July-06, 2022, Currency trading daily analysis and forex market latest forecast, by forex forum.
The USD/CAD rises for the second consecutive day, extending its weekly gains to almost 1.50%, courtesy of a buoyant greenback and falling crude oil prices. At the time of writing, the USD/CAD is trading at 1.3066, albeit in positive territory, shy of the YTD high around 1.3083.
Sentiment stays negative as USD/CAD traders prepare to digest June’s Federal Reserve Open Market Committee (FOMC) minutes. During the New York Session, US Services and Composite-related PMIs, released by S&P Global and the Institute for Supply Management (ISM), beat expectations but trailed May’s reading, illustrating that the US economy is slowing down.
The US Dollar Index is gaining 0.66%, up at 107.194, underpinned by high US Treasury yields. Contrarily, the US crude oil benchmark, WTI, plunges 2.74% in the day, exchanging hands at $96.62 per barrel, a tailwind for the major.
On the other hand, The dollar rose to fresh 20-year highs on Wednesday and the euro tumbled to a new two-decade low as rising energy prices and potential shortages cast a long shadow over the euro zone's economy.
The dollar index, which tracks the greenback versus a basket of six currencies, shot above 107, while the euro tumbled below $1.02, both for the first time since December 2002.
The United States is a net energy exporter, while Germany is running a trade deficit for the first time since 1991, he said.
"High interest rates in the U.S. and a trade shift which is beneficial to the U.S. adds to sustainability of the dollar’s strength," he said.
The dollar index rose 0.544%, with the euro down 0.87% to $1.0177.
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Elsewhere, The EUR/USD pair is trading in the red at 1.0169 at the time of writing. The bias remains bearish after taking out strong downside obstacles and because the Dollar Index tries to resume its growth.
Fundamentally, the Eurozone data came in mixed today. The German Factory Orders rose by 0.1% versus a 0.5% drop expected, while the Retail Sales surged by 0.2% versus 0.4% expected.
Staying below the lower median line and making a new lower low, dropping and closing below the 1.0161 could activate further drop towards the warning line. This scenario could bring short-term selling opportunities.
The rising cost of living continues to squeeze household incomes ahead of Japan’s upper house election on Sunday. A recent poll suggests that while the governing LDP party are likely to secure a majority victory, support for the current prime minister Kishida is waning. Approval ratings for Kishida came in at 54%, down from 59% three weeks ago.
USD/JPY KEY TECHNICAL LEVELS
The 4-hour chart shows price action consolidating above 135 while remaining in what appears to be a symmetrical triangle. Such a pattern is inherently neutral – meaning that we could be seeing signs of bullish fatigue in the pair.
The daily chart further supports the view that the market could be at a critical juncture, as the bullish advance appears to be slowing. 134.50 stands in the way of a lower move for now, with 131.35 a really key level for continued downside momentum. Resistance lies at the October 1998 high of 136.89 and 139.26 if we are to reach a new high.
USD/JPY: Retail trader data shows 23.31% of traders are net-long with the ratio of traders short to long at 3.29 to 1.
Further weakness in the European currency now drags EUR/GBP to new 3-week lows in the 0.8540 region on Wednesday.
EUR/GBP looks to UK politics, EUR selling
EUR/GBP sheds ground for the third session in a row midweek, heavily influenced by the intense decline in the single currency in response to recession fears in the broader Euroland in combination with noticeable ECB inaction.
EUR/GBP key levels
The cross is losing 0.43% at 0.8547 and a breach of 0.8511 (low June 16) would expose 0.8485 (low June 9) and finally 0.8441 (200-day SMA). On the other hand, the next up barrier emerges at 0.8678 (monthly high July 1) followed by 0.8721 (2022 high June 15) and then 0.9085 (2021 high January 6).
The AUDUSD remains in red and pressuring key supports at 0.6761/58 (new two-year low, posted yesterday / 50% retracement of 0.5509/0.8007 rally).
Soured risk sentiment on growing recession fears that boosted demand for safe-haven dollar, keep the Aussie dollar in defensive mode.
Violation of 0.6761/58 pivots is likely to spark fresh bearish acceleration on negative signal and triggering stops parked below, with possible extension towards 0.6463 (Fibo 61.8% / monthly cloud base).
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