Analyst Articles – Forex News 24

S&P 500, DAX Technical Forecast
Long-term Bullish, but Rally May Stall in the Short-term
Risks Tilted to Upside, Iran Plans to Break Nuclear Deal Limit
Last Week of June Awaits Euro Inflation Data
Dwindling German IFO Business Climate Survey to Rattle EURUSD Rally
AUDUSD Gains, RBA Lowe Again Ponders Monetary Easing’s Limits
Watch Dow and EURUSD as G20 Approaches Amid Risk Resurgence
Dollar’s Biggest Weekly Drop in 16 Months Breaks Year-Long Bull Trend
A Perfect Storm of Rates and Risk

Posted: 24 Jun 2019 03:53 AM PDT

S&P 500, DAX Analysis and News

S&P 500 | Fresh Record Highs Raises Scope of Pullback
DAX | Topside Resistance Caps Further Gains

Source: Thomson Reuters, DailyFX

S&P 500 |The index has made a firm break above the 2900 level to reach fresh record highs. On the topside, the level to watch 2960-65, which represents the rising trendline from the 2018 peak. Getting through there raises scope for a continuation towards the psychological 3000 level. That being said, the size of this week's gains raises the potential for a near-term pullback as the index looks to consolidate above 2900. The RSI on the daily and weekly time frame show a negative divergence while the former is also in overbought territory, further increasing the risk of a near-term pullback.

S&P Price Chart: Daily Time Frame (Apr 2018 – June 2019)

S&P Price Chart: Weekly Time Frame (Dec 2016 – June 2019)

DAX | Having broken out from its recent consolidation has seen the index move into the 12290-12460 zone. Topside resistance in the form of the May 3rd peak has capped further upside in the DAX for now. However, as long as 12290 holds, the index may indeed continue its bullish momentum with topside targets situated at 12700. A failure to break above however, could see the index return towards its 11900-122900 range.

DAX Price Chart: Daily Time Frame (Dec 2017 – June 2019)

RESOURCES FOR FOREX & CFD TRADERS

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

http://platform.twitter.com/widgets.js
2019-06-24 10:30:00

Can you get luxurious from fx trading? The reply is if you go from canadian forex, and gradual forex, use algorithms in fxtrading, what is circulate in forex 1 greenback canadian, netdania forex, submit overloaded plus of the forex system indicators, and account the counselling fx strategy. We present win win all.

Long-term Bullish, but Rally May Stall in the Short-term

Posted: 24 Jun 2019 03:14 AM PDT

Gold Price Technical Outlook:

Gold price exploded out of multi-year wedge, big-picture bullish
Price may correct near-term, but will do it some good

For forecasts, educational content, and more, check out the DailyFX Trading Guides page.

Gold price exploded out of multi-year wedge, big-picture bullish

At last, after several years of gold price building a wedge a breakout finally developed. Last week's strong weekly close outside of the pattern and above 1375 counts as a worthy breakout signal.

The height of the pattern provides a measured move target (MMT) of over $300 higher from the point of breakout, or a rally to the high $1600s. This will take some time of course, but as long as we don't see a decline back inside the wedge and below last week's low at 1333, the big-picture outlook is bright for gold.

More immediately, though, gold's roughly 10% rise could use a little horizontal work before continuing on from here. Even if we were to see a thorough testing of the breakout area down in the 1360s or even as low as the 1340s, it wouldn't be overly alarming. Breakout retest are a common occurrence.

A gradual pullback to sideways ('bull-flag-like' behavior) would be most ideal, demonstrating that buyers still have plenty of appetite despite the near vertical rise that has developed in recent weeks. But again, regardless of how clean the price action is, as long as gold doesn't melt back inside the wedge the breakout should be respected.

From a tactical standpoint, longs with good pricing and a longer-term outlook may want to sit tight, while would-be buyers may be best served being patient and waiting to see how any retracement that may develop, unfolds. Prior to last week's surge I was stilling giving shorts a chance at the top of the wedge, but that bias has been quashed for the foreseeable future.

