Foreign Exchange in July 7/16/18
Published on: 07/16/18 1:53 PM
There has been a lot happening in the Forex industry over the past few weeks. The United States has met with China and is trying to ease trading war tensions. As far as the United Kingdom is concerned, President Trump was not a fan of the Brexit policy that was passed. He stated that it would be hard to strike a trade agreement with our ally. In this article, I am going to be breaking down a couple currency pairs along with going over the fundamentals.
Over the past few days, EUR/USD has recovered from its one week low and has completely erased its daily losses. The pair has jumped from 1.1612 to 1.1670, lying slightly below daily highs. The currency pair has been holding strong given the report of the Fed’s monetary policy. The Euro is now back above the 20 day moving average as it trims its losses against the dollar. Looking back, the report that was released had no tremendous impact on the dollar. 1.1650 could be looked at as a potential support for the currency pair. However, holding above that line could signal some short-term exhaustion. If the pair closed below 1.1630, it would weaken how the euro would be performing. 1.1670 continues to show a strong resistance for the pair.
As far as the USD/JPY pair is concerned, the dollar is retreating from the highs that it had set in January. The market feels as if it is overbought which encourages covering profits by a lot of traders out there. This is especially due to the pair’s strong push 140 pips up over the course of the past five trading sessions. However, the trend remains bullish. Even though it is still bullish, the pair seems to be consolidating.
On the fundamental side of things, the US-China trade tensions have tended to support the pair. Both economies agreed to resume trade talks and decrease the tension between them. People then viewed the Yen as a safe haven
As far as the GBP/USD pair is concerned, it is trading right around the 1.3210 mark. It has recovered due to the fact that British Prime Minister May and United States President Donald Trump may be meeting with each other to ease tensions. This was because Trump was not a fan of Britain’s Brexit policy. He stated that it would threaten a trade deal between the UK and the US. The pair tends to be on the oversold side as depicted by the RSI indicator. The pair has continued to have a support level around the 1.3100 mark but it has still failed to recover. When Trump announced that it would be hard to strike a deal given the Brexit policy, the pound started to sell off.