30-Jul-2020

1) GBP/USD: Struggles To Find Acceptance Above 1.3000, US GDP Eyed For Fresh Impetus
2) EUR/USD: Bullish Run Stalls Ahead Of 61.8% Fibo., Focus Shifts To German/US GDP
3) Dollar Wavers After Mild Fed Interest Rate Decision

1) GBP/USD: Struggles To Find Acceptance Above 1.3000, US GDP Eyed For Fresh Impetus

The GBP/USD pair prolonged its recent strong bullish momentum and continued scaling higher on Wednesday amid the emergence of some fresh US dollar selling. The pair moved back above the key 1.30 psychological mark during the US session after the Fed delivered a more dovish message. As was widely expected, the US central bank decided to leave the Fed funds target rate unchanged at 0-0.25%. The Fed also pledged to keep rates near zero until it is confident that the economy has weathered the recent events and is on track to achieve its maximum employment and price stability goals.

The accompanying policy statement indicated that members tied the pace of recovery on the developments surrounding the coronavirus pandemic. In the post-meeting virtual press conference, the Fed Chair Jerome Powell that there are signs that the continuous increase in COVID-19 cases is weighing on the economic activity and reiterated to use a full range of tools to support the economy. The dovish outlook comes amid the impasse over the next round of US fiscal stimulus measures, which continued weighing on the greenback and remained supportive of the bid tone surrounding the major.

As investors looked past the FOMC policy update, the USD staged a modest bounce from over two-year lows and exerted some pressure on the pair during the Asian session on Thursday. In the absence of any major market-moving economic releases from the UK, the USD price dynamics will play a key role in influencing the pair’s momentum. Meanwhile, the US economic docket highlights the release of the Advance GDP report, which is expected to show that the economy collapsed by a record 34.1% during the second quarter of 2020. The data will produce some meaningful trading opportunities later during the early North American session.

From a technical perspective, the upward trajectory stalled near a resistance marked by the top end of a near three-month-old ascending trend-channel. The mentioned barrier is pegged near the 1.3025 region, which should now act as a key pivotal point for short-term traders. A convincing breakthrough will be seen as a fresh trigger for bulls and set the stage for a move beyond the 1.3065 intermediate hurdle, towards reclaiming the 1.3100 round-figure mark.

On the flip side, any meaningful pullback now seems to find immediate support near the 1.2900 mark. Some follow-through weakness might prompt some technical selling, though the corrective slide might still be seen as a buying opportunity. This, in turn, might help limit the downfall near the June swing high resistance breakpoint, around the 1.2815-10 region.

2) EUR/USD: Bullish Run Stalls Ahead Of 61.8% Fibo., Focus Shifts To German/US GDP

The US dollar came under some renewed selling pressure on Wednesday and tumbled to more than two-year lows after the Fed delivered a more dovish message. The US central bank kept its benchmark rate unchanged at 0-0.25% – as was widely expected – and pledged to use a full range of tools to support the economy in these challenging times. The Fed reiterated to keep rates near zero until it is confident that the economy has weathered the recent events and is on track to achieve its maximum employment and price stability goals.

The accompanying policy statement indicated that members tied the pace of recovery on the developments surrounding the coronavirus pandemic. In the post-meeting virtual press conference, the Fed Chair Jerome Powell said that there are signs that the continuous increase in COVID-19 cases is weighing on the economic activity. This comes on the back of the impasse over the next round of US fiscal stimulus measures and did little to provide any respite to the USD bulls, pushing the EUR/USD pair to the highest level since September 2018.

As investors looked past the Fed decision, the pair struggled to find acceptance above the 1.1800 mark and witnessed a modest pullback during the Asian session on Thursday. Market participants now look forward to the prelim German GDP and CPI reports for some impetus. The Eurozone’s largest economy is anticipated to have contracted by 9% during the three months to June. The US economic docket highlights the release of the Advance Q2 GDP report, which is expected to show that the economy collapsed by 34.1% annualized pace. The data will play a key role in influencing the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

From a technical perspective, the pair stalled its recent strong bullish momentum just ahead of a resistance marked by the 61.8% Fibonacci level of the 1.2555-1.0636 downfall. The mentioned hurdle is pegged near the 1.1820 region, which should now act as a key pivotal point for short-term traders. A sustained move beyond has the potential to lift the pair towards an intermediate hurdle near mid-1.1800s before bulls eventually aim to surpass the 1.1900 level and test 1.1945-50 resistance zone.

On the flip side, any meaningful pullback might continue to find some support near the 1.1700 round-figure mark. Subsequent fall below the mentioned level might still be seen as a buying opportunity near mid-1.1600s. That said, some follow-through selling might turn the pair vulnerable to slide further towards the 1.1600 mark. The mentioned level represents the 50% Fibo. level and should now act as a strong base for the pair.

3) Dollar Wavers After Mild Fed Interest Rate Decision

The US dollar was little changed as traders reacted to the Fed interest rate decision yesterday. In its decision, the bank left interest rates unchanged and warned that covid-19 resurgence threatened the overall economic recovery. The bank also left the open-ended quantitative easing program unchanged and promised to do more to support the economy. It will also extend the emergency swap lines with some central banks to ensure that the currency was readily available to them. He said:

“We are committed to using our full range of tools to support our economy in this challenging environment.”

The Australian dollar declined slightly as traders reacted to weak economic data from the country. Data from the statistics office showed that private house approvals declined by 5.7% in the second quarter after falling by 4.4% in the first quarter. Other data showed that the import price index declined by 1.9% in the second quarter while the export price index declined by 2.4%. Meanwhile, building approvals fell by 4.9% in the quarter. In New Zealand, building consents increased by 0.5% in June after rising by 41.7% in the previous month.

The economic calendar will have some important data today. In Germany, the statistics office will release the unemployment data for July. Analysts expect that the rate increased from 6.4% to 6.5%. The office will also release the preliminary GDP data from the country. In the Eurozone, the European Commission will release the services, industrial, and consumer sentiment data. Later today, in the US, the Bureau of Labour Statistics (BLS) will release the initial jobless claims data. We will be watching these numbers to see whether the number of Americans filing for benefits is rising. The bureau will also release the preliminary reading of US GDP.

The EUR/USD pair is trading at 1.1775, which is a few pips below yesterday’s high of 1.1805. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages while the RSI is at the overbought level of 70. Also, it has moved above the bullish pennant pattern that was forming two days ago. The pair is likely to continue moving upwards to 1.1850, which is the next important psychological level.

The GBP/USD pair is little changed at 1.2978, which is slightly below yesterday’s high of 1.3010. On the four-hour chart, the accumulation and distribution indicator has moved to the highest level since April this year. The signal and main lines of the MACD have also been rising. Further, the price is above the short and medium-term moving averages. Therefore, it is likely that the price will continue rising as bulls attempt the next resistance level at 1.3050.

The AUD/USD pair was little changed during the Asian session. The pair is trading at 0.7176, which is the highest it has been since July 22. On the four-hour chart, the price is above the 50-day and 100-day EMAs. The price’s upward momentum has waned while the RSI has remained below the overbought level of 70. Therefore, the pair is likely to remain within this narrow range today.