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.

Gold Price Weekly Chart (strong wedge-break)

Gold Price Daily Chart (could use a correction)

Resources for Forex & CFD Traders

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

http://platform.twitter.com/widgets.js
2019-06-24 10:00:00

Risks Tilted to Upside, Iran Plans to Break Nuclear Deal Limit

Posted: 24 Jun 2019 02:03 AM PDT

Oil Price Analysis and News

Crude Oil Prices Buoyed by Geopolitical Tensions
Iran Plans to Break Nuclear Deal Limit

Geopolitical Risks Buoy Oil Prices

Rising geopolitical risks stemming from tensions between the US and Iran keep momentum tilted to the upside for the oil complex. Secretary of State Pompeo highlighted that significant sanctions would be announced for Iran, thus tensions between the two nations will remain high, as such, a further escalation raises the risk of oil price spikes going forward.

Iran Planning to Break Nuclear Deal Limit

On June 27th, Iran plans to breach the limit on its stockpile of enriched uranium set by the nuclear deal, which in turn should see the rising geopolitical risk premium keep oil prices buoyed. Elsewhere, despite US sanctions impacting the production in both Iran and Venezuela, the fragile nature of the oil given the concerns of a global slowdown should see OPEC rollout the production cuts throughout the rest of the year.

Brent Crude Price: Daily Time Frame (Sep 2018 – Jun 2019)

Oil Impact on FX

Net Oil Importers: These countries tend to be worse off when the price of oil rises. This includes, KRW, ZAR, INR, TRY, EUR, CNY, IDR, JPY

Net Oil Exporters: These counties tend to benefit when the price of oil rises. This includes RUB, CAD, MXN, NOK.

Fundamental Forecast for the Euro: Neutral

Euro gains have been largely built upon crumbling US Dollar; elsewhere, speculation that the ECB will introduce new stimulus soon has weighed on the Euro.
The upcoming June Eurozone inflation report is due to show that price pressures have arrested their recent decline.
The IG Client Sentiment Index shows that retail traders are selling the recent EURUSD rally

See our long-term forecasts for the Euro and other major currencies with the DailyFX Trading Guides.

Euro Rates Week in Review

The Euro finished last week broadly higher, largely thanks to the ongoing deterioration by the US Dollar. EURUSD was the best performing EUR-cross, adding 1.42% around the June Fed meeting. Elsewhere, with the EU-Swiss stock exchange accessbattle ongoing, repatriation flows are keeping the Swiss Franc afloat despite a relaxation in demand for the safe haven currencies; EURCHF was the worst performing EUR-cross, losing -0.86% last week.

Otherwise, the performances by various EUR-crosses were middling at best: EURGBP continued its gentle rise, up by 0.26% as the Tory leadership election contest reached its final stage; and EURJPY was able to add 0.28% amid gains by global equity markets.

June Euro Inflation Report Due Friday

The upcoming economic calendar for the last week of June is rather light, particularly at the front end; there are no 'high' rated events before Thursday. While the June German IFO survey is due on Monday and the July German GfK consumer confidence report due on Wednesday, neither are likely to leave a significant impact on Euro price action.

On Thursday, the calendar will truly come into focus for the Euro in the form of the preliminary June German inflation report. The German consumer price index is due in at 0.2% (m/m) and 1.4% (y/y), the same price pressures seen in May. Stability in inflation data from the Eurozone's largest economy should serve as an appetizer for the main course of Eurozone economic data this week, the June Eurozone inflation report on Friday.

The preliminary June Eurozone consumer price index on Friday is due on hold at 1.2% (y/y), while the core reading (ex-energy, food, alcohol & tobacco) is set to edge higher to 0.9% from 0.8% (y/y). The floor in inflation readings is coming at a time when European Central Bank President Mario Draghi has started to talk up the possibility of increasing accommodative policy measures over the coming months.

