Amana Capital Daily Market Reports
After rebounding from a two-year low during the previous week, selling pressure on the New Zealand dollar seems to build up again in the New Zealand dollar vs Japanese yen (NZD/JPY) pair.
From a technical standpoint, the pair faced resistance on the previously broken wedge chart pattern at around 73.41. As of 13:44 London time, the Japanese yen traded at 73.16 against the kiwi.
While the yen seems now well supported below the 73.41 level, a break of that resistance could send the pair up to the August 8 high of 75.23. To the downside, sellers could find heavy buying pressure on the previous week’s low of 72.34.
Fundamentals also played an important role in the break of the wedge pattern previously, as deteriorating risk appetite was supportive for the yen. Risk currencies, on the other hand, weakened against most major currencies. Developments in the Turkish lira and this week’s ECB meeting could now create additional volatility in risk sentiment and should be followed by NZD/JPY traders.
The Kiwi could also be vulnerable ahead of key data releases from New Zealand, including tomorrow’s GDT Price Index report and the quarterly change in retail sales on Wednesday.
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The British pound has caught a notable bid against the U.S. Dollar as we move into Monday's U.S. trading session, with the GBP/USD pair advancing towards its 200-period moving average across the hour time frame. At present there is no apparent catalyst for move higher in the British pound, aside from thin-trading conditions and minor weakness in the greenback.
The GBP/USD pair has not traded above its 200-hour moving average since August 1st this year. If we see the GBP/USD break and hold above this key technical barrier, we may well see the pair trading back towards the 1.2800 level.
Key resistance above the 1.2800 level for the GBP/USD pair comes from the August 14th swing-high, at 1.2826 and the 1.2850 level. If we see the GBPUSD pair fail at current levels, we should expect that sellers will push price action back towards the key 1.2700 support level.
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- USD/CAD under pressure after the Canadian consumer price index beat market expectations
- Loonie traders betting on another rate hike from the Canadian central bank
The Canadian Dollar received a notable bid after Canadian CPI data outperformed market expectation on Friday, rising +0.5% month-on-month and +3.0% during the same period last year. Bets are now high that the Bank of Canada may raise rates at their next meeting, or at least give a nod to an upcoming rate hike.
The Canadian economy has recently been posting much better than expected data recently, aside from Friday impressive inflation data, Canadian employment and retail sales figures have been standout points this month. Many fear that NAFTA talks and trade disputes with the United States may influence the Bank of Canadian to remain cautious, this may not necessarily be the case as the BoC has repeatedly said it does not incorporate hypothetical scenarios into its policy decisions.
Technically the USD/CAD pair is likely to remain weak while trading below the 1.3123 level, as it marks a key turning point for the USD/CAD this year. Key support is now found at 1.3049, 1.2990 and 1.2965.
Traders should also note, that despite the USD/CAD pair’s decline on Friday, sellers failed to break below the former weekly trading-low. Key resistance above the 1.3123 level is found at the 1.3169 and 1.3220 levels.
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The U.S. Dollar Index is currently moving away from worst trading levels of the week so far, after finding strong support from just above the 96.00 mark. The greenback started to decline on Friday after the Michigan consumer confidence survey came in much softer than expected.
Looking across the lower time frames on the U.S Dollar Index, a bearish head and shoulders pattern is now clearly visible. If we see the 96.00 level starting break this week, the U.S. Dollar Index could be in for a one-hundred drop if the bearish pattern plays out to its full potential.
If we do see a drop below the 96.00 level, traders will increasingly start to look towards the 95.65 region, as it formerly marked the key breakout region for the greenback during early August.
If we see the U.S. Dollar holding above the 96.00 mark, key resistance is found at the July 2017 peaks, around the 96.50 region, while the 96.79 also offers resistance, as it represents a former key swingihg below current yearly-high, at 96.99.
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The third largest digital asset declined last week to test the major support level at $0.25 due to the overall bearish sentiment in the crypto market since the beginning of August. However, over the past couple of days, there were positive moves in the XRP/USD price above the $0.3270 level against the US Dollar.
Technically, even with the current strong push to the upside, we cannot disregard the idea that the trend remains bearish as the price continues to create lower highs, and on top of that, the 200-day moving average is still pointing downwards. Drawing a Fibonacci retracement levels from the July 18 high of $0.525 down to the August 14 low of 0.246, we can get the $0.354 to $0.419 range (38.2% to 61.8% Fibonacci levels). I suspect that traders might view this range as an opportunity to short XRP/USD aiming for the August 14 low and potentially the December 17 low of 0.198.
Only on a break to the trend defining high of $0.525 might turn the trend bullish, and I suspect the price might target the next resistance level at the June 19 high of $0.561.
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Mid last week, the NZD/USD pair printed its lowest level at 0.6545 which we haven’t seen since February of 2016. Subsequently, the pair gained traction and extended its gains to a fresh week high at 0.6635 and seems to be a product of a broad-based US Dollar weakness.
Overall, the trend remains a healthy bearish because the price continues to create lower and lower highs, and the 200-day moving average is still pointing downwards. If we draw a Fibonacci retracement levels from the July 26 high of 0.6850 down to the August 15 low of 0.6545, we can get the 0.6662 to 0.6734 range (38.2% to 61.8% Fibonacci levels). I suspect that bearish traders might view this range as an opportunity to short NZD/USD aiming for the August 15 low followed by January 28, 2016 low of 0.6415.
At the moment, my bearish bias remains intact as long as the price trades below the July 26 high. A clear breach of this high might invalidate the bearish outlook and the price could target the next resistance level located at the June 25 high of 0.6922.
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