Hello, dear traders!
Tuesday news was unfavorable for the US currency. Recent statistical data is not in favor of maintaining the growth rate of the US economy. Yet, despite the negative news, the dollar hasn't lost its position against the main currencies.
A fall in consumer confidence was quite unexpected; in addition, there's a significant decline in new home sales - by 7.8%. A fall in consumer spending indirectly confirms that economic growth pace is slowing down, and the situation in the second quarter might be worse than expected.
However, the dollar isn't falling. In the contrary, following Jerome Powell’s speech, the US currency is rising against the euro, pound and Japanese yen. In his speech, the head of the Fed has mentioned that the Fed constantly monitors the situation and is ready to take measures for stimulating the economy. Moreover, according to the Fed, there's a possibility to achieve the target inflation rate of 2.0%, but this will happen at a slower pace than previously expected.
As a result, the likelihood that the rate cut by 50 basis points will take place in July is very high.
On Wednesday pay attention to:
- 14:15 - report on inflation in the UK; speech by the head of the Bank of England Mark Carney;
- 17:30 - durable goods orders in the US.
Both news are important, make sure not to miss them.
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The British pound is expected to weaken
On Tuesday, the pound updated the monthly maximum, but there was a sharp retracement from the level of 1.2783. As a part of this movement, global imbalance was formed at 1.2739; after its testing takes place, selling can be performed. The reversal M-shaped pattern is clearly observed on lower timeframes.
Place stop at 1.2787, close deals with profit at 1.2691 and 1.2595.
CADCHF - opening long positions
As for this pair, stop was executed yesterday, but the chart hasn't updated the Lows yet as there's a serious resistance of the bulls. There's a clear W-shaped movement with an imbalance at 0.7376. Retest of the level from above has already taken place, so while the chart is still located close to the imbalance one can open purchase deals.
Stop is located at 0.7347, and two targets - at 0.7406 and 0.7465.
AUDCHF - purchase deals can be opened
Here, buy signal has already been generated. Reversal pattern formation was followed by an imbalance breakout upwards with a subsequent retest of the level 0.6775. Protective stop is located at 0.6743. We expect the pair to grow to at least 0.6808, where the first take profit is located; the rest 50% of volume is closed at 0.6873.
CHFJPY - opening short positions from the level 110.26
On Tuesday, a two-month high was tested, it was the second wave of M-shaped pattern with a total minimum at 110.26. This level is a global imbalance, which has already been broken through downwards; at the moment we are waiting for price rounding and retest of resistance to take place. At touching the level 110.26 one can enter the market with targets at 110.00 and 109.48.
Place stop loss with a small margin above the high of the reversal pattern - it should be located at 110.52.
EURAUD - buying from the level 1.6320
Here, buy signal has already been generated. Entering the market became possible after retest from above of global imbalance at 1.6320 has taken place. At subsequent approaching this level one can perform buying.
Stop for the deal is located at 1.6281. Target levels are located at 1.6360 and 1.6443.
Tuesday signals summary:
- GBPAUD - safe rule was executed;
- EURCAD, GBPCHF, NZDJPY - deals are not open.