European Central Bank (ECB) Takes Center Stage After Fed’s Decision.

Introduction

In this market update, we cover the Federal Reserve’s recent decision to increase interest rates, the market’s muted reaction, and what to expect during the Europe & US sessions. The focus is on the ECB’s upcoming announcement and how it might impact the Euro. We’ll also analyze the Dollar Index and Canadian Dollar’s performance, along with key news events affecting global markets.

Fed Increases 25bps; Muted Market Reaction

The Federal Reserve Bank has raised interest rates by 25 basis points as widely anticipated, with hints of potential further increases if supported by data. The market’s reaction was relatively muted as most attention was on future expectations. The US indices ended the day with minor fluctuations, showing the Nasdaq down 0.12%, the S&P flat, and the Dow up 0.23%. After the news, US Treasury rates experienced choppy trading, with the benchmark 10-year rate falling 4 bps to 3.87%, and the 2-year rate falling to 4.85%. Additionally, oil fell more than 1% following lower-than-expected US crude supply.

ECB and Europe in Focus

As the Federal Reserve’s decision met investors’ expectations, the initial central bank news of the week elicited a muted reaction. The Asian session had few scheduled events, leading to traders expecting range-bound market conditions. However, all eyes are now on Europe as the European Central Bank (ECB) takes center stage.

Europe & US Sessions Awaited

With the Eurozone in a different position than the Fed, traders are anticipating increased volatility around the ECB’s rate announcement. While a 25bps increase is likely, the statement and comments could trigger market fluctuations. Later in the US session, the most recent GDP figures from the states and weekly unemployment claims data will be released.

What Happened in the Asia Session?

During the Asia session, the dollar index (DXY) started around 100.70 and found support near 100.80 before rebounding to approximately $100.95 as Europe’s market opened.

What Does it Mean for the Europe & US Session?

In the Europe & US sessions, all eyes will be on the ECB, which is expected to raise its main refinancing rate by 25 basis points to 4.25%. ECB President Christine Lagarde’s speech during the press conference could cause the Euro to advance further.

The Euro (EUR)

Key News Events Today

• ECB Monetary Policy Statement
• ECB Press Conference

What Can We Expect from EUR Today?

The European Central Bank is expected to raise its main refinancing rate by 25 basis points, similar to the Federal Reserve. ECB President Christine Lagarde’s remarks during the news conference may further impact the Euro’s performance.

Central Bank Notes:

• The ECB raised three key interest rates by 25 basis points.
• Slightly lowered economic growth projections.
• The Governing Council commits to sufficiently restrictive interest rates to achieve the inflation target.
• Rate decisions will be data-dependent, considering various economic factors.
• Next meeting on 27 July 2023.

Next 24 Hours Bias: Weak Bullish

The Dollar Index (DXY)

Key News Events Today

• GDP
• Unemployment Claims

What Can We Expect from DXY Today?

Today, the US will present its preliminary estimate of first-quarter GDP data, expected to be close to the previous estimate of 2.0% YoY growth. Unemployment claims are anticipated to reach 234k, which may impact the US dollar’s performance.

Central Bank Notes:

• The federal funds rate target range is 5.25% to 5.50%.
• The Committee is strongly committed to returning inflation to its 2% target.
• Monetary policy adjustments may be made based on emerging risks.
• Various factors will be considered, including labor market conditions and inflation pressures.
• The next meeting runs from 19 to 20 September 2023.

Next 24 Hours Bias: Weak Bearish

The Canadian Dollar (CAD)

Key News Events Today

• No major news events.

What Can We Expect from CAD Today?

The USDCAD dropped significantly overnight following the dovish FOMC press conference but found support near 1.3165 and is now rising again.

Central Bank Notes:

• The Bank of Canada increased its overnight rate target to 4.75%.
• Canada’s economy grew 3.1% in the first quarter of 2023, exceeding expectations.
• Concerns have risen about inflation staying above the 2% target.
• Next meeting is on 6 September 2023.

Next 24 Hours Bias: Weak Bearish

Global Markets

• Asian Stock Markets: Nikkei is up 0.68%, Shanghai Composite is down 0.20%, Hang Seng is up 1.53%, ASX is up 0.73%
• European Equities: DAX futures are up 0.40%, CAC 40 is up 0.92%, and FTSE up 0.20%
• US Stock Market: Dow Jones is up 0.23%, S&P 500 is down 0.02%, and Nasdaq 100 is down 0.12%

Commodities

• Gold at $1980.49 (+0.47%)
• Silver at $25.06 (+0.63%)
• Brent Oil at $83.10 (+0.65%)
• WTI Oil at $79.47 (+0.85%)

News & Data

• (USD) FOMC Press Confidence at 00:00
• (EUR) ECB Monetary Policy Statement at 17:45
• (EUR) Interest Rate Decision (Jul) Forecast 4.25%, Previous 4.00% at 17:45
• (USD) Initial Jobless Claims Forecast 235K, Previous 228K at 18:00
• (USD) GDP (QoQ) (Q2) Forecast 1.8%, Previous 2.0% at 18:00
• (USD) Pending Home Sales (MoM) (Jun) Forecast –0.5%, Previous –2.7% at 19:30
• (EUR) ECB President Lagarde Speaks at 19:45

