EURUSD Forecast And Technical Analysis July 12th
I would like to say few words before the near term analysis of the pair.
Currencies War started already. I shared a few documents yesterday evening in the trading room. I would like to summarize and keep it simple as much as I can.
*** Countries need to keep their currencies weak. They need cheaper currencies to have an advantage against their rivals in the global trade competition.
*** Yesterday, Financial Times published an article about ‘low but rising’ risk of US currency intervention. Summary of the article:
“If there’s anything on the economic menu President Donald Trump desires nearly as much as lower interest rates, it’s probably a weaker U.S. dollar. The question for investors is how far will he go to get it.
Goldman Sachs on Thursday described outright currency-market intervention as a possibility, albeit a “low but rising risk.” Analyst Michael Cahill pointed to an increasing series of presidential tweets, comments and policy actions and proposals that have put U.S. currency policy back in the spotlight.
And while such a move would cut against policy norms that have been in place since around the mid-1990s (see chart below), “in a world where QE has become almost conventional, FX intervention is not a giant leap,” Cahill said in an email, referring to the quantitative easing, or QE, programs undertaken by major central banks in response to the global financial crisis.”
When we talk about a Currencies Intervention, you may want read the below sample to have an idea about how it goes on:
You may read the full article via the following link.
*** On the other hand, ECB will go to another rate cut and QE cycle. With the ECB’s interest rate cut and the new QE cycle , the yields of the Euro Bond bonds will fall, the banking system will have hard times. The ECB may have to include bank bonds in its bond purchases. This is a matter of big discussion…Tough days ahead.
Whenever Dollar Index makes an attempt to break out key resistances, we see something seting a boundry.
Yesterday The U.S CPI data releasd and we got much better data than expected. After 2,5 years Core CPI moved above UST10.
We see pretty much stronger USD while comparing the U.S and Eurozone economies, Central Bank’s interest rates, their general overviews.
However, things do not seem to go on as they are written in the book of rules.
Going back to intraday trading:
Eurozone Industrial Production and U.S PPI data is released.
The pair is trading at 1.12720 as of writing. After yesterday’s upbeat US CPI data, it dropped and tested the 1.12400 support. However it failed the break below the support ( Whatever the reason “FED rate cut probablility, USD Intervention etc”)
We have sold it at 1.12870 and booked our profits.
It is testing the broken structure. If EU Industrial Production data comes better than expected (These days; I do not think that the reliability of macroeconomic data is strong ) may send the price above 1.12900.
A break and close above 1.12900 would lead the price 1.13200. A cup and handle pattern would be completed at 1.13200 and we may see a bullish continuation. I will publish this pattern later today.
If the pair fails to break above 1.12900, it is likely to retest 1.12400 and 1.12200 near term.
I will update!
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