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GBP/USD Technical Analysis

The pair is updating price lows.

We observed that during yesterday's trading session the pair updated its annual lows and found a new level of resistance near the mark of 1.2860, leading it to a correction.

The dollar index continues to demonstrate the strength of the reserve currency and is near the maximum annual values.

Today, we expect the US Producer Price Index for June, as well as an estimation of the UK’s GDP growth, although at the current time it is unlikely to see a trend correction.

Therefore, we will expect the price to overcome the current level of support and look for points to enter short positions.

We believe that the next psychological level for the pair will be at 1.28, near which we recommend to set the Take Profit levels. Otherwise, a correction option may be applied to the upper level which is at 1.2960.

 

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EUR/USD Technical Analysis & Daily Chart

The euro is weakening amid the Turkish crisis, so we should sell the pair today.

Today we would take a look at the EUR/USD currency pair. As of the middle of last week the pair began a more pronounced decline and is now down to levels previously reached in April 2017.

As we have mentioned before, there are no serious incentives for the euro to strengthen. The European Central Bank is committed to a soft monetary policy and the economic fundamentals from the eurozone for now remain lukewarm. Right now the single currency is additionally under pressure due to the brewing financial crisis in Turkey. While Turkey is not a part of the European Union, nor the eurozone, there are many European banks operating there who can suffer and transfer damages into the EU. Currently the Turkish lira has sunk by more than 30% for 2018 and inflation in the country is above 15%. Moreover, today we expect the German and eurozone GDP for the second quarter of 2018.

The American dollar continues to be supported by solid economic fundamentals and a hawkish attitude by the Federal Reserve, who see it fit to increase interest rates twice more before the year’s end. Other than the trade war with China, the dollar was also affected by the Turkish crisis throughout the past few days, as risk appetite is low and investors are currently stocking up on dollars. Today we do not expect any reports from the United States.

In terms of the daily chart, today we have a pivot point for the pair located at 1.1393, with the pair currently trading below it. We expect the EUR/USD to continue declining, so pay attention to the nearby support levels at 1.1374 and 1.1355. The daily resistances are located at 1.1414 and 1.1433, but we do not expect the pair to touch them today. The indicators of technical analysis and moving averages agree on a strong sell recommendation.

 

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Technical analysis

Let's start with the EUR/USD pair. Here we see that the pair has updated the annual lows reaching the mark of 1.1365 and is in the corridor between the resistance levels. We expect that the price will stay in this corridor. Technical indicators diverge for now. We advise you to wait for the signal to enter the market.

We advise you to wait for the signal

Pound/Dollar. We see the continuation of the downward movement and the renewal of the lows. If the pair manages to gain a foothold below the level of 1.28, the next target will be the level of 1.2650. The MACD and the RSI also point to a sell.

The next target will be the level of 1.2650

AUD/USD. This pair is also pointing down. The next psychological mark will be the level of 0.72, from which a price correction is possible.

Psychological mark will be the level of 0.72

USD/CAD. The price approached the Moving Average 21. The current level is 1.3085. In case of its overcoming, we expect the move to the level of 1.3030. However, we can get a turn from the Moving Average and the pair might go up, as technical indicators indicate a purchase.

We expect the move to the level of 1.3030

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EUR/SGD: Fundamental Review & Forecast


The EUR is under pressure due to the situation with the Turkish lira. The deals to BUY seem the most effective in the near future.

The rates continue within the upward trend. However, its intensity has been lost. Now we can see signs of a weak downtrend formation. Actually, the SGD gradually began to strengthen half a year ago and during this time increased in price by 5%. For a long time the euro has been declining due to rising tensions in international trade and a slowdown in economic growth in the EU.

This week, unexpectedly, the euro was influenced by another negative external factor: the rapid fall of the Turkish lira. This caused panic on the financial markets, given that Turkey's foreign debt to the EU is 150 billion dollars. With the fall of the Turkish lira and the economic crisis in Turkey, it is likely that this debt will become irrevocable or at least problematic. The ECB has also expressed fears about the large banks of France and Italy, which are major creditors for Turkey. In addition, there's a danger for a number of enterprises exporting a significant part of their products to Turkey. As a result, the value of the euro fell significantly against most currencies.