Forex and Commodity Technical Analysis for Trading – July 2023

Introduction

In this comprehensive analysis, we will explore the technical outlook for major Forex pairs and commodities, including GBP/USD, EUR/USD, AUD/USD, and USD/JPY, as well as popular commodities such as Brent Crude Oil, Silver, and Litecoin. We will delve into the Exponential Moving Averages (EMA), Simple Moving Averages (SMA), Relative Strength Index (RSI), Stochastic Oscillator, Resistance and Support Levels, and conclude with actionable trade suggestions.

GBP/USD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.2943, suggesting a Buy sentiment.
• EMA 20: The 20-day EMA displays 1.2914, reinforcing a Buy indication.
• EMA 50: With a value of 1.2887, the 50-day EMA aligns with a Buy recommendation.

Simple Moving Average

• SMA 5: The 5-day SMA shows 1.2937, indicating a Buy sentiment.
• SMA 20: The 20-day SMA records 1.2893, supporting a Buy stance.
• SMA 50: The 50-day SMA stands at 1.2991, signifying a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, displays a reading of 61.45, suggesting a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive condition.

Resistance And Support Levels

• Resistance: The resistance level is identified at 1.3016
• Support: The support level is observed at 1.2940

Summary And Trade Suggestions

Based on the technical analysis, GBP/USD presents a Buy outlook. Traders may consider entering a long position, considering the indicators, moving averages, and oscillators.

Trade Suggestion:

• Entry Point: 1.3045
• Take Profit: 1.3140
• Stop Loss: 1.2991

EUR/USD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.1110, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 1.1108, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 1.1079, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1.1087, reinforcing the Buy recommendation.
• SMA 20: With a value of 1.1122, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 1.1084, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 56.5, signifying a positive signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1.1144.
• Support: The support level is identified at 1.1069.

Summary And Trade Suggestions

In summary, the technical analysis of EUR/USD points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 1.1181
• Take Profit: 1.1271
• Stop Loss: 1.1123

AUD/USD

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 0.6787, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 0.6772, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 0.6756, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 0.6775, reinforcing the Buy recommendation.
• SMA 20: With a value of 0.6769, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 0.6749, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 57.93, signifying a Bullish signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 0.6817
• Support: The support level is identified at 0.6769

Summary And Trade Suggestions

In summary, the technical analysis of AUD/USD points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 0.6836
• Take Profit: 0.6894
• Stop Loss: 0.6790

USD/JPY

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 140.24, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 140.56, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 140.67, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 140.27, reinforcing the Sell recommendation.
• SMA 20: With a value of 140.48, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 140.63, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 44.12, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 141.03
• Support: The support level is identified at 139.88

Summary And Trade Suggestions

In summary, the technical analysis of USD/JPY points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 139.35
• Take Profit: 138.41
• Stop Loss: 140.03

FTSE 100

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 7681.74, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 7682.07, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 7551.84, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 7674.46, reinforcing the Buy recommendation.
• SMA 20: With a value of 7643.21, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 7477.56, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 68.18 signifying a Positive signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 7701.0
• Support: The support level is identified at 7647.5

Summary And Trade Suggestions

In summary, the technical analysis of the FTSE 100 points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 7734.0
• Take Profit: 7803.8
• Stop Loss: 7690.9

Brent Crude Oil

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 82.91, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 81.56, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 79.77, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 82.90, reinforcing the Buy recommendation.
• SMA 20: With a value of 81.56, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 79.77, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 70.45, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 83.45
• Support: The support level is identified at 82.88

Summary And Trade Suggestions

In summary, the technical analysis of Brent Crude Oil points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 83.95
• Take Profit: 84.89
• Stop Loss: 83.35

Silver

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 24.85, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 24.69, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 24.29, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 24.81, reinforcing the Buy recommendation.
• SMA 20: With a value of 24.78, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 24.15 affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 62.18, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 25.23
• Support: The support level is identified at 24.70

Summary And Trade Suggestions

In summary, the technical analysis of silver points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 25.36
• Take Profit: 25.91
• Stop Loss: 24.93

Litecoin

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 90.71, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 91.25, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 92.95, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 90.40, reinforcing the Buy recommendation.
• SMA 20: With a value of 91.42, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 93.79, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 50.10, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 93.32
• Support: The support level is identified at 89.71

Summary And Trade Suggestions

In summary, the technical analysis of Litecoin points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 94.56
• Take Profit: 100.09
• Stop Loss: 90.62

Conclusion

In summary, the Federal Reserve’s interest rate hike had a muted impact on the markets, leading investors to await the ECB’s announcement for potential market volatility. The Euro and the Dollar Index are both poised for interesting moves, with various key news events shaping their performance. As traders navigate the global markets, staying updated on economic data and central bank decisions is crucial for informed decision-making.