Trading plan for July 22

By FX BAZOOKA analytical team

Main events to watch on July 22 (Tuesday):

AUD: RBA Gov Stevens Speaks (03:00 GMT)

GBP: Public Sector Net Borrowing (12:30 GMT), CBI Industrial Order Expectations (10:00 GMT)

USD: Core CPI (12:30 GMT), Existing Home Sales (14:00 GMT)

Trade ideas

EUR/USD is trying to hold above the 2-year support line. After Friday’s spike down to $1.3490 trading has been taking place above $1.3500. The pair’s attempt to recover failed at $1.3550. German producer prices stagnated today, although a slight growth was expected. The market is finding more and more reasons to be bearish euro. Tensions at Ukraine also create negative risks for this pair, and we are waiting for the information about EU’s sanctions against Russia. In the absence of news in the euro area’s economic calendar tomorrow, the currency is unlikely to rise above $1.3550/75. Small sell orders on its weak attempts to recover still look like the best strategy, though as long as the pair hasn’t fixed below 2014 low at $1.3476, it might be difficult to earn many pips. The market players will be watching data from the US to update their predictions about the timing of the Fed’s rate hikes.

GBP/USD extended the last week’s decline on Monday, approaching the major 1.7060 support. Next important levels below the price are 1.7000, 1.6950 and 1.6900, while resistance is seen at 1.7100 and 1.7180/7200. We expect the 1.7000 mark to limit the current bearish correction and the pair to retest the recent record highs once again, so the buy-on-dips strategy looks good these days. UK is scheduled to release a couple of figures on Tuesday, but GBP is likely o be dominated by the BoE meeting minutes release expectations (data will come on Wednesday). There is a market speculation that some BoE members had voted for a rate hike on the last meeting. If this is true, GBP/USD will strengthen.

USD/JPY spent the day in a narrow 101.10/30 range, still supported by the 55-week MA. Break below the major 101.00 support could open the way to 100.60 and 100.00, while resistance is seen at 101.80, 102.00 and 102.30. Bears have good technical prospects, but the market needs a driver to pull through 101.00 yen. Focus on the US data releases on Tuesday.

AUD/USD touched support at $0.9370 after testing levels above $0.9400 at the end of last week. A strong close on Friday ($0.9390) draws some attention back to the recent high at $0.9455. Still, the bulls need to push the prices above $0.9412 (daily Kijun-sen) to ease the bearish pressure. Only a break below $0.9330/20 will confirm a top and lead to the decline to $0.9230/20. The negative risks are associated with the Reserve Bank of Australia’s Governor Stevens speech which could contain dovish comments.

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