Dollar moves higher after Federal Reserve insurance rate cut

Insurance cut

The US dollar moved sharply higher this week, despite the Federal Reserve cutting interest rate by 25 basis points. Financial market participants bought the greenback against a basket of top currencies, as the FOMC statement noted that the interest rate cut was largely an insurance measure against a possible global downturn. Federal Reserve Chair Jerome Powell also said that the central bank was closely monitoring incoming data before deciding if another rate cut may be necessary. The EURUSD pair tumbled to a multi-year trading low, following the US interest rate cut.

• The EURUSD pair is bearish while trading below the 1.1110 level, key support is found at the 1.1000 and 1.0920  levels.
• If the EURUSD pair trades above the 1.1110 level, buyers may test towards the 1.1160 and 1.1187 resistance levels.

Pound plummets

The British pound tumbled lower against the US dollar and the euro this week after chances of a hard-Brexit increased significantly. Traders sold the GBPUSD pair and bought the EURGBP pair, as newly appointment British PM Boris Johnson reiterated his commitment to defending the Irish backstop issue. The Bank of England also kept interest rates on hold this week, with BoE Governor Carney talking up the risk surrounding a hard-Brexit. The British pound tumbled below the 1.2100 level against the US dollar, which marked sterling’s lowest trading level since January 2017. 

• The GBPUSD pair is bearish while trading below the 1.2340 level, key support is found at the 1.2050 and 1.1980 levels.
• If the GBPUSD pair trades above the 1.2340 level, buyers may test towards the 1.2380 and 1.2440 resistance levels.

Bitcoin $10,000

Bitcoin traded around the psychological $10,000 level for most of the trading week, as the number one cryptocurrency closed the month of July with a heavy loss. Bitcoin suffered its first losing month after five consecutive monthly gains, as the stunning upside rally from the $4,000 level paused. The broader cryptocurrency market was generally quiet this week, with digital currency market leaders Ethereum and Litecoin also posting double-digit declines for the month of July.

• The BTCUSD pair is only bullish while trading above the $11,100 level, key resistance is found at the $11,700 and $12,000 levels.
• If the BTCUSD pair trades below the $11,100 level, key support is located at the $9,100 and $8,400 levels.

BOJ Miss

The Bank of Japan lowered inflation forecasts and kept interest rate on hold this week, as the Sino-US trade war continued to dent the world’s third-largest economy. The Bank of Japan lowered inflation forecasts through to 2020, as the central bank continued its struggled with persistently low domestic inflation. Bank of Japan Governor Kuroda reiterated his commitment to powerful monetary policy easing and noted that the central bank remains prepared to act if inflation weakens or the economy takes a downturn. 

• The USDJPY pair is only bullish while trading above the 109.00 level, key resistance is found at the 109.00 and 110.30 levels.
• If the USDJPY pair trades below the 109.00 level, key support is located at the 106.40 and 106.00 levels.