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The Monday after July 4th


Jul.07.2014

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Did you get to have a long weekend? US markets were closed on Friday for the 4th July weekend. A vast amount of European traders also took the opportunity for an extended weekend, knowing that trading volumes were going to be particularly light.

Over the weekend we've seen some noise from Europe, which includes the ECB's Lautenschlager saying that he "absolutely does not" see bond buying by the central bank as being on the horizon. This contrasts to Mario Draghi's comments at the ECB press conference just a day earlier - though we do concede that Mr Draghi may have been talking more in the interests of weakening the European currency, Mr. Euro .

Another German banker in the news is Jens Weidmann, head of the German Central Bank. Matteo Renzi, the Italian PM, has taken offense at Mr Weidmann's comments that Italy is leveraging Europe's reputation as a "boring old auntie" to try and soften the rules on austerity and budget control. Mr Renzi's response was to say that "The Bundesbank does not have among its tasks to take part in the Italian political debate... Europe belongs to European citizens, not to bankers, neither Italian or German bankers". Italy 1 - 0 Germany.

France's finance minister wants there to be a rebalancing of global currencies, with less dominance of the US Dollar. Mr Sapin is using the punishment that BNP Paribas were given - not being able to clear US Dollars - as a launch pad for the issue he believes Europe faces. Speaking to the FT he said "We (Europeans) are selling to ourselves in dollars, for instance when we sell planes. Is that necessary? I don't think so. I think a rebalancing is possible and necessary".

In Ukraine, forces have taken back the main separatist stronghold town of Slaviansk, leaving just Donetsk as the major city in pro-Russian hands. The advance by government forces will be seen as a positive for Ukrainian and regional stability - assuming Vladmir Putin lets it stand.

Goldman Sachs have got Dollar asset trading off to a strong start this morning, after they revised their US rate rise forecasts this weekend. Following Thursday'sstrong employment report from the US, the bank now expect the Federal Reserve to start raising rates in Q3 of 2015, rather than Q1 of 2016. The marked move forward has given Treasuries and the US Dollar a boost in early trading, whilst everything else has been pretty static.

This week looks fairly quiet compared to last, with the key highlights on the economic calendar being the minutes from the last Fed meeting and a host of Fed speakers. We don't see a big chance of anything revolutionary coming out of the Fed, only comments along the lines of 'when the time is right, we will act decisively, we've just got to work out when that is'. The UK calendar sees a GDP estimate from the NIESR tomorrow, some house price data and the Bank of England rate announcement, though we'll have to wait a couple of weeks to read the minutes from the meeting, which will be the more interesting part for investors.

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Intraday Forex Technical Levels

 

EUR/USD Intraday: key resistance at 1.3615.

Invest Diva likes: Short positions below 1.3615 with targets @ 1.3575 & 1.355 in extension.

If pair goes nuts: Above 1.3615 look for further upside with 1.364 & 1.3675 as targets.

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

Supports and resistances:
1.3675
1.364
1.3615
1.3597 Last
1.3575
1.355
1.3535

GBP/USD Intraday: consolidation in place.

Invest Diva likes: Short positions below 1.718 with targets @ 1.711 & 1.709 in extension.

If pair goes nuts: Above 1.718 look for further upside with 1.72 & 1.7235 as targets.

What’s up on the Forex dance floor: The RSI lacks upward momentum.

Supports and resistances:
1.7235
1.72
1.718
1.7134 Last
1.711
1.709
1.7055

USD/JPY Intraday: bullish bias above 101.8.

Invest Diva likes: Long positions above 101.8 with targets @ 102.25 & 102.45 in extension.

If pair goes nuts: Below 101.8 look for further downside with 101.65 & 101.5 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. Indeed, the pair is seen as drawing a consolidation a slightly declining channel ahead of another up move.

Supports and resistances:
102.65
102.45
102.25
101.925 Last
101.8
101.65
101.5

USD/CHF Intraday: bullish bias above 0.8925.

Invest Diva likes: Long positions above 0.8925 with targets @ 0.896 & 0.8975 in extension.

If pair goes nuts: Below 0.8925 look for further downside with 0.89 & 0.888 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:
0.8985
0.8975
0.896
0.8939 Last
0.8925
0.89
0.888

NZD/USD Intraday: the downside prevails.

 

Invest Diva likes: Short positions below 0.876 with targets @ 0.8710 & 0.868 in extension.

If pair goes nuts: Above 0.876 look for further upside with 0.879 & 0.8835 as targets.

What’s up on the Forex dance floor: As long as 0.876 is resistance, look for choppy price action with a bearish bias.

Supports and resistances:
0.8835
0.879
0.876
0.8746 Last
0.8710
0.868
0.8655

AUD/USD Intraday: the downside prevails.

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 0.9445 & 0.9505 as targets.

What’s up on the Forex dance floor: The RSI lacks upward momentum.

Supports and resistances:
0.9505
0.9445
0.941
0.9363 Last
0.9325
0.929
0.9255

USD/CAD Intraday: bullish bias above 1.0615.

Invest Diva likes: Long positions above 1.0615 with targets @ 1.0695 & 1.0725 in extension.

If pair goes nuts: Below 1.0615 look for further downside with 1.058 & 1.0555 as targets.

What’s up on the Forex dance floor: The RSI has just landed on a support around 30% and is reversing up.

Supports and resistances:
1.075
1.0725
1.0695
1.0639 Last
1.0615
1.058
1.0555

 US Index Levels

S&P500

Long positions above 1964 with targets @ 1982 & 1990 in extension.

Alternative scenario: Below 1964 look for further downside with 1956 & 1950 as targets.

Dow Jones

Long positions above 16870 with targets @ 17000 & 17050 in extension.

Alternative scenario: Below 16870 look for further downside with 16790 & 16715 as targets.

Nasdaq 100

Long positions above 3882 with targets @ 3931 & 3955 in extension.

Alternative scenario: Below 3882 look for further downside with 3850 & 3829 as targets.

Russell 2000

Long positions above 1194 with targets @ 1211 & 1217 in extension.

Alternative scenario: Below 1194 look for further downside with 1186 & 1177 as targets.

 

 

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