EUR/USD: analysts' expectations on the EU economy have not been metThe EUR/USD exchange rate is falling against the background of the weakening of the US dollar, reaching the level of 1.0832.Macroeconomic data did not confirm expectations, putting pressure on the euro: in July, the business activity index in the French manufacturing sector fell to 44.1 from the expected 45.4, and in Germany to 42.6 against the forecast of 43.5, which led to a decrease in the EU composite index from 45.8 to 45.6. In the French services sector, the indicator improved from 49.6 to 50.7, while in Germany it decreased from 53.1 to 52.0, which eventually lowered the pan-European index to 51.9.Resistance levels: 1.0870, 1.0950.Support levels: 1.0830, 1.0750.GBP/USD: possible correction of the Bank of England's policy in AugustThe GBP/USD pair has been experiencing downward pressure for the second week, reaching 1.2890 during the Asian session.British investors are analyzing the latest employment data: in May, the unemployment rate was 4.4%, the employment rate increased by 19.0 thousand instead of the expected 18.0 thousand, the average salary with bonuses decreased from 5.9% to 5.7%, and without bonuses — also to 5.7%, which is the lowest since the summer of 2022. Analysts believe that these data are insufficient to convince conservative-minded members of the Bank of England that inflationary pressures are under control. However, monetary policy easing is possible at the August meeting, as inflation reached the target of 2.0%, and core inflation, excluding energy and food, approached 0.3%, well below the maximum of 0.9% at the beginning of last year. Two rate cuts of 25 basis points are forecast this year. Business activity data is published today at 10:30 (GMT+2): an increase in indicators in the manufacturing sector to 50.9 and in the service sector to 52.1 may support the British currency.The attention of American investors turned to political events: on Sunday, the current US President Joe Biden announced his refusal to participate in the elections, supporting Vice President Kamala Harris as the candidate of the Democratic Party, which has already gained the necessary number of votes for her nomination. Despite this, many experts see Donald Trump from the Republican Party as the winner, who, if he wins, can impose duties on Chinese goods and lower taxes, stimulating investment, which can accelerate inflation and slow down monetary policy easing. Today at 15:45 (GMT+2), data on business activity indices in the manufacturing sector and the service sector are expected on the market, which may have an impact on the US dollar.Resistance levels: 1.2939, 1.3061, 1.3183.Support levels: 1.2817, 1.2695, 1.2573.USD/JPY: Japanese Annual Core CPI settled at 2.1%The USD/JPY pair shows a steady decline, reaching the level of 154.58, while the market considers the current growth of the yen as corrective, caused by currency interventions of the Bank of Japan.At the same time, macroeconomic indicators remain disappointing: the core consumer price index remained at 2.1%, rising from 1.8% in May. The index of business activity in the manufacturing sector decreased from 50.0 to 49.2 points in July, while in the services sector it improved from 49.4 to 53.9 points. Analysts point to the growing concern of Japanese politicians about the weakness of the national currency and their desire to influence the regulator in order to raise rates. However, at the July 31 meeting, Bank of Japan officials are expected to keep interest rates at the same level and consider the possibility of adjusting monetary policy only in the fall.Resistance levels: 155.40, 157.70.Support levels: 154.10, 151.80.USD/CAD: awaiting the Bank of Canada's rate decisionsThe USD/CAD pair continues to grow for the second week in a row, currently checking the level of 1.3793 (Murray [8/8]). The Canadian dollar is under pressure on the eve of the Bank of Canada meeting, where an interest rate cut from 4.75% to 4.50% is possible. This decision may be due to the latest inflation data for June, which showed a decrease to 2.7% from 2.9% year-on-year and an increase in unemployment from 6.2% to 6.4%. Given these factors, additional monetary policy easing seems justified, especially after statements by the head of the Bank of Canada, Tiff Macklem, about the possibility of reducing the cost of borrowing with a slowdown in consumer price growth. The regulator's goal is to achieve a "soft landing" of the economy, avoiding a sharp increase in unemployment.As a result, an increase in the USD/CAD exchange rate in the near future looks like the most likely development.Resistance levels: 1.3793, 1.3855, 1.3916.Support levels: 1.3732, 1.3671, ...
