USD, GBP/USD, EUR/USD Analysis and Talking Points

  • USD Remains King
  • Euro and GBP stays below stress

USD: A continued repricing of recession dangers has been felt within the commodity after a dramatic sell-off in oil costs throughout yesterday’s session. Meanwhile, the already sturdy USD has been additional fueled by safe-haven flows and will probably proceed to take action as danger sentiment sours. That stated, the spike increased within the buck has been a wrecking ball for its main counterparts, most notably the Euro, which is printing recent two-decade lows and seems to be set for parity.

EUR/USD Chart: Monthly Time Frame

Source: Refinitiv

The negatives for the Euro are well-known and may very well be additional exacerbated by two occasions this month. Firstly the annual upkeep shutdown of Nordstream from July 11-21st and secondly the ECB’s July assembly the place all the main focus is on whether or not the central financial institution can announce a reputable anti-fragmentation instrument. That stated, the bias could be to fade any bounce backs within the single foreign money from 1.0300-20. Looking forward, eyes shall be on the upcoming ISM Non-Manufacturing PMI report and after final week’s weak manufacturing determine, this knowledge shall be carefully watched as as to whether it will add additional weight to recession dangers.

Resistance – 1.0340-50 (2017-2022 lows), 1.0485-90 (Jun 30/Jul 1st highs), 1.0558 (50DMA).

Support – 1.0210 (July 2002 peak), 1.0000 (Parity)

Top Q3 Trade Idea – Euro May Break Parity

GBP: Politics is on the forefront of the speaking heads within the media, nevertheless, for merchants, the Pound has been somewhat sanguine concerning the political turbelence. While GBP/USD is considerably decrease in current periods, the pair has not moved decrease since key cupboard members annouced their resignations, in the meantime, EUR/GBP is in reality decrease. It is the start of the tip for Boris Johnson, though, the present backdrop that plagues the Pound stays unaltered. This has been evidenced by this morning’s delicate development PMI knowledge, whereas BoE Chief Economist Pill remark’s weren’t precisely in favour of a bigger hike within the Bank fee.

Comments made by BoE’s Pill

  • One-off daring strikes will be disturbing to markets
  • There is a case for steady-handed strategy
  • If we get a fame for large, sharp strikes in financial institution fee, markets will see it as noise

Alongside this, ought to Boris Johnson reluctantly announce his resignation, except for uneven worth motion within the brief time period, the medium time period outlook nonetheless stays for decrease GBP on rallies. Reminder, when former UK PM, Theresa May, resigned, GBP truly closed the session increased. Outside of a short-squeeze, the bullish argument is missing.

Resistance – 1.2000 (spherical quantity), 1.2215 (May low), 1.2332 (Weekly High)

Support – 1.1900 (Weekly low), 1.1614 (2020 closing low), 1.1400-50 (Brexit/Covid lows)

GBP/USD Chart: Weekly Time Frame

US Dollar Wrecking Ball, Euro and GBP Under Pressure
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