The market sentiment is down, Theresa May can't renegotiate the Brexit deal, Italy and the EU can't agree on a lower deficit.
Weekly Forex Outlook: July 2-6
The USD index was at multi-month highs but once again failed to stay above 95.00. Support lies at 93.20. Everyone keeps discussing trade wars, although concerns have eased for now. This helped USD/JPY to rise to resistance line since May. A break above 110.90 is needed for the pair to rise to 111.30 and 111.80.
The first week of July contains many important economic events. The Reserve Bank of Australian will meet on Tuesday. The Federal Reserve will release June meeting minutes on Thursday. Friday will be marked with American labor market data – nonfarm payrolls, unemployment rate, and average earnings.
Traders do not expect any action from the RBA but its statement will be very important. Optimistic comments and risk-on sentiment may bring AUD/USD to 0.7480 and 0.7520.
EUR/USD found support between 1.1550 and 1.15. It’s the third time this area limits the decline, although bears keep returning to it. The euro got a boost on Friday as European leaders reached an agreement on migration. Despite the progress, there are still serious disagreements among the eurozone countries. As a result, the positive effect on the euro may be only temporary. The overall setup on the daily chart remains negative. Resistance is at 1.1720, 1.1780 and 1.1820.
USD/CAD formed a double top and broke below support at 1.3260. The Canadian dollar strengthened versus the US currency as oil rose to 3-1/2-year high. The target is at 1.3150. Support is at 0.7350 and 0.7300.