The greenback lingered near its strongest level since early April against the euro on Monday, as financial markets looked ahead to the Federal Open Market Committee (FOMC) meeting this week for clues on the timing of stimulus tapering.
The US Dollar was also close to a 12-day high on the safe-haven yen as record-high US equity markets lifted risk outlook.
The dollar index, which measures the currency against six major currencies, stood at 92.920 at the start of the week, off from last week’s 3-1/2-month high of 93.194. It was still up about 3.8% from a recent low on May 25 as an improving US economy bolstered the outlook for the Federal Reserve to start paring asset purchases as early as this year.
Next week is busy for the last week of July. The most important economic data next week will be:
Traders will be watching for updated inflation data out of the US, Eurozone, Canada, and Australia on Wednesday. Progress reports on economic improvements0 across the US and Euro-area will also be provided with advanced Q2 GDP data slated for release on Thursday and Friday. The Euro, in addition to the DAX 30, CAC 40, and STOXX 50, are all ready to absorb this new information through the lens of how it might sway ECB policy given its latest strategy review and new perspective on inflation. Last but surely not least, US equity investors will be bombarded with quarterly results as earnings season kicks into full gear.
Major Currencies Performance and Signals
EUR/USD
The euro initially tried to rally during the week but then gave back the gains as we continue to slide lower. At this point, the market is very likely to be very noisy, but I think rallies will probably be faded during this week.
FORECAST: SELL
Resistance: 1.1800, 1.1850, 1.1900
Support: 1.1750, 1.1700, 1.1650
GBP/USD
Mixed UK data still indicated economic growth in the country. Brexit and the pandemic keep limiting demand for the pound and the GBPUSD pair is losing bullish strength, but there are no signs of an upcoming drop.
FORECAST: NEUTRAL
Resistance: 1.3800, 1.3850, 1.3900
Support: 1.3750, 1.3700, 1.3650
AUD/USD
The Australian dollar bears have shown their teeth. This week investors will be waiting for the Australian CPI and the US FOMC decisions.
FORECAST: SELL
Resistance: 0.7400, 0.7450, 0.7500,
Support: 0.7300, 0.7250, 0.7200
USD/JPY
The USDJPY pair continues with its previous week’s rally and continues to trade higher. Bulls are not in a mood to settle down any time soon if the price remains strong above 110.50. Momentum Oscillators hold onto a positive momentum, indicating more upside.
FORECAST: BUY
Resistance: 110.50, 111.00, 111.50
Support: 110.00, 109.50, 109.00
USD/CAD
The Loonie consolidated gains for the last two previous sessions with bulls facing stong resistance near the 1.2580-1.2620 zone. The view for this week is neutral.
FORECAST: NEUTRAL
Resistance: 1.2650, 1.2700, 1.2750
Support: 1.2600, 1.2550, 1.2500
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