The US dollar started playing the role of a safe haven
Weekly Forex Outlook: July 9-13
The USD index declined last week. It went down from resistance. There’s potential for a further slide to June lows at 93.20. If the greenback falls below this support, it will signal a double top on the chart and we’ll see a bigger decline.
The US dollar didn’t like US labor data. Although NFP showed a solid gain, wage growth slowed down and the unemployment rate increased. It means that the American central bank will be less eager to increase interest rates in the long-term. In addition, trade tensions between the US and China escalated as America imposed tariffs on $34 billion worth of Chinese goods. This will make it harder for USD/JPY to get higher. Resistance is at 110.60 and the pair risks retesting 110.0. This week the most importance US data release will take place on Thursday as the CPI comes out. The forecasts are good. The same day will bring the accounts of the European Central Bank’s last meeting: it will have an impact on the EUR. In addition, notice that the ECB president will speak on Monday and Wednesday.
Despite concerns about global trade, markets started the week with optimism. Stock markets rose ahead of the US earnings season. Currencies like AUD, NZD, and CAD can rise more before they hit resistance. Let’s have a look at the news from Britain. British Brexit Secretary David Davis had resigned. This is a blow to Prime Minister Theresa May. She risks losing her majority in parliament. GBP/USD is holding ground for now as the market is waiting for what will happen next. There’s a bullish engulfing pattern on the weekly chart and the pair is above April-June resistance line. However, the pair needs to overcome resistance at 1.3350. Next targets will be at 1.3420 and 1.3550. Support is at 1.3220. EUR/USD is also in the positive territory. The pair can rise to 1.1850 and 1.1880. Support is at 1.1700.