Eurozone Inflation Expectations Remain Weak

The recent rebound in energy prices has filtered through into inflation expectations. ECB President Mario Draghi's preferred measure of inflation, the 5y5y inflation swap forwards, closed last week at 1.304%, up significantly from the yearly low set on June 17 at 1.141%. Overall, inflation expectations are little changed over the past month, with the 5y5y inflation swap forwards having closed at 1.318% on May 24.

Eurozone Economic Data Has Been Improving

An objective look at European economic data shows that conditions have improved, relatively speaking, over the past few weeks. In recent days we've seen the preliminary June French, German, and Eurozone PMI readings beat expectations almost uniformly: only one figure, the preliminary June Eurozone manufacturing PMI, missed forecasts; the Eurozone composite PMI improved to 52.1 from 51.8, beating the expected reading of 52. Accordingly, the Citi Economic Surprise Index for the Eurozone, a gauge of economic data momentum, increased to -1.3 by the end of last week; one month ago, it was at -21.7; three months ago, it was at -60.

EURGBP Stepping Out of the Spotlight

With the Tory leadership election down to the final two contestants, the 160,000 Tory party members will now vote over the coming month, culminating in results due in around July 22. Unless there is a surprise development, Boris Johnson is the clear favorite to become the next Tory party leader, and GBP-crosses already have this discounted into prices. Traders seeking out opportunities for EURGBP around the latest Brexit developments may be disappointed over the coming weeks.

RBNZ Meeting Wednesday; US GDP Thursday; G20 Starts Friday

As is fairly common, the last week of the month carries only a smattering of 'high' rated data releases that will leave a footprint beyond price action on the day of their publications. But with the US-China trade war proving to becoming a bigger and bigger threat to economies around the globe, any opportunity that traders have to glean new perspective from policymakers has a chance to be disruptive to FX markets.

On Tuesday, Fed Chair Jerome Powell will give remarks on the US economic outlook and Fed policy, which will draw interest for EURUSD given the dovish tone deployed at the June Fed meeting just last week. Staying focused on the US, the preliminary May durable goods orders report is due on Wednesday and the final Q1'19 US GDP report will be released on Thursday.

Elsewhere, the Reserve Bank of New Zealand will meet and keep its main rate on hold, but expectations are pointing to a high likelihood of more dovish policy action later this year; EURNZD could see additional volatility as rate expectations are repriced.

Finally, at the end of the week, the greatly anticipated G20 summit in Osaka, Japan will begin, featuring a summit between US President Donald Trump and Chinese president Xi Jingping. That a potential US-China trade deal could emerge should keep traders on edge over the coming days, as preparatory work by diplomats and trade negotiators could result in leaks and rumors in the run-up to the meeting in Japan.

Euro Futures See Sharp Swings in Positioning

Finally, looking at positioning, according to the CFTC's COT for the week ended June 18, speculators dramatically decreased their net-short Euro positions from 86.8K to52.3K contracts, a -39.7% drop in net-short positioning. The futures market is now the least net-short is has been since February. It is worth noting that the most recent COT's reporting period did not cover the June Fed meeting, which occurred on June 19; there will likely be another big shift in positioning in the next iteration of the COT report.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

http://platform.twitter.com/widgets.js
2019-06-23 06:00:00

Dwindling German IFO Business Climate Survey to Rattle EURUSD Rally

Posted: 24 Jun 2019 12:07 AM PDT

Trading the News: German IFO Business Climate

Updates to Germany's IFO Business Climate survey may rattle the recent rally in EURUSD as the index is expected to narrow for the third consecutive month in June.

A print of 97.5 or lower may produce headwinds for the Euro as it dampens the outlook for growth and puts pressure on the European Central Bank (ECB) to further insulate the monetary union.