USD/JPY is near the 153.65 mark, while the yen remains stable due to neutral macroeconomic statistics, which in this case plays the role of support.The consumer price index in Tokyo remained at 2.3% year-on-year, while the core index excluding fuel and food prices increased slightly from 2.1% to 2.2%. The price index for corporate services increased from 2.7% to 3.0%, which is higher than preliminary estimates of 2.6%. This significant increase in the cost of corporate services indicates a possible continuation of high inflation and provides the Bank of Japan with grounds for tightening monetary policy. According to Reuters, this issue will be discussed at a meeting on July 31. The government's monthly report also indicates a recovery in the country's economy, but a slowdown in export growth may have a negative impact on GDP.Meanwhile, the US dollar index is trading near the 104.00 level as part of a corrective trend. The American currency practically does not react to macroeconomic indicators, as the internal tension in the United States is so great that traders are in no hurry to open new positions, waiting for additional signals from the authorities. Recently, President Joe Biden explained in his address to the nation the reasons for his refusal to participate in the elections and confirmed his intention to serve as president until the end of his term. This event distracted attention from the GDP report, which showed economic growth in the second quarter to 2.8% from 1.4%, as well as from labor market data, which recorded a decrease in the number of applications for unemployment benefits to 235 thousand from 245 thousand.On the daily chart, the pair has moved beyond the multi–month ascending channel with the boundaries of 163.00-156.00 and continues to decline.The indicators suggest a sale. The fan of the average alligator indicator has correctly opened downwards, and the awesome oscillator indicator forms descending bars in the sales area.If the asset continues to decline and consolidate below the key support level of 153.00, we will open sales with a target of 150.80. We will set the stop loss at 154.00.We will consider purchases if the pair overcomes the resistance level and continues to grow, gaining a foothold above the 154.70 mark, we will designate 157.70 as the target. We will put the stop loss at ...
EUR/USD: macroeconomic data did not contribute to the strengthening of the euroAlthough the US dollar is showing a decline, the EUR/USD exchange rate continues to follow the corrective trend, being at the level of 1.0837.The latest macroeconomic data did not support the euro: in July, the business activity index in the French manufacturing sector fell from 45.4 to 44.1 points, in Germany the decline was from 43.5 to 42.6 points. In the French services sector, the index improved from 49.6 to 50.7 points, while in Germany it decreased from 53.1 to 52.0 points, which led to a correction in the overall indicators for the eurozone from 45.8 to 45.6 points in the manufacturing sector and from 51.9 to 45.6 points in services. As a result, the composite index fell from 50.4 to 48.7 points, returning to the deterioration zone for the first time since March, indicating a slowdown in the Eurozone economy. This, in turn, increases the chances of interest rate cuts by the European Central Bank (ECB) in September and December. Meanwhile, the GfK Group consumer climate index improved from -21.6 to -18.4 points in August, exceeding expectations of -21.1 points amid slowing inflation and improving household incomes due to wage growth.Resistance levels: 1.0909, 1.1021.Support levels: 1.0793, 1.0708.GBP/USD: pound rose on business activity dataAfter a significant rise at the beginning of the month, the GBP/USD exchange rate is now falling against the background of a temporary correction of the US dollar, remaining at 1.2888 during the Asian session.The pound is supported by macroeconomic data: the index of business activity in the manufacturing sector increased from 50.9 to 51.8 points, and in the services sector — from 52.1 to 52.4 points, which led to an improvement in the composite index from 52.3 to 52.7 points. This gives investors reason to expect further strengthening of the national currency until next week, when data on the labor and real estate markets will be published. Such indicators are a recovery from the period of instability caused by the recent parliamentary elections and may contribute to accelerating GDP growth. Nevertheless, most experts believe that the Bank of England will not begin active measures until autumn.Resistance levels: 1.2930, 1.3040.Support levels: 1.2860, 1.2750.AUD/USD: According to Roy Morgan, tax cuts will reduce mortgage