Global shares are enjoying a so called “relief rally” – a recovery after severe losses, led by the Shanghai Index which is trading higher by over 2%. Last night, Dow Jones and SP500 enjoyed the biggest percentage gain in 4 years. The positive stock environment is benefiting the USD, hence the drop of the EURUSD to 1.1320 levels, from 1.1715 3 days ago. USD was also lifted by surprisingly positive US durable Goods data which added sizeable gains to Monday’s more modest advance. GBPUSD dropped more consistently than the EUR however the losses were contained at the 1.5460 level, which is also the 100 day moving average.
USD is now the 2nd strongest currency of this week, next to the JPY. The main market moving event today will be the US Q2 GDP. Markets expect that the numbers will show a rise of 3.2%. A closely watched event will also be the Jobless claims and pending home sales data as well.
New York Fed’s William Dudley suggested that a rate hike in September appeared less likely now. According to him, “the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago”. Watch out for US data, beating expectations will make discussions about October Rate hikes become more and more likely.
Trading quote of the day: “Your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed.” – Peter Lynch
USDJPY
Pivot: 120.25
Likely scenario: Short positions below 120.25 with targets @ 118.2 & 117.1 in extension.
Alternative scenario: Above 120.25 look for further upside with 121.3 & 122.35 as targets.
Comment: As long as 120.25 is resistance, look for choppy price action with a bearish bias.
USDCAD
Pivot: 1.324
Likely scenario: Long positions above 1.324 with targets @ 1.3355 & 1.34 in extension.
Alternative scenario: Below 1.324 look for further downside with 1.32 & 1.3145 as targets.
Comment: The RSI lacks downward momentum.
USDCHF
Pivot: 0.9375
Likely scenario: Long positions above 0.9375 with targets @ 0.9505 & 0.955 in extension.
Alternative scenario: Below 0.9375 look for further downside with 0.9295 & 0.9245 as targets.
Comment: The RSI is well directed.
GOLD
Pivot: 1140
Likely scenario: Short positions below 1140 with targets @ 1126 & 1119 in extension.
Alternative scenario: Above 1140 look for further upside with 1146.5 & 1153 as targets.
Comment: The RSI advocates for further decline.
OIL
Pivot: 40
Likely scenario: Short positions below 40 with targets @ 37.75 & 37 in extension.
Alternative scenario: Above 40 look for further upside with 40.6 & 41.25 as targets.
Comment: As long as 40 is resistance, likely decline to 37.75.
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