Surprising Fed speak

Next 24 hours: What to look out for over the coming sessions

Today’s report: Surprising Fed speak

The market got a tiny reprieve from headlines around the coronavirus on Wednesday, instead focusing in on a heavy round of economic data and some surprising Fed speak.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The market has been looking for a higher low since topping out in 2021 up at 1.2350. Ideally, setbacks continue to be well supported down towards 1.1600 in favour of the next major upside extension back through 1.2350 and towards a retest of the 2018 high at 1.2555 further up. Only a weekly close below 1.1600 would force a rethink.

  • R2 1.1976 – 25 June high– Strong
  • R1 1.1909 - 30 July high – Medium
  • S1 1.1752 - 21 July low – Medium
  • S2 1.1704 – 31 March/2021 low – Strong

EURUSD – fundamental overview

Eurozone services and composite PMIs came in softer, while Eurozone retail sales also disappointed on Wednesday. We saw the Euro sold on the back of these developments, with added downside pressure coming from more hawkish leaning comments from Fed's Bullard and Clarida. Key standouts on Thursday’s calendar come in the form of German factory orders, Eurozone construction PMIs, German construction PMIs, the ECB economic bulletin, UK construction PMIs, the BOE interest rate decision, Canada trade, US trade, and US initial jobless claims.

EURUSD - Technical charts in detail

GBPUSD – technical overview

The market is in a corrective phase in the aftermath of the run to fresh 2021 and multi-month highs. At this stage, additional setbacks should be limited to the 1.3500 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high.

  • R2 1.4002 – 23 June high – Strong
  • R1 1.3984 – 30 June high – Medium
  • S1 1.3843 – 28 July low – Medium
  • S2 1.3690 – 22 July low – Strong

GBPUSD – fundamental overview

The Pound couldn't do anything with a better round of UK services and composite PMI reads, with the currency more focused on selling pressure from hawkish Fed speak. Key standouts on Thursday’s calendar come in the form of German factory orders, Eurozone construction PMIs, German construction PMIs, the ECB economic bulletin, UK construction PMIs, the BOE interest rate decision, Canada trade, US trade, and US initial jobless claims.

USDJPY – technical overview

The longer-term trend is bearish despite the recent run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption back down towards the 100.00 area. It would take a clear break back above 113.00 to negate the outlook.

  • R2 111.00 – Figure– Medium
  • R1 110.70 – 14 July high – Strong
  • S1 108.72 – 4 August low – Medium
  • S2 108.34 – 7 May low – Strong

USDJPY – fundamental overview

Japan services and composite PMIs came in solid on Wednesday, but didn't really factor into price action. The Yen was mostly lower on broad based USD demand from hawkish Fed speak. Key standouts on Thursday’s calendar come in the form of German factory orders, Eurozone construction PMIs, German construction PMIs, the ECB economic bulletin, UK construction PMIs, the BOE interest rate decision, Canada trade, US trade, and US initial jobless claims.

AUDUSD – technical overview

The Australian Dollar has been in the process of a healthy correction following the impressive run towards a retest of the 2018 earlier this year. At this stage, there is risk for additional declines, though setbacks are expected to be well supported down into the 0.7000 area.

  • R2 0.7504 – 13 July high – Strong
  • R1 0.7427 – 4 August high – Medium
  • S1 0.7290 – 21 July/2021 low – Strong
  • S2 0.7200 – Figure – Medium

AUDUSD – fundamental overview

Warnings around Q3 GDP reads in Australia proved to be an initial strain on the Australian Dollar on Wednesday, but was somewhat offset by solid Aussie PMI reads. Ultimately however, it was a wave of broad based USD demand on hawkish Fed speak that forced Aussie lower into the Wednesday close. Key standouts on Thursday’s calendar come in the form of German factory orders, Eurozone construction PMIs, German construction PMIs, the ECB economic bulletin, UK construction PMIs, the BOE interest rate decision, Canada trade, US trade, and US initial jobless claims.

USDCAD – technical overview

Finally signs of a major bottom in the works after a severe decline from the 2020 high. The weekly close back above 1.2500 encourages the constructive outlook and opens the door for a push back towards next critical resistance in the 1.3000 area. Any setbacks should be well supported into the 1.2200s.

  • R2 1.2808 – 19 July high – Strong
  • R1 1.2608 – 23 July high – Medium
  • S1 1.2422– 30 July low – Medium
  • S2 1.2425 – 14 July high – Strong

USDCAD – fundamental overview

Canada building permits rose on Wednesday, but the Loonie was still hard hit on the day from the dump in oil prices and hawkish Fed speak. Key standouts on Thursday’s calendar come in the form of German factory orders, Eurozone construction PMIs, German construction PMIs, the ECB economic bulletin, UK construction PMIs, the BOE interest rate decision, Canada trade, US trade, and US initial jobless claims.

NZDUSD – technical overview

The market has entered a period of consolidation after running up to a yearly and multi-month high. At this stage, there is still room for deeper setbacks into the 0.6500-0.6800 area before we see an attempt at a higher low and resumption of upside pressure.

  • R2 0.7106 – 6 July high – Strong
  • R1 0.7089 – 4 August high – Medium
  • S1 0.6881 – 20 July/2021 low– Medium
  • S2 0.6800 – Figure – Strong

NZDUSD – fundamental overview

The New Zealand Dollar was a standout outperformer on Wednesday despite some selling into the close. Earlier in the day, the currency got a nice amount of upside momentum from the extremely impressive New Zealand jobs data. Key standouts on Thursday’s calendar come in the form of German factory orders, Eurozone construction PMIs, German construction PMIs, the ECB economic bulletin, UK construction PMIs, the BOE interest rate decision, Canada trade, US trade, and US initial jobless claims.

US SPX 500 – technical overview

Longer-term technical studies are looking quite exhausted and the market is showing signs of wanting to roll over after racing to another record high. Look for rallies to be well capped ahead of 4500, with a break back below 4139 to strengthen the outlook.

  • R2 4450 – Psychological – Strong
  • R1 4432 – 29 July/Record high – Medium
  • S1 4233 – 19 July low – Medium
  • S2 4139 – 21 June low – Strong

US SPX 500 – fundamental overview

We're trading just off fresh record highs, and yet, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout and risk of rising inflation should weigh more heavily on investor sentiment into the second half of 2021.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1600.

  • R2 1917 – 1 June high – Strong
  • R1 1850 – Mid-Figure – Medium
  • S1 1750 – 29 June low – Medium
  • S2 1724 – 13 April low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, and coronavirus fallout. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Peformance chart: 30 Day Performance vs. US dollar (%)

Suggested reading

Daily Reports Global FX Insights   LMAX Exchange  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.