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Currency Analyst since 2010

Forex trading plan for July 6

British pound renewed its post-referendum minimum. EUR/GBP jumped to the highest level since 2013. GBP/USD fell to 1.3050 area. The psychological 1.3000 mark is painfully close. British currency is oversold, but sellers are active. The next downside target lies at 1.2895. Resistance is at 1.3305. Pound was affected by the news that Standard Life Investments suspended trading in its 2.9 billion-pound UK Real Estate fund. In addition, British services PMI missed the forecast. The Bank of England published its latest Financial Stability Report forecasting difficulties in British financial system and volatility in economy and markets. The BOE cut banks’ capital buffer from 0.5% to zero so that the lenders could lend more money to households and companies. Yet, the regulator underlined that it cannot fully offset the volatility.

EUR/USD so far failed to fix above resistance at 1.1170. Investors are concerned about Italian banking sector. There’s talk that the nation’s government is considering injecting capital in third-largest commercial bank, Banca Monte dei Paschi di Siena. The pair is consolidating in an ascending triangle on H1. We still think that the resistance in the 1.1170/1200 area will be hard to break. Support is at 1.1100 and 1.1050. German factory orders are due at 06:00 GMT. The ECB president Mario Drahi will speak at 08:00 GMT.

USD/JPY slid to 101.45 on the market’s risk aversion. Traders were concerned about Brexit and not happy with statistics from China. Below this level the next downside targets are at 100.70/45. Resistance is at 102.40. Watch the releases of ISM services PMI and FOMC meeting minutes at 14:00 and 16:00 GMT for further clues.    

AUD/USD fell below 0.7500. The Reserve bank of Australia left the benchmark interest rate unchanged at 1.75%, but Australian dollar was hurt as the market’s risk sentiment worsened, commodity prices went down and there’s uncertainty with Australia’s parliamentary election results. The nation’s trade balance and retail sales disappointed. RBA Assistant Governor Debelle will speak at 07:30 GMT. Aussie is vulnerable for decline to 0.7440 and 0.7370. 

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