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Forex Technical Trade Note Outlook - 2 July 2019

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Barry Dumas
Forex-Technical-Trade-Note

With a seemingly success of the G20 summit behind us the United States and China have called for a truce on their trade disputes for now. Whether the two nations can commit to a lasting arrangement in the long run remains to be seen, as markets start digest the news.

Taking a closer look at the DXY

The U.S however have turned their focus on the European Union once more with threats of imposing tariffs on $4 billion of additional EU goods. We have seen the U.S Dollar Index (DXY) react to this news on Monday and started to gain momentum.

The DXY is currently at a resistance point and might just weaken from here as the Non-Farm Payrolls (NFP) jobs numbers might deliver a surprise approach this Friday.

DXY Curncy GT247 Bloomberg-1Source - Bloomberg

Let’s take a closer look at two major currency pairs:

GBPUSD

Brexit is still the focal point as growth in the U.K housing market starts to fade as Brexit concerns deepen. Weaker than expected Manufacturing PMI data has also reaffirmed growth concerns in the United Kingdom. The U.K Construction data released today has also disappointed and came in lower than expected.

Some technical analysis points to look out for on the GBPUSD:

  • The price action on the currency pair has moved lower from pivot level (purple line) which acted as support. We might still see a move higher from here if the U.S Dollar starts to weaken.
  • The broadening pattern might be in play if the Pivot does not hold which would see the cable move lower.

GBPUSD Curncy GT247 Bloomberg-2Source - Bloomberg

USDJPY

The Japanese Yen is usually regarded as a safe haven currency has strengthen over the last couple of weeks as the U.S Dollar weekend. Yester days move on the currency pair can be attributed to participants seeking risk sensitive currencies as the U.S-China tariff truce kick off.

Some technical analysis points to look out for on the USDJPY:

  • The price action has moved lower and has finally broken out of the descending channel (red lines). We might see a throwback in play back to the 107.72 price level.
  • We need to see a close above the 108.94 resistance level to confirm that the bulls have taken charge.

USDJPY Curncy GT247 BloombergSource - Bloomberg

Outlook on an emerging market currency pair:

USDZAR

The South African Rand (ZAR) has gained strength against the U.S Dollar mainly due to Dollar weakness as the local economy is still in a state of disarray. We might see Emerging markets become the pick of the crop once more as markets risk appetite returns as the U.S-China trade truce brings some stability to international markets and global trade.

Some technical analysis points to look out for on the USDZAR:

  • The USDZAR currency pair has found support around the 14.13 level and might just push higher as the U.S Dollar strengthens ahead of NFP.
  • The Relative Strength Index (RSI) has also reached the over sold barrier and will be watched closely.

USDZAR Curncy GT247 Bloomberg-3Source - Bloomberg

USDMXN

The USDMXN currency pair has seen increased volatility over the last couple of weeks as the U.S-Mexico border issue rages on and a freak heal storm cover parts of Mexico. Mexican Manufacturing data for June disappointed and slipped to an almost 2 year low as the U.S-China trade disputes take effect.

Some relief on trade might be expected as Emerging markets become attractive to investors once more over the medium term.

Some technical analysis points to look out for on the USDMXN:

  • Some notable levels to take note off might be the 19.28 resistance level and the 18.88 support level. A breakout above 19.28 might target the 19.55 level and close the Gap.
  • If the U.S Dollar starts to weaken then we might expect the 18.88 and 18.74 levels to be in focus.

Take note that this currency pair is extremely volatile, and one can expect wide price swings and extreme volatility.

USDMXN Curncy GT247 BloombergSource - Bloomberg


Disclaimer:

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. GT247.com does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information which we receive from third party data providers. You must rely solely upon your own judgment in all aspects of your trading decisions and all trades are made at your own risk. GT247.com and any of its employees will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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