Market Analysis: 8 September, 2016

Market Analysis: 8 September, 2016

By Christala Parmaxi

Overview:

BoC :  

The Bank of Canada kept its interest rates unchanged at 0.5% yesterday as it was widely expected. However, the bank warned of an increased likelihood of the economic profile to be lower than expected during July’s meeting. The BoC referred to the fact that the growth in H1 was slower than expected and this trend could continue in H2 as well; however for now they would keep the “wait and see” motion. The Loonie fell right after this statement but is recovering today.

Economic Calendar

ECB Policy Meeting

ECB is having its policy meeting and interest rate decision today. The Bank is widely expected to keep deposit rates and interest rates unchanged at -0.4% and 0% respectively, a record low for both rates.

ECB Rates

 

However, investors are looking for QE expansion since the inflation of the European Union is still low and Brexit risks on the long-term did not diminish yet. Specifically ECB may extend its asset purchasing program beyond the current end day of March 2017, since Draghi already stated in the past that QE will run as long as necessary for the inflation target to be reached.

Technical View

EURUSD

The most traded currency is showing a bullish bias in the medium-term, following yesterday’s trading range. MACD just moved above its equilibrium level and ADX is indicating positive directional movement. Also, stochastic is slopping upwards and price is moving above Bollinger’s middle band. EURUSD is testing again the resistance of 1.127. Upon upside penetration of it, the next valid target is the resistance of 1.135 which coincides with Bollinger’s upper band. To the downside, the risks are near the support level of 1.12 that coincides with SMA100 and then 1.113. Let’s wait and see EBC’s next step to open any position since a dovish tone adopted by Draghi would push the pair lower in the near-term.

EURUSD

EURUSD

AUDUSD

Aussie is running on a 3-week high pushing the trigger for the continuation of the current upside trend. ADX indicates positive directional movement while RSI and MACD are slopping above their equilibrium levels; specifically MACD just crossed the 0 level and its signal to the upside.

AUDUSD

AUDUSD

The next valid target on the 4-Hour chart is the top of 0.7755. However, looking closer on the pattern of the price I would expect a correction down to the middle of the previous candlestick and then a further move upwards. Moreover, ADX is on overextended levels indicating a possible correction.

AUDUSD

AUDUSD

 

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