Market Wrap: Weak Dollar, Strong NZD and Gold

Market Wrap: Weak Dollar, Strong NZD and Gold

What you need to know on July 14

  • The earnings season has started strong! PepsiCo has published better-than-expected Q2 earnings results and surged to record highs. US banks: JPMorgan and Goldman Sachs beat earnings per share forecasts, but the stocks edged lower. Why? Banks have severe headwinds: drop in fixed-income trading, rising costs, and economic uncertainty.
  • Today, Bank of America, Wells Fargo, and Citigroup will reveal their financial results.
  • US inflation came out greater than expected and pushed the USD up. It refreshed the talks about when the Fed can start tightening the policy. Traders will await eagerly the speech of Fed’s Powell this week.
  • The NZD rocketed after the Reserve Bank of New Zealand claimed it would end quantitative easing this month. It surprised investors and led them to price in an interest-rate hike as early as August.

Technical outlook

EUR/USD keeps moving inside the descending channel. Yesterday, the US inflation jump pushed the USD up and thus pressed EUR/USD down significantly. Today, the pair is recovering the losses. It may rise to the 50-period moving average (MA) of 1.1835, but shouldn’t cross it on the first try. If it manages to do so, it may soar to the 100-period MA of 1.1880. Support levels are yesterday’s low of 1.1770 and 1.1750.

EURUSDH4.png

Gold keeps attacking the 38.2% Fibonacci retracement level of $1815. If the price jumps above this threshold, it should rise to the 50% Fibo level of $1833. It may happen as the US dollar is quite weak today. On the flip side, if gold fails to cross the $1815 barrier, it will drop to the 23.6% Fibo level of $1790.

XAUUSDDaily.png

NZD/USD surged above the psychological mark of 0.7000 due to RBNZ’s hawkish surprise. The pair is likely to rise to the 200-day moving average of 0.7070, where it should stop for a while. The breakout above the 200-day MA will push the pair up to the next round number of 0.7100. Support levels are 0.7000 and yesterday’s low of 0.6930.

NZDUSDDaily.png

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USD Holds the Line
USD Holds the Line

The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now. 

US Dollar Prepares for the Pump
US Dollar Prepares for the Pump

On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies. 

Uptrend in Gold Starts Now
Uptrend in Gold Starts Now

Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!

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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.

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S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.

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