Summary
- the news that North Korea test-launched ICBM triggered risk-off sentiment and boosted safe havens like gold and the Japanese dollar, which is likely to be short-lived.
- there are some key economic data to look forward to, including PMI from both Euro Zone and UK, EU’s retail sales month-over-month in May and the final estimate for U.S durable goods orders MoM in May and factory orders as well.
- in addition, we will get FOMC latest minutes from the monetary meeting in June tomorrow 2:00AM BJT（GMT 14:00）.
The US markets closed Tuesday, 4, July as Americans observance Independence Day and the Dollar continue to hover and inch higher toward the resistance offered by a falling trend line on the H4 chart in the quiet session. However, the dollar opened lower and started to decline and gold and the Japanese dollar jumped amid risk-off trading early morning as North Korea test-launched ICBM intensified the geopolitical tensions. We are gearing up for the release of minutes from Federal Reserve’s last monetary policy meeting tomorrow at 2:00 BJT（GMT 14:00）as markets will examine to see if there are any indications as to when the FED could signal the specific timing on tapering its sizeable balance sheet.
Technical
The Dollar Index (DXY) slipped after meeting resistance on its H4 chart. Here, the short-term moving averages were held by the long-term moving averages and shifted their state to standing close from diverging to each other. Meanwhile, the slope of the long-term moving averages flattened. All these observations suggest the rally of the Index within the downtrend is coming to the end. The Dollar would bottom out again following a positive minutes.
As to non-US currencies, the Euro rebounded slightly this morning after it found support at its rising trend line on its 4 hour chart. A bullish breakout from 60-period EMA on H1 chart and Tuesday’s highs could sustain price rally. With holding support at its rising trend line on its 4 hour chart as well, the sustainability of the Pound short-term rebound could be in focus. The commodity Australian dollar declined sharply against the Dollar on the less hawkish policy statement accompanied by the interest rates decision released by RBA on Tuesday. The Aussie rallied to correct its decline from late yesterday’s session until this morning in Asian trading. Let’s wait and see if the resistance levels at EMA30 and EMA60 on the H1 chart will be effectively held or not.
Let’s take a look at the precious metals. Gold corrected and rallied slightly in line with risk-off sentiment today after the sharp decline. With limited and transitory effects of the short-term events, it may resume its downtrend in European session. On the upside, it now faces resistance at 1230 and around 1233.
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.