Today’s Forex Guide

Angela Merkel turns 60 | USD/CAD Focus


Jul.17.2014

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It has been a slow summer for our dancing currency pairs but we are still seeing some action on the forex dance floor. Only yesterday we mentioned that Putin might have got off the hook with the US unlikely to lift their crude export ban this year. apparently this touched a nerve in the White House and yesterday they added a number of Russian businesses to their sanctions black list. Rosneft are the biggest name to be added to the list, but banks, defense companies and other energy firms have also been added. The additional sanctions came as a result of Russia failing to fulfil promises to de-escalate Ukrainian troubles. Already this morning Russia's stock market is down close to 3% and the Ruble has dropped against the Dollar.

It wasn't an easy day for Janet Yellen on Capitol Hill yesterday. The Fed Chair got quite a grilling from the House Financial Services Committee, who suggested that she tie monetary policy to a mathematical formula, so that forward guidance is significantly clearer, which, according to Ms Yellen, "would be a grave mistake". Ms Yellen is concerned that politicians want too much say in how the Fed conducts its business and the legislation that is being presented to the House puts at risk the central bank's independence, potentially making it a political tool.

Today we get to look at European inflation numbers early on. A weak print is likely to further weigh on the euro as expectations for Draghi to act increase. There are a lot of government debt issues from the UK, Spain and France today which could have an impact on the markets. We'll also get to see US jobless claims and housing stats. It should be noted that Angela Merkel turns 60 today and to celebrate she and a number of guests will be sitting down to a lecture on economics (that's a true story).

In Loonie news the Bank of Canada (BOC) is no longer hawkish with its monetary policy statement, as Governor Stephen Poloz admitted his “serial disappointment” over the Canadian economy.

Although policymakers agreed to keep interest rates on hold for now, they acknowledged that several downside risks remain. In fact, BOC officials decided to cut their growth forecasts for Canada from 2.3% to 2.2% this year and from 2.5% to 2.4% for 2015. Aside from that, they also downgraded their GDP estimates for the U.S. and the global economy.

So here is where Ms. USA is headed versus Mr. Loonie: Reversing after reaching a top at 1.127, the pair is dancing below the Ichimoku cloud and has yet to reach the 50% Fibonacci level. As long as the resistance at 1.094 is not surpassed, the risk of the break below 1.064 (38% Fibo level) remains high and we could see more drops towards 1.044.

USDCAD technical analysis candlestick chart fibonacci resistance Ichimoku RSI
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EUR/USD Intraday: under pressure.

Invest Diva likes: Short positions below 1.354 with targets @ 1.351 & 1.3475 in extension.

If pair goes nuts: Above 1.354 look for further upside with 1.3575 & 1.362 as targets.

What’s up on the forex dance floor: As long as the resistance at 1.354 is not surpassed, the risk of the break below 1.351 remains high.

Supports and resistances:
1.362
1.3575
1.354
1.3529 Last
1.351
1.3475
1.345

GBP/USD Intraday: key resistance at 1.715.

Invest Diva likes: Short positions below 1.715 with targets @ 1.709 & 1.7055 in extension.

If pair goes nuts: Above 1.715 look for further upside with 1.718 & 1.722 as targets.

What’s up on the forex dance floor: As long as the resistance at 1.715 is not surpassed, the risk of the break below 1.709 remains high.

Supports and resistances:
1.722
1.718
1.715
1.7104 Last
1.709
1.7055
1.7

スライド1

USD/JPY Intraday: rebound expected.

Invest Diva likes: Long positions above 101.4 with targets @ 101.8 & 102.05 in extension.

If pair goes nuts: Below 101.4 look for further downside with 101.2 & 101.05 as targets.

What’s up on the forex dance floor: The RSI has just broken above a bearish trend line. The 101.4 congestion area is expected to limit the downside potential.

Supports and resistances:
102.25
102.05
101.8
101.452 Last
101.4
101.2
101.05

スライド3

USD/CHF Intraday: bullish bias above 0.895.

Invest Diva likes: Long positions above 0.895 with targets @ 0.9 & 0.9015 in extension.

If pair goes nuts: Below 0.895 look for further downside with 0.891 & 0.8895 as targets.

What’s up on the forex dance floor: The next resistances are at 0.9 and then at 0.9015.

Supports and resistances:
0.904
0.9015
0.9
0.8978 Last
0.895
0.891
0.8895

NZD/USD Intraday: the downside prevails.

Invest Diva likes: Short positions below 0.8725 with targets @ 0.8675 & 0.865 in extension.

If pair goes nuts: Above 0.8725 look for further upside with 0.8745 & 0.8785 as targets.

What’s up on the forex dance floor: As long as the resistance at 0.8725 is not surpassed, the risk of the break below 0.8675 remains high.

Supports and resistances:
0.8785
0.8745
0.8725
0.8687 Last
0.8675
0.865
0.863

AUD/USD Intraday: caution.

Invest Diva likes: Short positions below 0.941 with targets @ 0.9325 & 0.929 in extension.

If pair goes nuts: Above 0.941 look for further upside with 0.9455 & 0.9485 as targets.

What’s up on the forex dance floor: Intraday technical indicators are mixed and call for caution.

Supports and resistances:
0.9485
0.9455
0.941
0.9376 Last
0.9325
0.929
0.9255

USD/CAD Intraday: the bias remains bullish.

Invest Diva likes: Long positions above 1.0695 with targets @ 1.0825 & 1.0855 in extension.

If pair goes nuts: Below 1.0695 look for further downside with 1.0655 & 1.0625 as targets.

What’s up on the forex dance floor: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Supports and resistances:
1.0905
1.0855
1.0825
1.0748 Last
1.0695
1.0655
1.0625

 

 US Index Levels

S&P500

Short positions below 1978 with targets @ 1959 & 1953 in extension.

Alternative scenario: Above 1978 look for further upside with 1984 & 1986 as targets.

Dow Jones

Short positions below 17070 with targets @ 16930 & 16885 in extension.

Alternative scenario: Above 17070 look for further upside with 17115 & 17170 as targets.

Nasdaq 100

Short positions below 3942 with targets @ 3879 & 3865 in extension.

Alternative scenario: Above 3942 look for further upside with 3961 & 3981 as targets.

Russell 2000

Short positions below 1159 with targets @ 1137 & 1125 in extension.

Alternative scenario: Above 1159 look for further upside with 1176 & 1194 as targets.

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