EURO CONTINUES TO GAIN POSITIONS

The holiday season in the mid-summer gives investors a lot of material to think about. During this week we have seen increased interest in the euro that stemmed from the hawkish hints of ECB President Mario Draghi about a possible reduction in the asset purchasing program that could start this autumn. At the same time, lack of confidence about the third rate hike by the Fed within 2017 resulted in the fall of the US dollar that accelerated amid postponing the vote on health care reform in the US. This resulted in the growth of uncertainty about the ability of the Trump administration to ease taxes and spend money on infrastructure. Strong interest in the euro resulted in the fall of gold that would otherwise have been supported by the rising uncertainty on the American stock markets and the fall of the US dollar.

The data on the German consumer climate index from Gfk showed an increase by 0.2% to 10.6% in June gave some support to the common currency. Later today the markets digested macro data on GDP growth in the US for the first quarter of this year which cheered the bulls trading the USD/JPY. Trading activity for the pair rest of will be restrained as investors await news from Japan on the unemployment rate, household spending, core consumer price index and industrial production due to be published at 23:30 GMT.

The British pound is supported by hawkish rhetoric from Bank of England’s Governor, Mark Carney. The possibility of a rate increase in the UK during this year has increased but bulls are restrained by the uncertainty concerning the outcome of Brexit negotiations.

Oil prices are growing after yesterday’s report on production volume in the US that declined by 100 barrels per day last week. This reduction is likely to be temporary due to a storm in the Gulf of Mexico that influenced a number of deliveries in the country. The positive trend in crude oil also strengthened the Canadian dollar, but we do not rule out correction after the recent strong moves.

EUR/USD

The common currency has reached the year’s high due to a change of sentiment on the market towards possible tightening in ECB’s monetary policy, within which the cuts to the asset purchasing program may start this autumn. As a result, we have seen the strong upward movement to the resistance level at 1.1450, and its overcoming will likely lead to further growth to the psychologically important level of 1.1500. The price reached the SMA100 on the 15-minute chart and may resume positive dynamics within the local rising trend. In the case of correction, the first support will be at 1.1300.

GBP/USD

The increase of the British pound continued today and currently, the quotes are consolidating near 1.2980. Further growth is possible to 1.3050, but it would need strong stimulus to surpass this level. After recent growth, there is a possibility of a retreat to 1.2890 and 1.2800. The triggers for sharp moves tomorrow may come from data on the UK business investments, current account and GDP growth in the first quarter.

USD/JPY

The upward movement within the channel resumed after some price consolidation near 112.00. The next target within the positive impulse will be 113.00, the breaking of which may stimulate the bulls to push the quotes up to 114.00 and 114.70. Investors may take profits during this trading session ahead of the release of a block of important macro statistics in Japan at 23:30 GMT. The immediate targets within the correction will be at 112.00 and 111.70.

Gold

The gold price has shown a strong descending move that could be caused by a so-called “fat-finger” error. The fall was limited by the strong support at 1240 where investors seem to be placing big bids as a number of unsuccessful attempts to fix below this level have been seen. The nearest goal for the bears in the case of overcoming 1240 may be at 1230. The RSI on the 15-minute chart has touched the oversold zone, that demonstrates possible price rebound with the potential of reaching the 1250-1252 range.

WTI

The American crude oil benchmark WTI has reached the important mark at 45.00. For the continued increase with targets at 46.00 and 47.00 the quotes need to overcome the resistance at 45.20. Most fundamental factors still indicate the imbalance between supply and demand and growing activity in the American oil sector is putting pressure on oil quotes. Ahead of the weekend and tomorrow’s report on the number of active drilling rigs in the US, published by oil service company Baker Hughes, we may see profit taking and the fixing long positions. The first targets, in this case, will be at 44.25 and 43.00.

USD/CAD

The strong appreciation of the Canadian dollar during the last few days is explained by a bullish trend in oil prices and depreciation of the greenback. Oil traditionally has a great impact on traders’ sentiment concerning the Canadian currency, but a possible slowdown in the pace of economic expansion in the US will also be negative for Canada, that’s why the potential for a further increase of USD/CAD is likely to be limited. Now the price is consolidating above the psychologically important level of 1.3000 and we may see the rebound up to 1.3165 and 1.3200 in the case of fixing positions on the pair.