pressureThe AUD/USD exchange rate stabilized at 0.6547, moving within the framework of an "expanding" pattern with boundaries of 0.6800–0.6300.Analysts are assessing possible actions by the Australian monetary authorities. Deutsche Bank expressed doubts about achieving the inflation target of 2.0–3.0% in the foreseeable future, which is confirmed by the data of the Melbourne Institute survey, where only 15% of participants believe in an early recovery of inflation after the pandemic. Experts from Roy Morgan believe that the tax cuts that have begun will significantly reduce the proportion of households experiencing mortgage stress if the labor market remains stable and the Reserve Bank of Australia does not raise interest rates. At the same time, the unemployment rate in the country reached 4.1% in June, which makes a correction in the cost of loans less likely, but persistent inflation may stimulate an increase in rates by 25 basis points at the August meeting, creating an additional burden for homeowners. According to RoyMorgan statistics, the number of mortgage borrowers facing late payments increased to 1.6 million or 30.3% of the total, which is 88.0 thousand more compared to the previous month. The proportion of people especially vulnerable to risks (based on their debt service costs) exceeded 1.016 million people, or about 20%, which is significantly higher than the average level over the last decade of 14.5%. Despite a slight decrease, mortgage stress remains high. According to analysts at Westpac Banking Corp., the probability of an increase in the RBA's key rate is estimated at 30%, and the first reduction is not expected until August 2025. In addition, the business activity indices in manufacturing and services showed a correction from 47.2 to 47.4 points and from 51.2 to 50.8 points, respectively.Support levels: 0.6530, 0.6450.Resistance levels: 0.6570, 0.6660.USD/JPY: the prospect of a rate hike by the Bank of Japan stabilizes the yenThe USD/JPY exchange rate continues to fall for the third week in a row, influenced by differences in the monetary policy of the US Federal Reserve and the Bank of Japan, with the current level at around 152.00.The increasing likelihood of monetary policy tightening by the Bank of Japan is supported by the latest data. The July figures indicate a strengthening of business activity, which may indicate a recovery in the country's economy. The consumer price index continues to exceed the target level, reaching 2.8% in June, with the base index at 2.6%. This allows the regulator to count on maintaining high inflation rates, which is facilitated by a significant increase in wages. According to information from Reuters, the Bank of Japan is expected to consider raising interest rates at its July 31 meeting, although specific measures may be postponed until the autumn.Resistance levels: 156.25, 159.37, 160.93.Support levels: 151.56, 150.00, 148.43, ...
On Wednesday, USD/JPY is in a short-term downtrend and is trading at 154.58, which investors see as a correction due to currency interventions by the Bank of Japan.Japan's macroeconomic data remains weak. The core consumer price index remained at 2.1% compared to the same indicator a year earlier. The index of business activity in the manufacturing sector in July decreased from 50.0 points to 49.2 points, and in the services sector increased from 49.4 points to 53.9 points. Experts believe that the weakness of the yen is causing concern among Japanese politicians who are trying to put pressure on the Central Bank to increase the cost of borrowing. However, most likely, at the July 31 meeting, interest rates will remain unchanged, and the adjustment of monetary policy will be postponed to the autumn.The dollar index is trading at 104.10, almost unresponsive to the June report on sales in the secondary housing market, which showed a decrease from -0.7% to -5.4%, which corresponds to an annual minimum. Today at 16:00 (GMT+2), new home sales data will be published, which is an important indicator of the American construction market. A correction is expected from 619.0 thousand to 639.0 thousand earlier.Technical analysis indicators indicate a sale. The averages on the alligator indicator have adjusted downwards and are opened correctly, and the awesome oscillator forms descending (red) bars in the sales area.We will open short positions after the price decreases and fixes below the key level of 154.10. We consider 151.80 as the target. We will place the stop loss at 155.50.In case of a breakout of resistance with subsequent growth of the asset, we wait for the price to consolidate above 155.40 and open purchases with a target of 157.70. We will place a stop loss at ...