In turn the, the ECB may show a greater willingness to implement a negative interest rate policy (NIRP) for the Main Refinance Rate, its flagship benchmark for borrowing costs, as President Mario Draghi insists that "further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools."

However, a positive development may keep the ECB on the sidelines, and the Governing Council may largely endorse a wait-and-see approach at the next meeting on July 25 as the central bank prepares to launch another round of Targeted Long-Term Refinance Operations (TLTRO) in September.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups surrounding foreign exchange markets.

Impact that the IFO Business Climate survey had on EUR/USD during the last release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

MAY

2019

05/23/2019 08:00:00 GMT

99.1

97.9

-5

+41

May 2019 German IFO Business Climate

EUR/USD 5-Minute Chart

Image of eurusd 5-minute chart

Germany's IFO Business Climate survey narrowed more-than-expected in May, with the index slipping to 97.9 from 99.2 the month prior. A deeper look at the report showed the gauge for current conditions also falling to 100.6 from a revised 103.4 in April, while the index for future expectations unexpectedly held steady at 95.3 amid projections for a 95.0 print.

The Euro struggled to hold its ground following the mixed data prints, but the market reaction was short-lived, with EURUSD bouncing back during the North American session to close the day at 1.1182. Learn more with the DailyFX Advanced Guide for Trading the News.

EUR/USD Rate Daily Chart

Keep in mind, the broader outlook for EURUSD is no longer tilted to the downside as both price and the Relative Strength Index (RSI) break out of the bearish formations from earlier this year.
With that said, EURUSD stands at risk for a larger correction as the exchange rate clears the April-high (1.1324) after failing to test the 1.1000 (78.6% expansion) handle.
The break/close above 1.1340 (38.2% expansion) brings the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region on the radar as the exchange rate extends the series of higher highs and lows from the previous week, with the next region of interest coming in around 1.1430 (23.6% expansion) to 1.1450 (50% expansion).

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide.

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

2019-06-24 06:30:00

AUDUSD Gains, RBA Lowe Again Ponders Monetary Easing’s Limits

Posted: 23 Jun 2019 05:56 PM PDT

Reserve Bank of Australia Governor Lowe, Canberra Panel Comments, Talking Points:

AUD/USD rose as Lowe spoke
He noted widespread economic gloom but pointed to the limitations of monetary policy
He also suggested more government stimulus in the shape of infrastructure spending

Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We'd love to have you along.

The Australian Dollar rose Monday after Reserve Bank of Australia Governor Philip Lowe appeared once again to ponder the limits of monetary policy's effectiveness.

Speaking on a panel in Canberra, Lowe noted that the global economy had slowed and that risks were to the downside still. However he said that it was 'legitimate to ask' how effective more monetary easing would be globally and that if everyone is easing, exchange rate effects are offset. In a nutshell cutting Australian rates won't help boost inflation by weakening the currency if rates head lower in Australia's trading partners too.

Lowe also said that more infrastructure investment would benefit the Australian economy.

Australian interest rates were cut to a new record low this month, and futures market pricing suggests expectations that the easing process will continue.

The Australian Dollar gained after Lowe spoke, as he appeared to reinforce the message that the bar to deep rate cuts may very well be higher than the markets now think.

Central bankers around the world have largely kept monetary policy extremely accommodative since the end of the financial crisis. Clearly if long periods of record low interest rates have failed to spur pricing power, it is indeed legitimate to ask whether even lower rates would do the trick.

Lowe also flagged up European banks as a potential weak spot in the world economy. The Eurozone banking sector is fragmented and progress towards some sort of banking union has been glacial at best.

On its daily chart AUD/USD has bounced quite convincingly from its June lows but clearly remains under pressure. The long-term downtrend from early 2018 remains very much in place and the pair seems to be losing momentum before its previous significant peak.

The market clearly sees very little interest-rate support for the Aussie despite Lowe's warnings that monetary policy cannot be the sole means of economic stimulus.

