Weekly Technical Analysis For July 30th to August 3rd, 2018
EUR/USD: Euro tumbled last week after the ECB monetary policy meeting and press conference by President Mario Draghi. The ECB kept interest rates unchanged at 0%, as expected. ECB also kept to its planned timetable to move away from its accommodative monetary policy. Additionally, Draghi turned more dovish on inflation. He said the underlying inflation remains muted and they are seeing encouraging signs here and there. But it's very early to call victory. The short version of the ECB is that nothing's changed.
US economic growth accelerated to 4.1% in the second quarter, matching forecasts and underlining the case for the Federal Reserve to proceed with plans to gradually increase interest rates. The data is the fastest rate of growth since the third quarter of 2014.
Looking ahead, The FOMC Monetary Policy Meeting and Nonfarm Payrolls data will be significant in the upcoming week.
The Fed is scheduled to hold its policy meeting on Wednesday. There is no rate change expected from the Fed. However, traders expect to see a third rate hike in September. If the Federal Reserve projects a more aggressive interest rate hike outlook, the greenback would rise sharply.
Looking at US Jobs Report’s forecast, US Nonfarm Payrolls is expected to 190K jobs created after rising 213K the previous month. Unemployment Rate is expected to drop to 3.9% from 4.0%. Average hourly earnings will be another release to be followed closely at the same time and are expected to rise to 0.3% from 0.2%.
The EUR/USD pair closed last week above the daily support level of 1.1607. Watch out for the 1.1607 this week. As long as the price stays above that level, on a daily basis, the fall may be limited. In this case, we will face 1.1720 and 1.1812 as resistance levels. On the other hand, if the price breaks down below 1.1607, the next support level can be found at 1.1531.
Support: 1.1607 - 1.1531 - 1.1446
Resistance: 1.1720 – 1.1812 – 1.1884
GBP/USD: In the upcoming week, the BoE Interest Rate Decision will be the most important event from the UK. Investors expect a rate hike by 0.25% to 0.75% from 0.50%. We will focus on comments from Carney at the press conference for further clues on monetary policy.
The GBP/USD pair showed a downward movement significantly last week. In the event that the price continues to fall, we will see 1.3050 and 1.2961 as support levels. On the other hand, if the price shows an upward movement, the next resistance levels are holding at 1.3152 and 1.3241.
Support: 1.3050 – 1.2961 - 1.2844
Resistance: 1.3152 – 1.3241 - 1.3306
USD/JPY: The BoJ Monetary Policy Decision will be announced on Tuesday. No change is expected in monetary policy while painting a slightly better picture of the economy. The BoJ Governor Haruhiko Kuroda will hold a press conference afterward to discuss the decision. His comments will be significant for the yen.
As long as the USD/JPY pair stays above 110.86 on a four hourly basis, the greenback may gain more value versus the yen and we will follow the daily resistance level at 111.66. On the other hand, if the price breaks down 110.86, the next support level is given at 109.90.
Support: 110.86 - 109.90 -109.35
Resistance: 111.66 - 112.46 - 112.63
Gold: The Gold price closed last week below the key level of 1225. As long as the price stays below 1225, on a four hourly basis, the selling pressure may continue and we will follow 1214 and 1207 as support levels. On the other hand, if the yellow metal’s price goes beyond 1225, the resistance level is holding at 1235.
Support: 1214 – 1207 - 1197
Resistance: 1225 – 1235 - 1243