The EURCAD broke the crucial support and returned to its main bearish trend
(Tomasz Wisniewski – Axiory Global Ltd.)
The proper EURCAD downtrend started in March of 2020. Today, the pair is taking another important step, which refreshes the bearish sentiment. For the past two years, the EURCAD is moving in very technical sequences. We’ve seen some proper drops and flat corrections. The most recent correction started in April and it looks like it came to an end just today.
The correction that we’re talking about was a big rectangle pattern restricted by the 1.376 resistance (red) supported at 1.34 (green). Both levels were tested frequently resulting in pullbacks to the inside but not today.
Today, traders chose a side and decided to go south. The euro is currently weakening across the globe and the EURCAD pair is in the same boat, If the price breaks the 1.34 support and drops lower. Currently the drop is the first step towards a proper sell signal. To secure a bearish victory we need to see if the daily candle will close below the green area. As for now, it looks optimistic and chances for a further slide are significant.
Could EURGBP fall below the 0.85 level?
Looking at EURGBP’s chart, we can see that it is currently trading at the rate of 0.8594. Having tested its resistance level at around 0.8650, we expect its rate to fall towards its support level at around 0.85. If it will be able to hold above that level, then an upward reaction could be expected otherwise it should fall further.
High Turkish inflation keeps pressure on TRY
(Alexander Kuptsikevich – FxPro Financial Services Limited)
The Turkish lira has been losing more than 1% over the last 24 hours following the release of another batch of inflation statistics which show no sign of easing and trades near 17.0.
Consumer prices rose by 5% during June, and the annual growth rate accelerated to 78.6%.
The annual producer price growth accelerated to 138.3% compared to 132.2% the month before. The development of this index indicates that there is still room for consumer inflation growth acceleration as manufacturers still have room to pass on increased costs to final prices. Judging by the increasing monthly rate of consumer price increases, manufacturers are accelerating this cost pass-through, but they are not there yet.
Last month’s end, we saw the Turkish lira gain protection on a pullback near the December highs, when the USDTRY fell to 16 from 17.40. However, this corrective pullback was short-lived and failed to change the trend. The USDTRY has stayed above below the 50-day moving average.
Rising inflation and a central bank constrained by Erdogan do not make the recent jump in the lira sustainable. Instead, it will only inflame the currency market speculators, who will quickly return it to the recent highs near 17.40.
The highest gap between inflation and the key rate (now at 14%) amongst the world’s biggest economies continues to pressure the Turkish currency. Therefore, an even deeper depreciation is possible soon, which can only be stopped by an even greater restriction of capital controls or central bank interventions.