It was supposed to be a quiet week until Thursdays Retail Sales however overnight the USD strengthened a lot over news that China had devalued its currency by almost 2% in an effort to revive its slumping economy. As a result most G7 pairs tumbled versus the USD with notable anti-hero being the AUD and NZD which are Chinas biggest trade partners in the region. To sum it up the PBoC has manually manipulated the peg to the USD, moving it up +2% and in line with the offshore rate. Instead of setting a daily exchange rate, the PBoC will use the market rate at the end of the day to determine the next day’s official rate.
Later in the EU session USD fell once again though, on news that the Greek bailout talks have been finalized. EURUSD rallied to 1.1050 breaking the significant resistance of 1.1036. GBPUSD has shifted into consolidation pattern after a slight bullish run. USDJPY continuous to recover after yesterday’s slight selloff and broke 124.62 resistance. EUR/CHF has rose more than 2.20% over the last two weeks and is back above the 1.08 threshold for the first time since January 15, printing fresh highs at 1.0845 this morning. Market focus will shift to Thursday’s Retail Sales out of the US.
Trading Quote of the Day: “If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time”.
USDJPY
Pivot: 124.4
Likely Scenario: Long positions above 124.4 with targets @ 125 & 125.2 in extension.
Alternative scenario: Below 124.4 look for further downside with 124.2 & 124.05 as targets.
Comment: The RSI is well directed.
USDCAD
Pivot: 1.31
Likely Scenario: Short positions below 1.31 with targets @ 1.299 & 1.296 in extension.
Alternative scenario: Above 1.31 look for further upside with 1.315 & 1.318 as targets.
Comment: The RSI lacks upward momentum.
GOLD
Pivot: 1093.7
Likely scenario: Long positions above 1093.7 with targets @ 1126.5 & 1135 in extension.
Alternative scenario: Below 1093.7 look for further downside with 1087.5 & 1083.5 as targets.
Comment: The RSI is bullish and calls for further upside.
OIL
Pivot: 43.9
Likely Scenario: Long positions above 43.9 with targets @ 45.4 & 46 in extension.
Alternative scenario: Below 43.9 look for further downside with 43.6 & 43.3 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
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