to the recent drop in UK services or PMI data. STIR (short-term interest rate) markets envision a 43% chance of a BoE rate cut next month.
https://www.tradingview.com/x/cYDVWdG9/
The technicals match pretty well with the above sentiment, making low after low in the past few weeks. Although GBP is far from the major support level at 1.24457, seeing another low soon wouldn't be surprising. Meanwhile, the key resistance lies high up at 1.28606.
Long-term outlook: bearish.
The interest rate is the chief bearish driver for the pound amid a mostly bleak economic bleak. As always, any better-than-expected growth data can present some short-term upside.
Japanese yen (JPY)
Short-term outlook: weak bullish.
The 'weak bullish' aspect is due to the Bank of Japan's recent decision to keep the interest rate unchanged. The Bank of Japan Governor, Kazuo Ueda, also recently stated that "depending on economic, price, and financial data and information available at the time, there is a chance we could raise interest rates at the July meeting."
Furthermore, STIR markets see a 60% chance of a rate hike in the meeting at the end of the month.
https://www.tradingview.com/x/311lDMYl/
Despite the slightly bullish outlook, the yen made history by reaching an all-time high of 161.285, breaking its previous major resistance of 160.233. So, it's clear this market is all the way up.
The key support remains at 154.546. However, it would take a miracle for USD/JPY to move above this area.
Long-term outlook: weak bullish
On the one hand, the yen offers mild bullishness due to the expected rate hike. Furthermore, catalysts that push US Treasury yields lower (e.g., weaker jobs data, lower core PCE) would also be positive for the yen. Finally, a big beat in new CPI data is another consideration.
However, things don't look rosy on the charts. To combat this, the Ministry of Finance in Japan has hinted at intervention once the yen exceeds a value of 160.00 (which it already has).
Australian dollar (AUD)
Short-term outlook: weak bullish.
The recent Reserve Bank of Australia meeting on June 17 aligned with the sentiment of unceasing inflation. So, it's a given that the RBA should hike the interest rate next month.
Another point worth mentioning is the CPI print at the end of July, with expectations of a positive outcome.
Finally, the Australian dollar shares an interesting correlation with China. Data indicating growth in this region (stimulus, new infrastructure projects, solid economic data, etc.) should boost the former.
https://www.tradingview.com/x/SYfJNeLY/
While showing some bullish fundamentals, the Aussie's range-bound conditions continue. The key support (0.65580) and key resistance (0.67141) levels remain neither far nor close to each other.
While this market can go either way, the short-term outlook suggests it may lean more towards the upper regions.
Long-term outlook: weak bullish.
The unchanging of the interest rate (along with a potential hike) are the main bullish drivers. However, a weak result in the upcoming CPI may encourage the bears.
Furthermore, the Australian dollar is exposed to slow economic growth in other countries.
New Zealand dollar (NZD)
Short-term outlook: weak bullish.
Like the RBA, the Reserve Bank of New Zealand (RBNZ) is also battling inflation. So, there is an incentive to be hawkish. However, as with the Aussie, the Kiwi is a pro-cyclical currency with high sensitivity to developments in China.
https://www.tradingview.com/x/iE8BFCTm/
After showing similar price action to AUD, the New Zealand dollar has just broken a notable support level. The next target would, of course, be down at 0.58746, while the key resistance is at a higher level at 0.62220.
So, the technicals seem to contradict what is fundamentally happening with the Kiwi.
Long-term outlook: weak bullish.
The hawkish stance suggested by the RBNZ is the key bullish catalyst. Still, any out-of-consensus CPI prints in the near term and sensitivity to other global economies like China could derail the currency.
Canadian dollar (CAD)
Short-term outlook: weak bearish.
STIR markets indicate a 50/50 chance for the Bank of Canada to cut rates this month. The Governor of the Bank of Canada, Macklem, has also suggested this would happen if inflation became stickier.
Interestingly, last week's CPI numbers were all positive for the Canadian dollar - hence the 'weak bearish' outlook.
https://www.tradingview.com/x/8FgtP59j/
CAD remains in full-on range mode. Just as it looked to break the key support at 1.35896, it quickly reverted. The key resistance is at 1.37919. Based on the chart dynamics, it's anyone's guess where the price will go this week.
Long-term outlook: weak bearish.
The long-term outlook is the same as the short-term. Expectations of a rate cut remain the centre of bearish attention. However, CAD may be redeemed by encouraging oil prices.
Swiss franc (CHF)
Short-term outlook: bearish.
STIR markets were predictably accurate with their 76% chance of the Swiss National Bank (SNB) cutting the interest rate last Thursday. Secondly, SNB expects a moderate improvement in inflation and GDP (Gross Domestic Product) and unemployment to rise slightly in the near term.
https://www.tradingview.com/x/SRgUwwjl/
The market recently attempted to break a key support area for the Swiss franc. However, the latest expected rate cut for the Swiss franc's interest rate caused a U-turn.
Now, USD/CHF's key support and resistance levels lie at 0.88268 and 0.91582, respectively.
Long-term outlook: bearish.
The expected rate cut in the next SNB meetings (in September and December 2024) is the key bearish driver for the Swiss. However, the bank's willingness to intervene and geo-political events may give the latter some upside.
Conclusion
On the technical side, it will be interesting to see if Aussie and CAD could breach their ranges. Let's also see if the yen may find some strength for a change this week.
The key news to diarise this week includes the minutes by the RBA and Fed, the year-on-year euro inflation rate, and the CAD unemployment rate.
So, that's it for this report - we hope you are well-prepared!
City Traders Imperium | Funding For Traders
- Est. Since 2018.
- Up to 100% Profit Share.
- Balance Based Drawdown.
- 1-Step & 2-Step Funded Accounts.
citytradersimperium.com/
- Est. Since 2018.
- Up to 100% Profit Share.
- Balance Based Drawdown.
- 1-Step & 2-Step Funded Accounts.
citytradersimperium.com/
Pubblicazioni correlate
Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.