No surprises from Fed

Next 24 hours: Stocks cautious post Fed

Today’s report: No surprises from Fed

Alright…so the fed decision has come and gone and as expected, we got more dovish, market friendly reassurances from the Fed Chair. And earlier on Wednesday, we also saw attempts to smooth things over out of China.

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 1.1896 - 6 July high – Medium
  • S1 1.1752 - 21 July low – Medium
  • S2 1.1704 – 31 March/2021 low – Strong

EURUSD – fundamental overview

Eurozone economic data was disappointing on Wednesday and ECB de Cos talked about the central bank keeping some of its bond buying flexibility post pandemic. And yet, the Euro moved higher, this on the back of more dovish reassurances from Fed Chair Powell in his post Fed decision presser. Key standouts on Thursday’s calendar come in the form of German unemployment, UK mortgage approvals, BOE consumer credit, Eurozone confidence and sentiment reads, German inflation, Canada weekly earnings, US GDP, US initial jobless claims, US core PCE, and US pending home sales.

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 1.3940 – 28 June high – Medium
  • S1 1.3737 – 26 July low – Medium
  • S2 1.3572 – 20 July low – Strong

GBPUSD – fundamental overview

The pound was boosted on two fronts on Wednesday. First it was the news of the drop in covid cases. Then it was about broad USD selling on more dovish reassurances from Fed Chair Powell post FOMC decision. Key standouts on Thursday’s calendar come in the form of German unemployment, UK mortgage approvals, BOE consumer credit, Eurozone confidence and sentiment reads, German inflation, Canada weekly earnings, US GDP, US initial jobless claims, US core PCE, and US pending home sales.

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 109.07 – 19 July low – Medium
  • S2 108.34 – 7 May low – Strong

USDJPY – fundamental overview

A little chop in the Yen on Wednesday, but ultimately, not much change for the Japanese currency. We did see some late demand on the back of some USD outflow post FOMC decision and mild US equity selling into the close. Key standouts on Thursday’s calendar come in the form of German unemployment, UK mortgage approvals, BOE consumer credit, Eurozone confidence and sentiment reads, German inflation, Canada weekly earnings, US GDP, US initial jobless claims, US core PCE, and US pending home sales.

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 0.7411 – 19 July high – Medium
  • S1 0.7290 – 21 July/2021 low – Strong
  • S2 0.7200 – Figure – Medium

AUDUSD – fundamental overview

Aussie inflation shot up to a ten year high on Wednesday, though Aussie rallies were held in check on account of the extended lockdowns in Sydney. We did however see Aussie demand into the NY close as the Buck was sold on more dovish reassurances from Fed Chair Powell. Key standouts on Thursday’s calendar come in the form of German unemployment, UK mortgage approvals, BOE consumer credit, Eurozone confidence and sentiment reads, German inflation, Canada weekly earnings, US GDP, US initial jobless claims, US core PCE, and US pending home sales.

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 1.2700 – Figure – Medium
  • S1 1.2500– Psychological – Medium
  • S2 1.2425 – 14 July high – Strong

USDCAD – fundamental overview

Wednesday's Canadian Dollar outperformance was a function of an ongoing recovery in the price of oil and broad based US Dollar outflows in the aftermath of dovish reassurances from Fed Chair Powell. Canada inflation did come in soft but failed to have any weighing influence on the Loonie. Key standouts on Thursday’s calendar come in the form of German unemployment, UK mortgage approvals, BOE consumer credit, Eurozone confidence and sentiment reads, German inflation, Canada weekly earnings, US GDP, US initial jobless claims, US core PCE, and US pending home sales.

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 0.7045 – 15 July high – Medium
  • S1 0.6881 – 20 July/2021 low– Medium
  • S2 0.6800 – Figure – Strong

NZDUSD – fundamental overview

The New Zealand Dollar didn't do much on Wednesday, though we did see some demand out from the lows of the day on a better feel for the outlook in China and on more dovish reassurances from Fed Chair Powell. Key standouts on Thursday’s calendar come in the form of German unemployment, UK mortgage approvals, BOE consumer credit, Eurozone confidence and sentiment reads, German inflation, Canada weekly earnings, US GDP, US initial jobless claims, US core PCE, and US pending home sales.

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 4426 – 26 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 (%)

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