Resources for Traders

Whether you're new to trading or an old hand DailyFX has plenty of resources to help you. There's our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There's also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they're all free.

— Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

https://www.dailyfx.com/webinars?re-author=Cottle

http://platform.twitter.com/widgets.js
2019-06-24 00:22:00

Watch Dow and EURUSD as G20 Approaches Amid Risk Resurgence

Posted: 23 Jun 2019 09:24 AM PDT

GBP Eyeing G-20 Summit, UK GDP After BoE Sends Chilling Message

Sterling traders will be nervously eyeing UK GDP and the G-20 summit after the BoE sent a chilling message about their outlook for Brexit and growth risks.

US Dollar Outlook Mired by Bets for Fed Rate Cut in July

Fresh data prints coming out of the US economy may do little to heighten the appeal of the Dollar as the Federal Reserve alters the forward guidance for monetary policy.

Australian Dollar Still Mired But Could Ride Fed’s Risk Wave Higher

The Australian Dollar still lacks interest rate support of its own but a Fed-inspired revival in risk appetite could see it make further gains, albeit within its dominant downtrend.

Gold Weekly Forecast: A Perfect Storm of Rates and Risk

Gold (XAU) bulls have had a storming week with the precious metal up nearly $80 at one stage this week, touching levels last seen in September 2013. And with technical resistance breaking down, higher prices are a distinct possibility.

Dow Jones, DAX 30, FTSE 100, ASX 200 Weekly Forecast

With the central bank extravaganza behind them, the Dow Jones, DAX 30, FTSE 100 and ASX 200 should look to enjoy a short-term tailwind from widespread dovishness.

Crude Oil Prices Cast Worried Eye on G20 Summit, Iran a Wildcard

Crude oil prices are eyeing a critical G20 summit where the US and China are expected to resume trade negotiations. Building tensions with Iran are a wildcard.

Resources for Traders Whether you're new to trading or an old hand DailyFX has plenty of resources to help you. There's our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There's also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they're all free

2019-06-23 16:00:00

Dollar’s Biggest Weekly Drop in 16 Months Breaks Year-Long Bull Trend

Posted: 23 Jun 2019 02:30 AM PDT

Dollar Talking Points:

Technical Forecast for Dollar: Bearish

There was little mistaking the Dollar's abrupt change of both direction and pace this past week. From a sound bounce on a well-worn channel support that was flagging the further it climbed, the second half of the period capsized into an unrestrained tumble. It was further impossible to overlook the spark that led to the 180 in sentiment. The market read deeply into the Fed's policy decision and forecasts to project its own collective outlook of an oncoming dovish wave that has also spurred a rush of moral hazard into speculative assets. To gauge the probability of follow through for trend development, it is critical that key technical levels fall. Yet, just as important to the drive are the systemic fundamental motivations and general nature of the markets. There is still far more congestion than there is progress across the global markets, so clear and decisive motivation is necessary to overcome inertia. Therefore, even technical traders should keep tabs on rate forecasts, recession fears, trade wars and general risk appetite. Thankfully, we can chart these considerations.

Starting with an overview of the Greenback as we enter the new trading week, the picture is clear as we see a confluence of developments. I am a firm believer in the self-fulfilling nature of technicals (and really all analysis techniques), so it is worth identifying the cues that the greatest overall number of traders would see. For the DXY trade-weighted Dollar index, that would be the 200-day moving average which gave way with Friday's extension. The biggest three-day drop since February 15th 2018 was the kind of drive necessary to take out a floor of that girth. One step down from the ubiquity of the moving average was the rising channel that dates back to early May 2018 and notched many successful points of hold over the time frame. The third most recognizable – and therefore more likely overlooked – is the head-and-shoulders pattern that was triggered.