The dollar fell against the Canadian dollar and hovered near multi-month lows against European currencies on Tuesday as Treasury bond yields were little moved amid expectations the US Federal Reserve will not raise interest rates in the near future.Dallas Fed President Robert Kaplan reiterated on Monday that he does not expect interest rates to rise until next year, lowering expectations that inflationary pressures could force the Fed to change policy sooner than stated.Read more: Causes of inflation and scientific approaches to their studyThe yield on 10-year US Treasury bonds stood at 1.6454%, continuing a decline from last week's five-week high.The dollar index to a basket of six major currencies was down 0.19% to 89.991 by 09:34. The euro rose 0.25% to $1.2181, close to its lowest level since February 26. At the same time, the pound rose 0.31% to $1.4178. The British currency was supported by the lifting of coronavirus restrictions in the UK.The Canadian dollar rose 0.31% against the US dollar to $1.2029, almost hitting a six-year high, thanks to higher oil prices. "The Aussie rose 0.46% to $0.7799. The New Zealand dollar rose 0.58% to $0.7242.The mainland yuan rose 0.2% to 6.4257. The Japanese yen rose 0.1 per cent paired with the dollar, to 109.08 yen.In the cryptocurrency market, bitcoin rose 3.81% to $45.255 but remained near a three-month low following tweet from Tesla CEO Elon Musk. Etherium rose 7.58% to $3,529.95, recovering from a two-week low hit on Monday.Read more: The history of Federal Reserve (Fed) and its ...
The foreign exchange market is better known as Forex or FX. Trading in this market has become very popular in recent years. However, this is not the case - Forex trading raises a number of questions. For example: what is the foreign exchange market? Which currency pairs are best to trade? Is currency trading risky? Some of the answers to these questions will be found in this article.What is the Forex market?The foreign exchange market is also called the Forex market or the English foreign exchange market. It is simply a market where currencies are exchanged. According to the Bank for International Settlements (BIS), the foreign exchange market is the largest market in terms of total volume, with up to USD 5 trillion traded daily. It is not a physical place, but rather an electronic network where institutions or individuals trade with each other.The left-hand currency is called the base currency and the right-hand currency is called the quote currency. The second currency indicates the value relative to 1 unit of the base currency. For instance, the formula EUR/USD = 1.4000 implies that EUR/USD trades at 1.4000, i.e., 1 Euro has a value of $1.40. The first currency is always expressed in the second currency. USD/JPY at 110.50 means that one USD is worth JPY 110.50. EUR/USDWhat are the best currency pairs to trade?The best currency pairs to trade effectively depend on your trading style. If you have a short term strategy, for example, if you like to scalp, then the major currency pairs will be most profitable for you because of the low spreads.On the other hand, for a fundamental trader, smaller currency pairs will be of interest based on long-term analysis. The most profitable currency pairs may be those involving the Australian dollar, Japanese yen or Canadian dollar.The best forex currency pairs:EUR/USD: this pair has the lowest spread and is not very volatile.GBP/USD: this pair is interesting in terms of spreads and possible gaps, but it is quite volatile.USD/JPY: this pair has low spreads and offers some interesting possibilities. GBP/USDHow to get started trading currencies online?To start trading currencies online, follow these steps:- Choose a regulated and reputable broker- Choose a broker by the quality of execution of trading instructions- Decide on the trading style that suits you best (scalping, intraday trading, swing trading - you keep your position open for several days)- Determine the appropriate leverage effect in the stock market according to your strategy and experience.- Do not invest more than you can afford to lose.- Choose an intuitive, simple and secure trading platform such as MetaTrader 4.- Try all the above steps on a demo account, before trading live.Read more: Features of intraday trading on the Forex marketGoldIs online currency trading dangerous?Like any financial investment, currency trading online is subject to risks. However, there are different methods to control these risks:- Determine the price of the currency pair at which you want to close a position if developments are unfavourable (for example, if you buy and the price falls, or if you sell and the price rises),- Determine the size of the trade so that your potential loss should not exceed 2-3% of your capital per trade,- Estimate your risk/return ratio (loss/profit) before you open the trade. By default you should have a greater potential for profit than loss, e.g. risk 50 pips, but try to make a profit of e.g. 100 pips.For proper money management and risk reduction it is advisable to start trading on a demo account and try things out on the dirt first. Such an account will allow you to trade in real market conditions, but with fictitious capital, so that you have a complete understanding of the foreign exchange market without any risk.Read more: Forex broker: how to choose a good ...