Market Analysis: 8 September, 2016
By Christala Parmaxi
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.
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.
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.
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.
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.
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.
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
June 8, 2017
June 6, 2017