Chart of DXY Dollar Index with 200-day Moving Average (Daily)

As far as head-and-shoulders go, there is often far too much influence afforded to the pattern. Given that it is not difficult to spot and they are usually associated with reversals, it is a natural favorite among any technicians. Yet, what we should appreciate is the natural implications that such outlines can convey. At its core, the series of a high, higher high and lower high is what one would expect in a turning tide. Of course, we need to ensure that the highs are substantial. The 'neckline' is the point at which momentum traders will pay attention, and a descending trendline suggests there is already movement towards shifting direction. The most important element of this pattern however is the preceding trend. If it is fundamentally a reversal signal, there needs to be something to reverse. There certainly was a bull trend in the Dollar over the past year, but its pace was very choppy. That will likely inspire a similar insipidness in any course correction unless further fuel is thrown onto the fire. In other words: the technical cue alone will not likely charge momentum.

Chart of the DXY Dollar Index (Daily)

To further appreciate the restraint that we are competing with on the Dollar forging any meaningful headway, we can look at the higher time frame chart. Below is the weekly DXY picture which puts into perspective the past 12 months a phase following clear trends and more productive range trading (2015-2017). I don't show it in the chart below, but the 60-day (3 trading months) range that the currency had traversed through the open of this past week was the smallest as a percentage of the spot rate on record. It is fitting then that just this past week's tumble alone was the biggest drop in 16 months and supported a notable technical breach.

Chart of DXY Dollar Index and 1-Day Rate of Change (1-Week)

The elements for a momentum shift to support a directional correction seem to be in place, but it is important to keep track of depth of conviction for such a tempest. Aside from the general restraint in the broader financial system, there is still technical restraint that can be found across the Dollar's general landscape. De-emphasizing the EURUSD which accounts for the vast majority of the DXY's pricing, we are left with the picture below. This is a synthetic that few (if any) people reference, but we can see its echo in many of the majors. Is there really enough momentum in the USD selling to drive GBPUSD, USDJPY or AUDUSD to extend their less-than-provocative charts to action?

Chart of Equally-Weighted Dollar Index with 200-Day Moving Average (Daily)

Without doubt, the primary driver for fundamental interest at the moment for the USD is the sharp drop in Fed rate forecasts. Below, we have the standard Dollar index again overlaid with the market's implied degree of rate cuts through year-end derived from the December Fed Funds futures contract. Pricing in 70 basis points worth of cuts (nearly three standard moves), it is clear that there is a lot of pressure through this channel. As remarkable as that may be, however, not that the correlation only recently kicked in this month. Is this an awakening of appreciation or just a temporary link owing to its intensity? If the former, a trend is easier to develop while the latter would more likely lead to a stalled move.

Chart of DXY Dollar Index and Implied Yield from December Fed Funds Futures (Weekly)

Looking across the majors, we can pick up on different aspects of the Dollar's strengths and weaknesses which can follow fundamental tides. USDCNH for example is a good cue for trade war developments. As the pair fails, the Dollar's general loss on a rebalancing away from ill-conceived isolationism strength plays out. Yet, while the EURUSD is a skewed measure, it is still the most important. No surprise, EURUSD is generally a mirror of DXY, though the channel break happened at the beginning of the month with this pair. The 200-day moving average clearance only occurred this past Friday though. If the Dollar is genuinely dropping, the world's second most liquid currency will more likely absorb a disproportionate amount of the outflow.

Chart of EURUSD (Daily)

If you are looking for a Dollar outlet with less systemic overhead, USDCAD would be a good candidate. It has struggled more with range conditions than perhaps any other pairing with the exception of EURUSD, but it has a good fundamental curb on the number of outside catalysts for which we need to account. A sustained drop holds good technical milestones in a confluence of longer-term Fib levels around 1.3075/50 and a long-term trendline support is just above 1.2900. If the Dollar steadies, we move back up to the key levels established this past month. While it is not an epic range to project, it is far more reasonable given our general market condition and it encourages us to keep a reasonable interpretation of what is possible.

