Daily Insights Report 04/08/2017

• 4 Aug 2017

USD/JPY

Looking at longer time-frames for this Friday’s Insights report, highlights key positions for major currency pairs. The USD/JPY pair has retraced from a previous bullish run, as the U.S. Dollar continues to struggle against major peers due to a lack of conviction from the Federal Reserve regarding future monetary policy.  The pair has reached a support at the 50 Fibo level, indicating there is potential for a bullish reversal. MACD is also heading closer to the zero line, however and if it breaks the Japanese Yen could continue its appreciation over the dollar. In the long-term, however, monetary policy actions are expected to happen in the U.S. at some point this year, if not in the third quarter.

Impact event: Non-Farm Payroll report at 15:30 GMT+3 will impact dollar pairs.

EUR/USD

The EUR/USD pair has broken the upper Bollinger band in a monthly time frame, with 5/6 consecutive bullish candles. Psychologically, can the bullish momentum continue? RSI has flattened just below the overbought zone and MACD remains below the zero line although appears to be turning more positive. Again, as stated previously divergent monetary policy is likely to see the Euro lose ground to the U.S. dollar despite positive macroeconomic data coming from the Euro zone.

USD/CAD

The Canadian Dollar continues to be buoyant after the Bank of Canada embarked on a monetary policy tightening cycle. Rising oil prices in the short-term have also provided support to the Canadian dollar as compliance with OPEC supply cuts continues. The pair has subsequently broken the 20 period moving average, however, bearish momentum appears to be slowing, highlighted by the upward trajectory of RSI and sustained positive momentum shown on MACD. It is likely that the previous bullish trend will continue in the long-term.

Impact event: Labour market data from both the U.S. and Canada at 15:30 GMT+3.

GBP/USD

The GBP/USD pair is testing the 20-period EMA after a sustained downtrend. The pound struggled against all major peers, as the Bank of England revised down growth forecasts for the economy yesterday. Inflation is expected to remain above target for the coming years due to spare capacity in the labour market. Referring to technical indicators, momentum is becoming less negative for the pound when reviewing the trajectory of MACD yest RSI remains flat below the 50 resistance line.