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On Thursday, the European Central Bank left the deposit rate at the level of -0.4% after the data indicated the weakness of the Eurozone economy. The main refinancing rate was left at the level of 0.00%. Monthly purchases of bonds in the amount of 30 billion euros per month will continue until the end of September 2018 and will be completed in full in December. From October to December, the QE program will be reduced to 15 billion euros per month. The ECB also lowered its forecast for GDP growth in 2018 to 2.1% against 2.4% earlier and said it would not raise rates, “at least until the summer of 2019”.
Despite the Fed’s decision to raise the rate, the dollar closed the trading day on Wednesday in negative territory. The dollar index DXY, reflecting its value against the other 6 major currencies, declined to 93.56 at the end of the trading day on Wednesday, after rising to 94.04. Despite investors ‘expectations, the dollar has declined, and, along with the US stock indices, which speaks of investors’ concerns about the negative impact of further tightening of the Fed’s monetary policy on the economic growth in the US.
According to the CME Group, investors estimate the probability that by September rates will be raised twice more, at 74%. With the growth of interest rates, the price of gold is falling, since. the cost of its acquisition and storage is growing. In this case, the investment attractiveness of gold in comparison with the dollar is decreasing. On Tuesday, the XAUUSD fell to the level of 1295.70. The price of gold lost about $ 5 per troy ounce.
USDJPY rallied and closed the day at 110.10. Seems like Trump sparked a rally here and we can see a re test of the resistance at 111.00 once again. This is very likely scenario but I’m in favor of lower prices in the longer term so any rallies towards the resistance should be sold.
EURUSD traded up for 4th consecutive week. The sharp recovery and the close above 20 days moving average suggest large shift in the price action to the upside. As suggested before, the retracement is needed before entering long positions. Higher high is formed. I am eyeing 1.1700 as a perfect long entry hope to be filled next week sometimes.
On Wednesday, the XAUUSD was still unable to determine the direction of the further movement and closed on the basis of the trading day at the same price as at the beginning of the exchange trades, at a price of 1296.00 dollars per troy ounce. It is likely that before the Fed meeting on June 12-13, the XAU / USD will remain in the zone below the resistance level of 1304.00 (EMA200 on the daily chart). Below this key resistance level, the negative dynamics of prices remains.
EURUSD was indeed higher for a 2nd consecutive day. The pair found a solid bottom at the support at 1.1550 and it has been moving higher ever since. From now, consolidation is likely, especially after such a strong recent downtrend. I expect the price to range between 1.1750 -1.1600 but eventually break and close above 20 days moving average and move higher again. I will be looking for a short term long positions with the break of 20 MA.
Gold as expected re-tested the resistance at 1300.00. It climbed as high as 1306 and came down sharply closing the day at 1298. Anywhere now is a good sell. I will be looking to place a short position as soon as the market opens in the morning. Targets at 1250, stops just above the recent high at 1310
EURUSD found a support at a major junction at 1.1550. The pair staged a sharp reversal and closed the day at 1.1665, engulfing the previous day. This is always a strong indication of the reversal and the follow through is very likely. Next level to breach lies at 1.1750 -1.1770 area. Short term targets should be placed there. I will be waiting for a break of 20 day moving average.
The euro’s share in the DXY index is about 57%, and the fall of the Eurodollar is reflected in the growth of DXY. The dollar remains the favorite on the foreign exchange market, and so far nothing has stopped its further strengthening and growth of DXY. DXY finally reaches 95.00 resistance. This is an important level and it will decide where USD Dollar will trade in the next few weeks. I would imagine, resistance will hold and DXYT will moved down=n to the support at 93.00 or perhaps lower.
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