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24 July 2017 – Dean Forex Market Commentary

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Dean's Daily FX Update – 24 July 2017

In the Zone

  • EURUSD
  • NZDUSD
  • USDZAR
  • Gold

Noteworthy News

  • The White House has called a press conference in which President Trump will be addressing healthcare reform this evening, one wonders what the new slant is.

Recap

These days it feels as though it just wouldn’t be a normal day of we didn’t have some form of scandal out of the White House. Rumours started filtering through the wires that Trump had hired Anthony Scaramucci as Director of Media Communications, which has led to Sean Spicer resigning. I am still deliberating with myself whether Spicer was not prepared to work with Scaramucci, or if he climbed through a small window of opportunity to escape the madness.

Despite the scepticism from the political world, I always enjoyed watching Scaramucci when he was on CNBC and to be honest he was pretty good at his first press briefing. If he becomes the voice of reason and gets Trump to get off his twitter account and listen to the team around him, you may find that the political cards may fall a little easier for Trump, it’s too early to judge – but this appointment could prove to be a master stroke.

The press briefing came too late in the day to judge market reaction, and the dollar continued to lose ground against all the major currencies, we have the FOMC this week and perhaps this week will culminate in being the turning point in the fortunes of the greenback.

The EURUSD is trading at the highest level in almost two years, with the high trading at 1.1685, it started last week at 1.1435 and that perhaps gives you an indication of how much work this pair has done. On the topside, the market will start seeing offers building between 1.1710 and 1.1735 as this is the high from August 2015 – a close above this level will then target 1.1800. On the bottom end of this pair we could see the buyers look for any dip opportunities at 1.1615, speculators are definitely long and will remain in charge as long as price remains above 1.1615. A weekly close below this level turns this trade into 50/50 territory and ultimately the previous resistance at 1.1465 will become a big level again.

The USDJPY finally pushed below the 200 day MA (and 50% retracement level) of 111.80 after multiple attempts had failed. Towards the end of the day, the pair traded to as low as 111.00 before it bounced, the sellers will only keep control if the pair is able to stay below 110.80, this is a pair that I am choosing not trade this week as I suspect that this one could be most affected by the FOMC on Wednesday.

The GBPUSD was the only pair to lose ground against the dollar last week, the fact that price stalled and failed at 1.3050 is huge for me – this was the top of the range that formed after the October flash crash and I it is still rather strong. The level to watch here is 1.2920 for me as I think that is where the market will target for the next break.

The AUDUSD had an early week surge, and much like its peers it trades at the highest level in over 2 years. The pair eventually consolidated and traded lower and closed below the 100 hour MA for the first time in 2 weeks, this pair is at a cross roads now and the next break will be key. There is natural resistance at 0.8000 but the pair may find it difficult to break above 0.7975 for now. On the lower side, I suspect that 0.7820 will be the first support.

I suspect that the rest of the central banks are starting to regret their overly bullish tones in the last 3 weeks, coupled with the political drama unfolding in Washington, almost all the pairs are at long term extremes. It is not in the best interests of these countries to be so strong against the greenback and I suspect that they may all start back tracking their comments soon – this may be bring in some mean reversion.

Important Economic Data out today

14:30                                     USD                                       Existing Home Sales

Consensus:                         5.59M

Effect:                                   Actual higher than expected is good for the USD

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