EURUSD: The Euro on defense mode, but for how long?
(Vasilis Tsaprounis – TopFX)
Once again the pair confirmed the expectations and after a daily drop below 1,04 on Thursday it reacted strongly with gains of around 100 basis points approaching 1,05 again.
It seems that ” buy on dips ” strategies, turned out to be one of the most appropriate as we noted in yesterday’s report.
The key macroeconomic picture is unchanged. The US core Personal Consumption Expenditure (PCE) Price Index came in as expected, falling slightly to 4.7 from 4.9 in the previous month, with no surprises. But it is a small indication that the latest interest rate hikes by Fed may have the first positive impact in terms of containing inflation.
Markets now seem to have ” digested ” that the Fed-ECB gap will remain as the ECB appears to be reacting very cosernative to the prospect of a rate hike, even as euro zone inflation stabilizes above 8%.
The pair is looking to find direction and through the technical picture of the charts, but from which we have mixed conclusions.
For this reason and in view of the absence of important events throughout the day we will prefer to maintain neutral view by repeating yesterday’s idea for ” buying in dips ” strategies for the Euro.
The view that the critical 1,0350-70 support level is now likely to be broken remains.
NZDUSD breaks crucial support
(Tomasz Wisniewski – Axiory Global Ltd.)
Asian sessions are usually quiet on the Forex market, volatility is lower and there are no strong, directional movements.
The first day of July was different though. The price moved and it moved a lot. Interestingly, it went against what was happening during the end of the European and American session but it was in line with the mid-term trends.
In today’s piece, NZDUSD, where overnight the price managed to break an absolutely crucial horizontal support, which triggered a great sell signal. Let me explain the situation from the very beginning: NZDUSD had been in a downtrend for quite some time, but most recently, it managed to establish a concrete support on the psychological barrier of 0.62.
This support worked in the middle of May and June and also yesterday, until sellers decided it was enough and broke it with a nice bearish candle. Also, in the last two weeks, the price created a nice pennant (black lines), which ended with a breakout to the downside and that could have been a hint for us regarding the direction of the next movement…and it was.
As long as we stay below the 0.62 resistance, we do have a very strong sell signal. The price climbing back above that resistance would mean a false breakout and would be a great signal to buy. But for now, this scenario is less likely to happen.