July-07, 2022, Daily latest currency trading analysis and forex market forecast, by forex forum.
Euro plummeted more than 2.3% against the US Dollar since the start of the week with EUR/USD now approaching downtrend support at fresh 20-year lows. We’re on the lookout for possible price inflection down here for guidance with US Non-Farm Payrolls on tap tomorrow. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts.
Technical Outlook
In last month’s Euro Price Outlook we noted that the EUR/USD had, “carved out the weekly / monthly opening-range just below downtrend resistance and the focus is on a breakout in the days ahead.” The range broke just one day later with an outside-day reversal plunging more than 3.5% into the 2016 low / low-day close at 1.0352/85. Euro continued to test this confluence zone into the close of June with a decisive break lower into the start of the week now taking price into downtrend support. While the break does keep the broader downtrend in play, the immediate decline may be vulnerable here and we’re on the lookout for possible inflection off this slope.
JPY/USD
As per the pre-Topkyo analysis on Thursday, USD/JPY Price Analysis: Bears step on advances above 136.00, the pair dropped in for a brief spell in the 135.50s before claiming all the way back above 136.00. The bulls have reclaimed the area but for how long?
It was noted that the hourly candle has all of the makings for a strong bearish close with a focus on the 135.50s.
However, following a trip to the downside, the pair has crept higher with a high of 136.22 so far. Thus now begs the question,’’ where now?’’
It could be argued that a bearish head and shoulders are being formed on the daily chart.
US Dollar
The dollar traded little changed against the euro and other trading currencies on Thursday, though sterling held on to gains after Boris Johnson said he was quitting as British prime minister.
Investors are waiting for U.S. jobs data on Friday and consumer price data next week that should signal the pace of inflation and whether the Federal Reserve continues to aggressively hike interest rates when policymakers meet on July 26–27.
The dollar index, which measures the currency against six counterparts, fell 0.047% after Wednesday’s peak of 107.27, a level not seen since late 2002. The euro was down 0.07% to $1.0176 after sliding to a two-decade low of 1.01615 on Wednesday.
Investors are grappling with the risks of a recession and whether interest rate hikes will be paused as global demand is under pressure.
The Atlanta Fed’s GDPNow model estimates seasonally adjusted GDP growth on an annual basis in the second quarter was -2.1%.
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GBP/USD
After a rough week in UK politics, the British pound reclaimed the 1.2000 level as UK Prime Minister Boris Johnson announced he would resign in autumn. However, he would remain as Prime Minister and announced that his government would not seek new policies or changes and would be left to the new PM. At the time of writing, the GBP/USD is trading at 1.2000.
GBP/USD advances on a soft US dollar, US Initial Jobless Claims rise
US equities remain positive during the day, reflecting recession fears waning and investors’ positive mood. Meanwhile, US Treasury yields rise, and the greenback retracts from 2-year highs, a tailwind for the GBP/USD. The US Dollar Index, a measure of the greenback’s value vs. its peers, has recovered some, up 013%, back above the 107.000 mark.
AUD/USD
The Australian dollar was been battered in June and the selling continued in early July as it fell to the worst levels since the peak of the pandemic. However in the last week it has repeatedly found buyers near 0.6765. It flirted with that level four times, including in Asia today.
Now it’s sprung to a two-day high at 0.6848 as the mood in markets improves. I’m surprised the bid isn’t even stronger given the report that China is considering a $220 billion infrastructure stimulus.
EUR/GBP
On the other hand, The cross extends a steep fall into third consecutive day and cracks significant support at 0.8501 (top of thick ascending daily Ichimoku cloud).
Bears accelerated on Wednesday after a bullish signal was generated on break of trendline support at 0.8584 (bull-trendline off 0.8281, Apr 14 low) and boosted by formation of daily Tenkan-sen / Kijun-sen bear-cross and daily close below pivotal Fibo support at 0.8540 (38.2% of 0.8249/0.8720 rally).
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