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Daily FX Brief, July 16 – Big Day, U.S. Retail Sales & U.K. Labor Report In Limelight!

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On Monday, the forex market remained muted due to lack of catalyst and the dollar was able to breath higher. The U.S. Dollar Index drifted from 96.75 to a high of 96.97; however, the overall trend still remains slightly bearish amid expectations that the Federal Reserve will cut interest rates at next week’s policy meeting.

Traders anticipate the Fed to lessen its key rate by 25 basis
points and make another cut in September. Foreign exchange markets were soft on Monday and volatility remained low ahead of major central bank policy decisions next week.

Economic Events to Watch Today

Today, investor’s focus stays in the top-tier economic catalyst such as the retail sales from the United States and the unemployment rate from the United Kingdom.

 

 

 

EUR/USD – Daily Outlook

The EUR/USD pair touched the bullish track but is holding below a series of 20 and 50 day EMA due to strong hurdle before the EC President vote. The EUR/USD currency pair hit a bullish track and corrective bounce from the 9 July of 1.1193. Whereas, the EUR/USD pair is presently trading at 1.1262 and the twenty-day moving average prevails at 1.1255.

During the day, Germany’s Ursula von der Leyen would cast a vote to be the first female leader of Europan Commissions.

On the other hand, the Euro may come into pressure and drop if legislators reject Ursula von der Leyen after that the European Union would need to come up with another applicant during this month.

U.S. Retail Sales – 12:30 GMT
The US consumer has been active in May as sales increased by 0.5% and core sales by the same scale. May’s report was accompanied by upward revisions for May. This time, more modest increases of 0.2% on the headline and 0.1% in core sales are projected.

On the technical front, the EUR/USD has dropped 0.2% to $1.1255. The EUR/USD currency pair is trading sideways in a narrow trading range of 1.12850 – 1.12430. The major currency pair hit the bullish track around 1.1240 to test the 1.1275 resistance.


 

Daily Support and Resistance
S3 1.1205
S2 1.1236
S1 1.1249
Pivot Point 1.1266
R1 1.1279
R2 1.1297
R3 1.1327

EUR/USD – Trade Tip

Let’s keep an eye on 1.1265 as the EUR/USD can stay bearish below this level until 1.1240. While above 1.1270, the pair can stay bullish until 1.1280.

GBP/USD – Daily Outlook

The GBP/USD pair recovers to 1.2520 amid political confidence and soft Brexit concerns. Today in the early Asian session, the GBP/USD currency pair recovers to 1.2520, after seeing a drop on the previous day.

The GBP/USD currency pair dropped against the U.S. dollar following the US NY Empire State Manufacturing Index flashed upbeat numbers. Moreover, the instability in the GBP/USD pair could be due to no Brexit deal threats which continue to dominate Sterling ever since Boris Johnson join as the candidate of prime minister posts.

U.K. Unemployment Report
From now, all investor’s eyes will be on the monthly jobs report and BOE Governor Carney’s speech at G7 meeting for fresh hints. The unemployment rate settles low at 3.8% in the UK, while wages are growing at a satisfying pace of 3.1%.

These economic figures for April are set to be renewed in May. Despite the positive numbers, the Bank of England is unlikely to boost rates until Brexit is sorted out. The Claimant Count Change is estimated to grow by 18.9K in June after 23.2K in May. This rise in jobless claims has yet to impact the jobless rate.


 

Daily Support and Resistance
S3 1.2403
S2 1.2469
S1 1.2494
Pivot Point 1.2535
R1 1.256
R2 1.2601
R3 1.2668

Recalling our previous forecast, the GBP/USD has violated the symmetric triangle pattern on the lower side at 1.2580 which is one of the major indications of a selling bias among traders. Right now, the cable trades at 1.2515 and has already hit our initial target level of 1.2520. Now it’s likely to face resistance at 1.2530 and support around 1.2490. The bullish breakout of this level can extend the buying trend until 1.2595 and a bearish breakout can cause a sell-off until 1.2475.

GBP/USD – Trade Tip

Consider staying bearish below 1.2535 and bullish above the same level to target 1.2570 on the upper side and 1.2520 and 1.2465 on the lower side. All the best!

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