The latest economic statistics are quite acceptable for investors. In particular, the GDP in the eurozone grew by 2.2% in Q2, which is in line with forecasts. However, the growth of the EU economy is achieved mainly thanks to the German economy, while in other EU countries the slowdowns in economic growth continue.

The situation in the economy of Singapore is even more doubtful than in the EU: a disturbing signal for investors was the data about Singapore's GDP, which grew in the second quarter by only 0.6%, while a twice higher significant growth by 1.3% was expected. Perhaps the data on the trade balance will be more impressive for the SGD. It is currently trading near the lowest values for the last 13 months, and its recent strengthening was only due to the negative impact of TRY on the euro.

Oscillators (Stochastic, RSI, MACD) unanimously point to the rates in the oversold zone. We expect at least a price correction in favor of the euro. Upon long-term trading it is also possible to make short deals, but the rapid strengthening of the SGD is not expected, even against the weakened EUR.

 

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GBP/USD Technical Analysis


The pair is finding new levels.

After yesterday's trading session, the dollar rally slowed down and the dollar index moved away from the recently reached peaks.

Released today in the UK, the basic index and the volume of retail sales showed better-than-expected results. Against this backdrop the British pound was able to strengthen versus the dollar.

Today we also expect a series of macroeconomic indicators from the US, which may again send the dollar to update the new highs.

At the moment, the RSI is directed upwards and the MACD has come out of the histogram, so we can consider it as a signal for purchase. However, the top chart continues the downward trend. Therefore, it is worthwhile to be careful when taking long positions.

Our pair found a new level of support near the 1.27 mark and turned from it.

Therefore, we recommend that you wait for the correction to finish and look for points to enter short positions, after a confirmation by technical indicators.

 

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Can Turkey Avoid a Crisis?

What the country is doing to prevent a crisis might not be enough.

Last week we introduced to the currently developing financial issues in Turkey. More specifically, their national currency, the Turkish lira, has been crashing hard against the dollar, losing more than 40% of its value in 2018; inflation is soaring high and the Turkish central bank’s hands are somewhat tied by President Erdogan, who would not permit a rate increase. Now that there is more information available, we would like to take another look at whether or not this could escalate out of proportion.

The Problem
Part of the reason we are seeing this unfold now of all times is the strength of the dollar. The Federal Reserve has implemented multiple interest rate increases over the past two years, and there are two more hikes expected in 2018. As people try to capitalize on the higher USD values, this adds pressure on the currencies of developing countries like Turkey (also Argentina, for instance, who is also struggling with a crisis right now).

Moreover, many Turkish businesses have international loans to fund their operations. With the growing gap between the dollar and the lira, these loans are quickly becoming more and more difficult to pay back, simply because they cost so much more in Turkish lira now than they did initially.

Inflation is extremely high in Turkey right now. Under normal circumstances the central bank would increase interest rates (like the Federal Reserve is doing) to curb inflation, but President Erdogan believes that rate hikes are out of the question and has decried them in his political platform. Furthermore, the central bank of each country is supposed to be independent of whoever is in charge and take care of the economy impartially, but Erdogan has done a lot in recent years to solidify his power and become something akin to an absolute monarch, rather than an elected president, at least in practice.

Temporary Solutions
Turkey was in need of a big foreign investment and found it in an unlikely ally – Qatar. Last year Qatar found itself in a tough spot as its neighboring countries all cut diplomatic and trade ties with it. Turkey lent a helping hand then and it seems Qatar is now returning the favor with a $15 billion investment.

Moreover, the Turkish central bank is trying to informally increase interest rates in a way that won’t clash with Erdogan’s official policies. Instead of doing a formal rate hike, the way the Federal Reserve and the Bank of England have done, the Turkish central bank is forcing banks to borrow money at night instead of during the day, and charges them 1.5% more at night. This was effective enough in stabilizing the lira this week, but it is not as strong and sustainable as an actual rate increase.

Investors fear that the measures that Turkey is currently taking are only good for buying a little bit of extra time before a full-blown crisis begins.

If things worsen, Turkey might have to ask for a bailout from the IMF, the way Argentine did. However, like the bailouts given by the ECB to Greece, this would come with a strict plan for austerity measures until the economy heals, and would be seen by the Turkish people as Erdogan’s biggest political failure. This explains why the President is trying to avoid it at all costs.

