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Jul 20, 2018

GREENBACK GAINS ON HAWKISH COMMENTS FROM FED CHAIR POWELL

US DOLLAR ADVANCES

The US dollar advanced broadly against a basket of top-tier currencies this week, as Federal Reserve Chair Jerome Powell struck a hawkish tone during his two-day grilling before US Congress. Chair Powell reiterated the Federal Reserve’s commitment to gradually raising US interest whilst acknowledging the current strength of the US economy. The US Dollar Index traded to a fresh yearly-high on his bullish comments, with the greenback making its strongest gains against commodity-related currencies and the British pound.

  • The USDJPY pair is bullish while trading above the 111.39 level, further upside towards the 113.40 and 114.10 levels remains possible.

  • If the USDJPY pair moves below the 111.39 level, sellers will likely towards the key 111.00 and 110.00 support levels.

BITCOIN ROCKETS HIGHER

Bitcoin made strong double-digit gains this week after bullish fundamental news provoked a strong technical breakout in the number one cryptocurrency by market capitalization. The BTCUSD pair climbed above the $7,000 level on reports that Blackrock, the world’s largest asset manager, was moving into the cryptocurrency and blockchain technology space. Bitcoin soared-higher on the news, alongside the broader cryptocurrency market, with the BTCUSD pair, eventually peaking around the $7,500 level before stabilizing well above the $7,000 support zone.

  • The BTCUSD pair is strongly bullish while trading above the $7,000 level. Key resistance is found at the $7,500 and $7,800 levels.

  • If the BTCUSD pair trades below the $7,000 level, further losses towards the $6,837 and $6,700 support levels remains possible.

GOLD PRICE CRASHES

The value of spot gold crashed-lower this week, as the US dollar index, moved higher and the Chinese Yuan currency slumped against the greenback. XAU/USD tumbled towards the $1,210 support level, as gold bears pummeled the yellow metal to a fresh 2018-trading low. Spot gold’s decline has been highly correlated with the USDCNH currency pair this year, as the PBOC continues to weaken the Chinese Yuan currency against the US dollar. American and China, the world’s two-largest economies, are currently locked in a bitter trade tariff war.

  • The XAUUSD pair is strongly bearish while trading below the $1,236 level, further downside towards $1,200 and $1,187 levels seems possible.

  • If the XAUUSD pair moves above the $1,236 level, further upside towards the $1,245 and $1,255 resistance levels may occur.

POUND SINKS

The British pound tumbled below the 1.3000 level against the US dollar this week, following the release of much worse than expected UK economic data and fighting within the ruling British government. The GBPUSD pair crashed below the 1.3000 level, as the United Kingdom economy released below consensus CPI Inflation and Retail Sales data for the month of June. The British pound had been under pressure prior to the softer data point being released, as British Prime Minister Theresa May struggled to find the backing to pass her Brexit Customs Union deal through parliament.

  • The GBPUSD pair is strongly bearish while trading below the 1.3000 level, further losses towards the 1.2940 and 1.2880 levels seem possible.

  • If the GBPUSD pair moves back above the 1.3000 level, further upside towards the 1.3100 and 1.3184 resistance levels seem possible.

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