Dollar Moves Higher, Trade And Data In Focus

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Dollar Moves Higher, Trade And Data In Focus

Forex Majors – Technical Overview And Weekly Predictions

Germany’s jobless rate falls to the lowest since the Reunification in 1990, British MPs are getting set to vote again on a Brexit deal and the Fed decided to slow down the pace of interest rate hikes. Volatility is a guarantee amid these turbulent times, let’s take a look at the Forex majors and see where they may be headed for the coming week.

EUR/USD – Technical Outlook

Although the German unemployment rate dropped to 4.9% from the previous 5.0%, which makes it the lowest since the 1990s, the Euro failed to post any type of recovery and the pair dropped into support. After the failed break of the long term bearish trend line, the pair started to slide and is currently trading right on support at 1.1216, with little to no bullish pressure. This support is likely to crumble, making way for an extended drop into 1.1176 area and possibly into the longer term support at 1.1120. The daily MACD has just crossed bearish, strengthening the possibility of an extended drop. To the upside, the first resistance is located at 1.1300 and as long as it holds, all upside moves should be short lived.

GBP/USD – Technical Outlook

The Pound is sliding lower amidst more Brexit drama, with MPs getting ready for yet another vote later today. The pair is approaching a bullish trend line which coincides with the 100 days Exponential Moving Average and the way price behaves here will determine the direction for the next week. A break of this support zone will show increased bearish pressure and will probably take price into 1.2790 – 1.2800 support, while a bounce will make 1.3365 the next target. Keep in mind that the result of the Brexit vote could accelerate or hinder these scenarios.

USD/CHF – Technical Outlook

At the time of writing the pair is trading at 0.9960, with very low volatility over the last few days and an overall bearish bias. After creating a triple top at 1.010, price fell down quickly and moved below the 100 days EMA before finding minor support at 0.990. The small bounce up seen at said support doesn’t seem solid enough to take price into 1.010 area and should be considered a simple correction after a strong drop. Once the correction is complete, the pair will likely attempt to break the long term bullish trend line, which could happen as soon as next week.

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USD/JPY – Technical Outlook

The last couple of days have been bullish for the pair, after a bounce at 109.80 support, but overall USD/JPY is showing mixed signals and printing indecision candles. The pair posted gains after the touch of support and is currently trading at 110.80 but upwards momentum may dissipate if the bulls cannot quickly overcome resistance represented by the 100 days EMA. The last few candles show long wicks, which is a sign of indecision and possibly rejection, so if we don’t see a climb above 111.00 and above the EMA, the chances for a drop through 110.00 – 109.80 support will increase in the coming week.

Gold Moves Higher as Traders Focus on Economic Data

Gold futures moved higher during morning Asian trade as Friday came to a close. The yellow metal is still trading near a one year low as traders are waiting for upcoming economic data out of the United States.

As of 1 am GMT, the widely traded spot gold contract (XAU/USD) inched higher. The metal gained 0.04 percent to trade at $1,222.70 an ounce. The bullion should fall lower again this week. This will be the precious metals third weekly decline a it should lose about 0.7 percent.

U.S. gold futures, for August delivery, traded down. They lost 0.3-percent to trade at $1,222.10 an ounce.

The dollar was firmer against Forex majors this morning. The dollar regained momentum as the euro slid lower. The European Central Bank gave no big surprises over its timing to ease back from their accommodative monetary policy and quantitative easing program.

Gold Traders focus on Economic Data

Economic data out of the United States, new orders capital goods increased better than expected for the month of June. Shipments also rose sharply. This signals solid second quarter growth in business spending on equipment.

Focus

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(Kitco News) – The gold market, which is trading at a four-month low is entirely at the mercy of the U.S. dollar, which is seeing a surge in momentum, pushing to a four-month high, according to one commodity analyst.

Ole Hansen, head of commodity strategy at Saxo bank said in a report Monday that the two support levels he is watching very closely are $1,300 an ounce and then $1,280 an ounce.

“Multiple failures since 2020 in breaking above an area between $1,365 and $1,375/oz has left the [gold] market nervous with the focus once again on finding support.” He said. “The potential success of these two levels in capping the downside at this stage is mostly in the hands of the dollar and its short-.term trajectory.”

Hansen’s comments come as the gold prices have fallen to within a hair’s breadth of his first initial support target. June gold futures last traded at $1,307.10 an ounce, down 0.92% on the day and its lowest level since late December. The selling pressure in gold was exacerbated after prices fell below the 200-day moving, which came in at $1,313.50 an ounce. Meanwhile, the U.S. Dollar Index is currently trading at 92.37 points, the highest level since early January. Momentum picked up as the index broke above its 200-day moving average, which comes in at 92.01 points.

Unfortunately for the gold market, Hansen said that the U.S. dollar could continue to push higher as investors cover their massive short position. Trade data, he explained shows speculative bearish positions against the U.S. dollar are starting to shift after hitting a seven-year high.

“The current strength of the dollar, driven by short-covering, rising bond yields and a slowdown in Europe, has rattled a market which previously held a general belief that the greenback would continue to weaken,” he said.

Although gold appears directionless, the near term Hansen said that there are positive long-term trends for the precious metal, including an overall uptrend within the commodity sector, higher inflation pressures and ongoing geopolitical uncertainty, even if tensions have eased recently.

“The threat of trade war between the US and China and more importantly the US and Iran remains in place and both could quickly reverse the current lack of focus,” he said.

Hansen added that while the futures market has suffered, there is still healthy demand from retail investors as physical holdings of gold-backed exchange traded products has risen to their highest level since 2020, totaling 2,341 tonnes.

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