 

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EUR/USD Technical Analysis & Daily Chart

The pair will begin a decline again, so we can sell it now.

Today we would return to the EUR/USD currency pair. It continues to be quite volatile, though it has recovered slightly compared to last Monday.

In all seriousness, things are not looking too great for the euro right now. The European Central Bank is committed to a dovish monetary policy and would not provide any incentives for the growth of the single currency. While this is not new, the pressure on the euro is increasing because the United States is consistently moving in the opposite direction with regular interest rate hikes. With the current risks coming out of Turkey, the euro is definitely feeling the pressure and we expect it to drop again.

The American dollar is moving in the opposite direction. The economic fundamentals from the United States are stable. Today we expect the minutes from the FOMC meeting held on August 1, which are of high importance since we can get a solid hint as to when the next rate increase would happen. So far analysts have been betting on a September hike. As we approach it, we are likely to see a further strengthening of the dollar.

In terms of the daily chart, today we have a pivot point for the pair located at 1.1438. We expect the EUR/USD to continue declining, so pay attention to the nearby support levels at 1.1438 and 1.1431. The daily resistances are located at 1.1441 and 1.1445, but we do not expect the pair to touch them today. The indicators of technical analysis and moving averages agree on a strong sell recommendation.

 

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GBP/USD Technical analysis

The pair is turning.

At the moment we are seeing a corrective movement in our pair, as it was reflected from the 1.27 mark and headed up. Right now the pair is staying at the level of 1.2820. In case of a fastening above this level, the upward movement can continue.

Today no significant macroeconomic indicators are expected, therefore we expect low volatility in our pair.

Our technical indicators point to a weakening of the upward momentum, so we advise you to expect a clear signal to enter the market.

If the continuation of the upward movement is confirmed, we expect the price to reach the levels of 1.2895 and 1.2960.

 

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AUD/CAD: Review & Forecast

The CAD is still the currency with the most potential against the AUD. The price correction is over, so the deals on the trend will be the most effective.

The rates have stabilized in August and now we can see a steady downward trend in favor of the Canadian dollar. The Australian dollar remains under pressure as a commodity currency amid developments in the trade war between the US and China. In addition, the soft monetary policy of the RBA, which keeps the rate at a record low of 1.5%, has also had a negative impact on the Australian dollar. As a result, the value of the AUD has decreased against the CAD to the level of April 2016. A similar pattern can be observed witth other base currencies against the AUD.

This week volatility has been decreasing in the absence of any news background. The AUD/CAD currency pair was one of the most stable while investors were focused on the situation in Europe, where falling of the Turkish Lira has had a negative impact on the euro, and traditionally on the situation in the US. The Canadian dollar managed to receive some support from news from the oil market: oil finally stopped its rapid decline, although it lost about $10 per barrel just for 2 months. In addition, the latest inflation data showed a growth by 3% in July, which exceeds expectations on the market and increases the probability of a rate change by the Bank of Canada.

In the near future the rates will depend on the situation on the oil market and the economic situation in Canada. Today volatility will increase with the release of new data about the Canadian basic retail sales index for June, and a week later - data on Canada's GDP in July. According to the chart, we can see the completion of the price correction. Thus, we can expect a further decreasing of the rates towards the support line, to 0.947-0.940 CAD. The most optimal would be short deals on the trend, which is also confirmed by the MACD and Stochastic oscillators.

 

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EUR/USD Technical Analysis


The pair is forming an inverted head and shoulders pattern.

The strength of the dollar has weakened and the dollar index began to depart from the highs achieved last week, dropping to the mark of 95.00.

The current EU figures show positive dynamics and support the USD. Our pair also left the minimum annual values and shows growth. At the moment, the movement has slowed and we are seeing a local correction in the pair.

On the chart we can notice that the pair is forming the inverted head and shoulders pattern, so we suppose that a second shoulder is being formed now and then an upward movement will begin.

Technical indicators point to sales, so we advise you to wait for the shoulder formation to be completed and look for points to enter long positions. A turnaround is possible from the marks of 1.1540 or 1.1500.