US dollar reverses as the FED outline the conditions needed for a July rate cut

US dollar hit

The US dollar tumbled across the board this week as the Federal Reserve paved the way for a July interest rate cut. The June FOMC policy statement was considerably more dovish than the previous policy statement, as it removed previously used bullish language and noted that US economic data had deteriorated. Federal Reserve Chair Jerome Powell noted that the if US data continues to underperform then the central bank would be forced to cut interest rates. The U.S dollar index fell sharply on the bearish statement, as traders started to factor in a potential 25 to 50 basis point rate cut next month.

∙ The EURUSD pair is only bearish while trading below the 1.1245 level, key support is found at the 1.1200 and 1.1170 levels.

∙ If the EURUSD pair trades above the 1.1245 level, buyers may test towards the 1.1320 and 1.1360 resistance levels.

BOE unchanged

The British pound has another volatile trading week against the US dollar due to UK political uncertainty and a host of high-impacting data points. Sterling fell toward the 1.2500 level at the start of the trading week as the UK Conservative party leadership race continued. The British pound failed to react to weaker UK inflation and retail sales data and a more dovish than expected Bank of England monetary policy statement. The GBPUSD pair headed back towards the 1.2700 level as US dollar weakness became the number one driver of the foreign exchange market.

∙ The GBP pair is bearish while trading below the 1.2700 level, key support is found at the 1.2660 and 1.2560 levels.

∙ If the GBPUSD pair trades above the 1.2700 level, key resistance is found at the 1.2747 and 1.2810 levels

Bitcoin strengthens

Bitcoin made a strong recovery back above the $9,000 level as the number one cryptocurrency recovered all of its earlier monthly losses. The BTCUSD pair headed to a new 2019 trading as it breached the $9,000 benchmark and edged ever closer to the $10,000 resistance level. Bullish news about Facebook launching a new cryptocurrency, called Libra, helped to spread positive sentiment amongst the wider market, although Litecoin and Ethereum both failed to make major new technical trading highs.

∙ The BTCUSD pair is bullish while trading above the $8,800 level, key resistance is found at the $10,00 and $10,400 levels.

∙ If the BTCUSD pair trades below the $8,800 level, key support is located at the $8,400 and $8,100 levels.

Loonie higher

The Canadian dollar made strong gains against the US dollar this week following much better than expected Canadian CPI figures and strong move higher in oil prices. Canadian monthly and annual inflation came in much better than expected, highlighting the divergence between the Canadian and United States inflation outlooks. The USD/CAD pair weakened further after the Federal Reserve rate decision, while oil prices continued to rise over fears about escalating geopolitical tensions between the United States and Iran.

∙ The USDCAD pair is only bullish while trading above the 1.3300 level, key resistance is found at the 1.3330 and 1.3360 levels.

∙ If the USDCAD pair trades below the 1.3300 level, sellers may test towards the 1.3130 and 1.3000 support levels.