SUMMARY

  • The LFO index of business confidence in Germany came in at 88.6 points, compared to the 89.4 expected. Spanish GDP is expected to grow by 2.4% year-on-year.
  • Yesterday, the GBPUSD closed 0.34% higher, driven by a weaker dollar. Currently, the currency is up 0.09% at 1.2691.
  • After almost reaching the 160 level, the Bank of Japan intervened in the FX market, generating a correction to the 158.74 support.

 

Main events:

  • Consumer price index (CPI) in Japan.
  • GDP in Spain
  • CPI in Canada
  • Conference Board in the United States
  • API weekly crude oil inventories

EURUSD

Specifications

  • Leverage: 200
  • Units: 100,000
  • Margin requirement: USD$539
  • Example: 100 pips change in EURUSD price = USD1,000 potential PL.
  • Support 1: 1,0734
  • Support 2: 1,0730
  • Resistance 1: 1,0736
  • Resistance 2: 1,0738

Fundamental Analysis

  • The LFO index of business confidence in Germany came in at 88.6 points, compared to the 89.4 expected. Spanish GDP is expected to grow by 2.4% year-on-year. The Eurogroup meeting continues. Investors await statements from FOMC leaders. EURUSD is currently up +0.03% at 1.0736.
  • In the US, the Conference Board is expected to release a reading of 100, down from 102, which would show a loss of business confidence. Traders are watching the FOMC meeting minutes to check the stance on inflation.
  • EURUSD is approaching the 1.0742 resistance zone. If the volume of long positions increases, the currency may try to reach 1.08529. RSI is at 63.38, still neutral, but close to the overbought zone. The moving averages point to buying.
  • According to analysts at Société Générale, the volume of long positions in the currency is very limited, so the trend could remain sideways.

GBPUSD

Specifications

  • Leverage: 200
  • Units: 100,000
  • Margin requirement: USD$686
  • Example: 100 pips change in GBPUSD price = USD1,000 potential PL.
  • Support 1: 1.2686
  • Support 2: 1.2683
  • Resistance 1: 1.2692
  • Resistance 2: 1.2695

Fundamental Analysis

  • Yesterday, the currency rose by 0.34%, driven by the weakness of the dollar. Currently, the currency is up +0.09% at 1.2691.
  • The currency’s upward movement is also due to traders’ expectations that the Bank of England will start cutting interest rates. According to stock analysts at ING, the Bank of England is expected to start cutting rates at its August 2024 meeting.
  • The currency is heading towards the resistance zone. The price is above the 200-day moving average. The RSI is at 63.03, in the neutral zone, but close to the overbought zone, which could trigger an initial profit-taking. The moving averages indicate buying.
  • In the UK, the market is watching the elections. Sunak’s party is trying to stay in power for another term.

USDJPY

Specifications

  • Leverage: 200
  • Units: 100,000
  • Margin requirement: USD$499
  • Example: 100 pips change in USDJPY price = USD1,000 potential PL.
  • Support 1: 159,27
  • Support 2: 159,22
  • Resistance 1: 159,41
  • Resistance 2: 159,50

Fundamental Analysis

  • After almost reaching the 160 level, the Bank of Japan intervened in the currency market, making a correction to the 158.74 support level. However, the uptrend remained, so buying volume was maintained, allowing the currency to recover to the current level of 159.36. Long-term traders are starting to look for the 160 level again.
  • Japan’s core CPI is expected to rise to 1.9% from 1.8% previously, indicating that inflation in Japan will increase slightly.
  • The currency remains in a resistance zone. The RSI is at 42.12, indicating neutrality, so the currency could start to turn sideways. The moving averages indicate a downward trend.
  • According to the Bank of Japan, the Japanese economy continues to recover. USDJPY remains near the intervention zone.

SOURCES

  • Thomson Reuters
  • Market watch
  • Bloomberg
  • Tradingview

 

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