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Daily FX Brief, Aug 07 – Forex Trade Setups, RBNZ Set to Cut Rates


On Tuesday, the U.S. dollar index was forming a rising wedge bearish pattern since last month. Nonetheless, the Greenback took a reversed from the significant 97.26 support level.

However, the yearlong U.S.-China trade war bubbled over on Monday as Washington blamed China of manipulating its currency. That was after China permitted the yuan to plunge to its lowest mark in more than a decade.

Economic Events to Watch Today

Today, the investor’s focus stays on the RBNZ monetary policy decision. Let’s take a look…



AUD/USD – Daily Outlook

The AUD/USD pair kept the bearish rally that had triggered since the start of 2019. The main focus of the date prevailed over the RBA Interest Rate Decision. The RBA policymakers kept the interest rates at an all-time low near 1%, anticipating the trade war tensions to worsen, forcing for a rate cut ere year-end.

Previously, the RBA had performed quarter-point cuts in June and July. Meanwhile, RBA Governor Philip Lowe explained that the stance of keeping lower rates for longer-term borrowings would raise employment growth and inflation.

Finally, the AUD/USD pair seemed to give us a positive closing today, following back-to-back twelve negative trading sessions in a row. The pair had previously violated and relocated below the support lines closed near 0.6865 and 0.6832 levels.

Meantime, the Australian June Trade Balance data recorded 8,036 million above the forecast of around 6,000 million.

The June Imports reported -4% over 1% last data. Also, June Exports reached around 1% over 4% prior statistics. Moreover, on the economic calendar, the Q3 QoQ RBNZ Inflation forecasts came out 1.86% over 2.01% previous figure.


Daily Support and Resistance

R3: 0.7135

R2: 0.6981

R1: 0.6891

Key Trading Level: 0.6827

S1: 0.6737

S2: 0.6673

S3: 0.6519

AUD/USD – Trade Tips

Consider keeping an eye on 0.6745, the double bottom pattern. So the bearish breakout o this level can trigger further sell-off in AUD/USD until 0.6720 and 0.6700.

USD/JPY – Daily Outlook

The Safe Haven currency pair USD/JPY was striving throughout the last month to have a bullish crossover above the strong 109.055 resistance level. However, the efforts seemed too vain with bears drawing the pair downwards on August 7.

A day before, after three back-to-back negative sessions, the USD/JPY pair presented slight upward trends, indicating recovery. Anyhow, this retracement price action seemed to take a halt near 38.2% Fibonacci level or 106.875 level.

On the economic docket, the June Japanese Leading Economic Index released out at 93.3 points, 1.82% weaker than the market forecasts of around 95.0 points. Despite that, the June Coincident Index reported 100.4 points in comparison to the street estimates of 98.8 points.


Daily Support and Resistance

R3: 113.11

R2: 110.29

R1: 108.45

Key Trading Level: 107.48

S1: 105.64

S2: 104.67

S3: 101.85

USD/JPY – Trade Tips

On the 4 hour chart, the USD/JPY has completed a 38.2% Fibonacci level or 106.875 level.

At the same time. USD/JPY is also facing strong resistance around the corner at 107, which is keeping USD/JPY lower. Until this level breakout, we may see USD/JPY trading bearish to target 106.350 and 105.500

EUR/USD – Daily Outlook

The US-China trade war fears continued to weigh on the USD and drove the pair sharp higher on Wednesday, keeping the EUR/ USD supported. After marking the daily opening near 1.1203 level, the EUR/USD pair formed a spinning top candlestick pattern by day end

Strong resistance confluence consisting of the 50-day and 100-day SMA restricted the pair’s upside. A day before, German June Factory Orders came out, exhibiting some upbeat statistics. The June MoM German Factory Orders recorded a 4.5% growth over the previous -2.0% estimates. Additionally, the YoY Factory Orders recorded -3.6% over -7.0% forecasts.

Daily Support and Resistance

R3: 1.1369

R2: 1.1234

R1: 1.117

Key Trading Level: 1.1099

S1: 1.1035

S2: 1.0963

S3: 1.0828

EUR/USD – Trading Tips

On the technical side, the EUR/USD is facing solid support around 1.1160, which is mostly extended by the series of EMA and double top resistance become support level. I will be looking to stay bullish above 1.1160 to target 1.1245. All the best!


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