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20 July 2017 – Dean Forex Market Commentary

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Dean's Daily FX Update – 20 July 2017

In the Zone

  • EURUSD
  • NZDUSD
  • Gold
  • Silver
  • Oil

Noteworthy News

  • There is now talk that the Republicans may opt to take a new decision to the Senate, to repeal Obamacare – is this what is needed to get the dollar going again?

Recap

Another day with a relatively light calendar on it, the data that came out was stronger than expected and yet the dollar still weakened somewhat. I mentioned it in our report yesterday but it seems as though nothing else matters except the political landscape in the US at present.  The Healthcare Bill is essentially not going to get through in its current format, Trump then invited the Republican Senators over for lunch where I am sure he started putting pressure on his own party to find a solution. We have since seen some stories emerge that the Republicans may choose to repeal Obamacare and allow for two years to phase it out – is this not what he promised in his campaign?

I am sure that Washington will get some reprieve, if for only a day though. The focus will instead shift towards two interest rate decisions in the form of the BOJ and ECB today and both of them could be market moving. After the EUR strengthened last month on Draghi speeches, you get the impression that he may have to soften his tone somewhat today.

The USDJPY is sitting on a couple of key levels which includes the both the 100 and 200 day MA between 111.63 and 111.88. The pair has traded early this morning back above to 112.00 which will be key for the bulls, I have a feeling that this press conference will not show any surprises and the market will sift through the hot air. Over the weekend, the trader commitment report showed that long USDJPY positions were at record levels and so there may a risk of a short squeeze in this market (when traders close their positions.)

The EURUSD corrected off its highest level in a year yesterday, although the day was a strange one. The currency pairs came out the blocks quickly yesterday and then wandered lower for most of the day. The EURUSD got to as low as 1.1501 yesterday which is a little short of the level I mentioned yesterday at 1.1487, this level represents where the big move from the healthcare failure started but also coincides with the 100 hour MA. The ECB press statement will be an interesting one, I have said on many occasions that Draghi can be very unpredictable, and today is one of those days – will he soften his tone on tapering of QE or will he not even bother today? 1.1465 was broken this week and this was a previous massive resistance level, it could be that business are hedging against a high EUR. Any move lower to 1.1465 could be met with some dip buyers.

We cover quite a lot in the morning videos and I have mentioned that the greenback does look poised to start fighting back. I am weary of this as the dollar has had a couple of “false starts” this week – looking at the technical picture however, it does look as though we may getting a sneak peak of a new dawn.

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