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Another profitable week passed by as we hit the target of 1.1210 that we had set (1.1199 was last week’s low). EURUSD is in a long-term consolidation for the last months and there must be an extraordinary event in order to break this sideways channel. Any prediction/estimation is applied until next Thursday. On Thursday there’s the ECB Rate Decision, following by the speech of Mr. Draghi in Frankfurt. Most likely a new Easing is on its way but the questions are when it will take place and if the market has already absorbed it. On the other hand, there’s a high probability for a FED rate cut by the end of July but still nothing is sure because if data remain strong this week there may be second thoughts. This week we’ll favour small & opportunistic buy trades with main target the price area of 1.1275 but we’ll take care to close any positions before Thursday noon. The important news for European economy (besides the Rates Decision of Thursday) is the Eurozone Consumer Confidence on Tuesday and Eurozone Manufacturing/Services/Composite PMI on Wednesday. Accordingly, for the US economy the most important news includes Mr. Kuroda (Bank of Japan) speech on Monday in Washington, House Price Index on Tuesday, Durable Goods Orders and Advance Goods Trade Balance on Thursday and above all, the US Annualized GDP on Friday. These events may cause high volatility and traders should pay more attention.
Last week, after the first two days, GBPUSD had a strong bullish reaction up to the price area of 1.2557 but then again it fell below 1.25 and finally week closed at 1.2503. In any case we took the profit of the sell positions at 1.2450 since price had a low at 1.2381. The long-term trend has not changed and still we’re looking for sell positions with main targets 1.2410 and maybe 1.2350. We don’t close the door on a bullish reaction since GBPUSD met the lowest price levels since April 2017 and such a reaction makes sense.
Fundamentals wise, GBP has serious pressures due to political uncertainty around Brexit. USD last week, helped a lot the GBPUSD bullish reaction as well. This week is quiet regarding announcements and macros. Most important is the Loans for House Purchase on Wednesday. Of course, the US news that are mentioned at EURUSD section could be fuel for strong and volatile movements.
Our prediction for the price action of USDJPY was quite accurate last week since the target of our sell positions was 107.20 and last week’s low was 107.20 too! Last Friday though was very bullish and maybe this was the beginning of a bullish reaction for the pair and although the technical outlook for the pair is bearish, our Machine Learning models show a bullish reaction for this case. 108.20 is the first target for our long positions and above this, the price area close to 108.50-108.70. The upcoming US rate cut in combination with the stimulus program of Bank of Japan that creates higher inflation creates a complicated outlook for the instrument. PMI announcement on Wednesday is the only important new for the Japanese economy this week.
Our selling positions last week were correct since we took easily the profit at 121.15 and the instrument moved even lower, below 121. Although the technical outlook is clearly bearish, our Machine Learning models show a bullish reaction. This comes along with the fact that EURJPY approaches oversold levels. We’ll take small risk for our long positions and our main targets are 121.50 and 121.90. Pay special attention on Thursday because the Interest Rates and Mr. Draghi speech will cause high volatility for EUR. We’ll take care of closing our positions before those events. News for Japanese economy restrict to the PMI announcement on Wednesday.
EURBGP crossed above 0.90 for good and it triggered our long positions. We couldn’t take our target since when the pair reached the price 0.9050, moved down with a strong trend and finally the week closed at 0.8973. Our outlook has not changed though, we’ll keep our buy positions with main target 0.9060 and 0.9090, just like last week. We’ll be tempted to close our positions if we see difficulties in breaking out 0.90 again and in any case our risk tolerance does not allow us to keep the positions for a price below 0.8950. Interest Rated and Mr. Draghi’s speech on Thursday will cause very high volatility and along with the Brexit political uncertainty leads us to the conclusion not to be exposed further to this pair with extra positions.
A consolidative week passed by for USDCAD as the weekly range was below 100 pips. Last week the news for the Canadian economy counterbalanced the rally of bad news in June due to the lower gasoline prices. We consider last week as a breath-taking week for the continuation of the downtrend. 1.2860 is the main target for our short positions. This is a very quiet week regarding the Canadian economy news and along with the news for the US economy that we saw at the EURUSD section, the fact that may cause high volatility for the pair is the fluctuated probability for FED’s rate cut, more than 50 basis points.
USDCHF had a very strong bearish movement last Monday but Tuesday was quite uncertain and the rest of the week was consolidative for the pair. This price uncertainty keeps us out from the specific instrument this week until a trend is established. There is some news for US economy that we’ve seen above and in combination of almost no news for Swiss economy this week, drives us to the conclusion that USD will be the dominator for the pair this week.
We took the target of our long positions at the price of 0.7080 last week. Last week’s high was 0.7081, very close to our take profit price. Although last Friday there was a price correction, we still believe in the uptrend outlook for the instrument. Our buy positions are looking for a target at the area of 0.7140. US economy has important news but it is also an important week for Australian fundamentals since there is the PMI announcement on Wednesday and Mr. Lowe’s (RBA) important speech in Sydney on Thursday. Last week’s minutes showed that the Australian Central Bank may adjust the interest rates if it’s required, so this speech has extra importance. On the other hand, China’s latest news showed that China had the lowest quarterly growth rate for almost 30 years. Long-term this will influence AUDUSD and we believe that above 0.72 this uptrend rally will reverse.
Our trailing stop mechanism that we had set last week, helped us to exit our positions early, avoiding the big losses of SP500. The losses were more than 2% and it puts the dominating uptrend to the test. We will avoid taking positions this week but if we had to, we’d favour small and opportunistic short trades with tight targets about 1%. Of course, we cannot exclude a strong bullish reaction that will take the price above 3,000 points again.
DAX30 approached the target price that we had set for our sell positions last week but since there were pullbacks, we closed our positions even with smaller profits. The downtrend is very clear for the Index and we’ll insist to our short positions looking for take profit close to 12,180 points. Our Machine Learning models align with this approach so we will increase our risk by increasing our exposure to the market.
A consolidative week passed by for FTSE100 with many ups and downs. Things are too complicated regarding the UK economy and politics and we’ll prefer to stay out this week.
Gold had a clear uptrend last week and Tuesday & Wednesday were quite bullish days. The probability for a Gold rally seems very high and we’ll follow our models by opening long positions, targeting $1,450. In any case, the key event this week for Gold movements is the ECB Rate Decision event on Thursday because this will influence the US Dollar Index (since EUR has a weight of 57.6%) and Gold and US Dollar Index have a strong negative correlation. The FED Rate Decision on July 31 and a possible rate cut also creates a bullish momentum for the commodity.
We had a very good estimation for last week since our short positions took easily the target at $57.50. Last week we had a low at $54.83 but this week is pretty different. We had a confirmation on Friday that two UK tankers was taken by Iran which is also confirms an increasing tension between Iran and USA. The concerns are high and the anticipated uncertainty gives high probability for price increase regarding the US Oil. We’ll open long positions looking for exiting close to the price area of $59.30.