Daily Insights Report 06/07/2017

• 6 Jul 2017

USD/JPY

The USD/JPY pair has broken above the 20-period exponential moving average (EMA) with a strong bullish candle. The break comes at the bottom of a fairly extended bearish move for the pair and is confirmed by a sharp upward trajectory on RSI which has moved away from the oversold area. MACD remains below zero, in negative territory and volume appears to be declining despite the strong bullish move in yesterday’s trading session. This could suggest that investors are closing out positions rather than any real conviction from buyers. The uptrend will be confirmed if MACD breaks above zero, pushing price action towards the 113.29 resistance area and when there is a stronger break of the 20-period EMA.

Impact event: ADP Private Payrolls will be released at 15:15 GMT+3 and will likely impact all dollar pairs.

NZD/USD

The NZD/USD has broken the resistance level at 0.727 and has broken the 20-period exponential moving average at the same time. MACD is flat below the zero line with RSI breaking the 50 resistance level. There is little conviction in the current move as indicated by lower trading activity/volume and a break of the 50 level on RSI can be a sell indication. Despite the bullish move, it appears momentum indicators suggest the move may be short-lived. A break of the zero line coupled with another candle closing above the 20-period EMA would be required to confirm bullish momentum.

AUD/USD

The pair seems to be fluctuating within a trading range of 0.757 and 0.760, with the 0.760 level providing a recent resistance level for the pair. Momentum appears to be with the sellers at present with a slight break of the 20-period EMA and MACD remaining in negative territory. RSI has flattened below the 50 line. Volume appears to be picking up, however, a breakout in any particular direction is likely to be as a result of fundamental factors, especially related to gold. More moves are expected in the US trading session later in the day where employment indicators may have an impact on gold prices and hence the AUD/USD (as a correlated asset).

GBP/USD

The GBP/USD pair has broken below a support line at the 1.296 level. However, MACD has broken the zero line in the last four bars and appears to be strongly bullish. The 20-period EMA also has a strong upward trajectory suggesting that momentum is with buyers. RSI has fallen flat just below the 70 overbought zone indicating there is still room for prices to go higher and potentially break the previous support level at 1.296. Two doji candles into the uptrend highlight uncertainty in the market and it is likely that the pair will be governed by fundamental factors later in the trading session today.