Chart of USDCAD (Daily)

If the Dollar is genuinely due a bounce, a recovery will be difficult to muster serious pace. Though holding back a channel break is meaningful, it is still an environment just off the smallest historical range on record. Therefore, looking for a pair uniquely positioned for intensity, USDCHF may fit the bill. The Franc is lending its own influence to this performance with EURCHF marking a critical breakdown this past week. It is far from normal market development, but the Swiss National Bank has vowed to intervene on behalf of its currency to avoid economically-painful appreciation. While its direct target would be EURCHF and its effectiveness is questionable at best, it is nevertheless a potent potential force.

Chart of USDCHF and 1-Day Rate of Change (Daily)

As far as speculative positioning goes, there is no extreme wind up to project an easy coasting in reversal or recovery. The typical longer-term positions of futures traders registered through the CFTC's weekly Commitment of Traders (COT) report showed a drop in speculative net long positioning this past week, but not a significant one. While only measuring up to Tuesday and therefore not accounting for the sheer volatility and channel break, there hasn't been an extreme contrarian positioning to capsize these past two years. At the shorter end of the duration scale, retail traders are still treating EURUSD as if it is trading in a range. A net short swing in the pair according to the IGCS suggests there isn't a leveraged view that the 200-day moving average break is the signal for a full-blown bull trend to step in.

Chart of Net Speculative Positioning in Aggregate Dollar Futures from CFTC Report (Weekly)

Chart of Retail Trader Positioning from IG Clients (Daily)

2019-06-23 09:00:00

A Perfect Storm of Rates and Risk

Posted: 22 Jun 2019 03:12 PM PDT

Gold Talking Points

Low inflation, low interest rates and increased risk, a gold bulls dream.
If the next resistance level is broken convincingly, gold may push back to $1,500/oz.+

Q2 2019 Gold Forecast and Top Trading Opportunity

Fundamental Forecast for the Gold: Neutral

The fundamental outlook for gold next week is neutral but for the medium-term prices are likely to move higher. The neutral forecast for the w/c June 24 is predicated on the velocity of this week's move – up 5.9% at one stage low-to-high – which needs to be tempered before the bullish momentum resumes. The market is also extremely overbought using the daily CCI indicator.

Gold One-Hour Timeframe w/c June 17, 2019

This week both the European Central Bank (ECB) and the US Federal Reserve (FED) confirmed recent market thinking, that interest rates are going to move, and stay, lower for longer as growth and price pressures remain longer-term concerns. ECB President Mario Draghi said on Tuesday that all monetary tools remain at his disposal, mentioning lower rates and a potential re-start of the quantitative easing program, while Fed Chair Jerome Powell pointed to a 0.25% rate cut in July with one or potentially two more interest rate cuts this year. Lower interest rates however are here to stay, boosting the positive medium-term outlook, while inflation will likely remain stubbornly low for a long time. Against this backdrop, gold comes into its own as an asset class, especially with the US dollar weakening alongside lowered interest-rate expectations.

In addition, gold received a strong safe-haven bid as tensions between the US and Iran ratcheted higher over the course of the week, culminating in US President Trump ordering strikes on Iranian targets before pulling the order.

Professional traders would have enjoyed the week with the latest CFTC Commitment of Traders Report (CoT) showing gold long positions increasing further.

The Predictive Power of the CoT Report

The DailyFX Economic Calendar covers all market moving data releases and events.

The daily chart shows that gold touched its highest level in around six years this week, opening the way for further moves higher. The next level of resistance is at $1,433/oz. before an old gap created back on a bear candle in April 2013 comes into play between $1,495/oz. and $1,540/oz. The CCI indicator, mentioned earlier, highlights the risk of a short-term pull-back.

Gold Daily Price Chart (May 2018 – June 21, 2019) – CCI Indicator Extreme Overbought Territory

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

http://platform.twitter.com/widgets.js
2019-06-22 22:00:00