Today’s Forex Guide

US Data gets Ms. USA going


Jul.31.2014

The market was treated to two key announcements from the US yesterday, which help Ms. USA aka US dollar or Greenback to move up against her major counterparts.

usa_flag zoom

US GDP was first up and showed that the second quarter bounced back from the polar vortex with a vengeance. The headline output for Q2 came in at 4%, a vast improvement on Q1's 2.9% fall - which was actually revised along with these numbers to show a fall of 'just' 2.1%. The growth was labelled 'the fastest in a decade', but that's not surprising when you get to catch up from the previous quarter, which was one of the biggest declines on record.

One positive to take from the reading is that consumer spending was one of the stronger areas, which is something that is likely to carry forward into the third quarter of this year, meaning this could, repeat, could, be a sustainable trend. The news was an instant hit with forex traders, who bought into the Dollar, pushing it to multi-month highs against some major currencies. It wasn't such a hit with equity markets though as they sold off at the prospect of higher rates and more investment competition - the exception being the NASDAQ which was boosted by tech firms clinging to the coat tails of Twitter's 20% one day climb.

Next up on the economic agenda was the Federal Reserve's monetary policy announcement. This delivered no surprises in terms of action - they cut another $10bn from their monthly asset purchases and kept interest rates on hold - what the market was looking for would be contained within the accompanying statement... what they got was one dissenter in the ten strong voting pane. Charles Plosser, head of the Philadelphia Federal Reserve is the first, in what could be a growing line of, decision makers that want to see the Fed move towards a tighter policy more quickly. He was a lone voice though and a couple of more dovish comments from Janet Yellen meant that the market wasn't able to jump onto the rate hike bandwagon with both feet. As such the Dollar lost some of the gains it saw from the GDP data and we're almost back to where we started!

While the Fed continues to provide an ultra-loose monetary policy, stock prices have continued to rise to what many call unsustainable levels. The market seems to have a deaf ear when it comes to these calls, but Alan Greenspan, former Chairman of the Fed spoke to Bloomberg yesterday and chipped in his two cents worth, saying "the stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction". This comes as the S&P looked like it was going to crack the 2,000 level this month, but with one day left and 1.5% to go, it's now looking unlikely that July goes into the record books.

In South America, Argentina have had their credit rating cut by S&P from CCC- to SD (Selective Default). Negotiations on paying "vulture funds" had broken down overnight, but there is still today to get the problem sorted.

Another story to draw your attention to: Germany and Russia might be working on plans to end the Ukraine conflict peacefully, according to the Independent, with a land for gas deal that keeps everyone happy. In the interim the G7 issued a statement saying they are ready to intensify the costs on Russia and condemning their actions in Ukraine. More sanctions details have been given, but we'll see if more coverage comes on Merkel's possible backroom deals before we bore you with the details.

Today's data includes German retail sales and unemployment as well as European inflation, Italian unemployment and French consumer spending. None of which is likely to bode well for the single currency. More jobs data from the US this afternoon and some big corporate earnings data out on both sides of the pond could also shake things up a bit.
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Intraday Forex Technical Levels

EUR/USD Intraday: key resistance at 1.3405.

Invest Diva likes: Short positions below 1.3405 with targets @ 1.336 & 1.335 in extension.

If pair goes nuts: Above 1.3405 look for further upside with 1.3425 & 1.3445 as targets.

What’s up on the forex dance floor: The pair has struck against its resistance and remains under pressure.

Supports and resistances:
1.3445
1.3425
1.3405
1.3382 Last
1.336
1.335
1.3325

GBP/USD Intraday: under pressure.

Invest Diva likes: Short positions below 1.6925 with targets @ 1.685 & 1.6815 in extension.

If pair goes nuts: Above 1.6925 look for further upside with 1.6965 & 1.7 as targets.

What’s up on the forex dance floor: The pair has struck against its resistance and remains under pressure.

Supports and resistances:
1.7
1.6965
1.6925
1.6877 Last
1.685
1.6815
1.678

USD/JPY Intraday: the upside prevails.

 

Invest Diva likes: Long positions above 102.55 with targets @ 103.15 & 103.4 in extension.

If pair goes nuts: Below 102.55 look for further downside with 102.4 & 102.15 as targets.

What’s up on the forex dance floor: The pair remains on the upside as the RSI is turning up.

Supports and resistances:
103.7
103.4
103.15
102.873 Last
102.55
102.4
102.15

USD-JPY-30-min-forex-chart

USD/CHF Intraday: the bias remains bullish.

Invest Diva likes: Long positions above 0.9075 with targets @ 0.911 & 0.913 in extension.

If pair goes nuts: Below 0.9075 look for further downside with 0.905 & 0.9025 as targets.

What’s up on the forex dance floor: The pair is rebounding above its support.

Supports and resistances:
0.9155
0.913
0.911
0.9094 Last
0.9075
0.905
0.9025

NZD/USD Intraday: key resistance at 0.852.

Invest Diva likes: Short positions below 0.852 with targets @ 0.846 & 0.843 in extension.

If pair goes nuts: Above 0.852 look for further upside with 0.856 & 0.8585 as targets.

What’s up on the forex dance floor: As long as 0.852 is resistance, look for choppy price action with a bearish bias. Prices are trading in a bearish channel.

Supports and resistances:
0.8585
0.856
0.852
0.8489 Last
0.846
0.843
0.84

AUD/USD Intraday: capped by a negative trend line.

Invest Diva likes: Short positions below 0.933 with targets @ 0.926 & 0.923 in extension.

If pair goes nuts: Above 0.933 look for further upside with 0.937 & 0.939 as targets.

What’s up on the forex dance floor: The RSI is bearish and calls for further downside. The pair is capped by its declining 50-period moving average (in blue).

Supports and resistances:
0.939
0.937
0.933
0.9294 Last
0.926
0.923
0.9205

 

USD/CAD Intraday: further upside.

Invest Diva likes: Long positions above 1.0875 with targets @ 1.092 & 1.095 in extension.

If pair goes nuts: Below 1.0875 look for further downside with 1.084 & 1.0815 as targets.

What’s up on the forex dance floor: The immediate trend remains up and the momentum is strong. The pair is supported by its 50-period moving average (in blue).

Supports and resistances:
1.099
1.095
1.092
1.0917 Last
1.0875
1.084
1.0815

USD-CAD-30-minute-forex-chart
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