- July 6, 2021
- Posted by: Analysis Team
- Category: FOREX, Technical Analysis
The Australian dollar rose against the US dollar and other currencies after the relatively hawkish Reserve Bank of Australia (RBA) decision. The Central Bank left interest rates unchanged at 0.10% and hinted that the first interest rate hike will come in 2023 instead of the previous 2024. The bank also decided to trim its weekly bond-buying program from the previous $5 billion to $4 billion. This action signalled that the bank remains optimistic about the Australian economy. Additionally, the bank sees inflation rising temporarily above 3% this year and then dropping to less than 2% in 2022.
The euro declined sharply after the relatively mixed economic data from Europe. In Germany, a survey by ZEW showed that the economic sentiment declined from 79.8 in June to 63.3 in July. This decline was worse than the median estimate of 75.2 and was partly due to the Delta variant of the coronavirus. On the positive side, data by Eurostat showed that the country’s retail sales rose by 4.6% in May after falling by 3.9% in the previous month. This increase was better than the median estimate of 4.4%. Further, the bloc’s retail sales increased by 9% on a year-on-year basis, better than the expected 8.2%. In Spain, industrial production rose by 26% YoY.
American stocks declined in premarket trading as investors remained worried about the scale of the ongoing ransomware attack. Hackers have breached systems by Kaseya and demanded as much as $70 million from the victims. Investors are also worried about the ongoing crackdown by Chinese authorities. During the weekend, the regulator ordered Didi not to onboard clients. Its app was also removed from the top app stores. Analysts believe that China will intensify its crackdown on tech companies that are listed in the US. Didi shares declined by 22% in premarket trading. Meanwhile, investors believe that July will have more vitality than in June, according to data crunched by Wall Street Journal.
The EURUSD pair declined sharply after the relatively weak German sentiment data. The pair declined from a high of 1.1897 to 1.1832. On the hourly chart, the pair has moved below the 25-day moving average and the important support at 1.1847. The MACD is below the neutral line while the Relative Strength Index (RSI) has declined close to the oversold level of 30. Therefore, the pair will likely keep falling with the next key target being at 1.1800.
The AUDUSD pair rose to a high of 0.7597 after the latest RBA interest rate decision. On the four-hour chart, the pair moved above the descending trendline shown in red. It also rose above the 23.6% Fibonacci retracement level. Also, it rose above the 25-day and 15-day exponential moving averages. It also seems to be forming a W pattern whose neckline is at the resistance at 0.7613, which is also along the 38.2% retracement level. Therefore, the pair will likely keep rising as bulls target this neckline.
The USDJPY pair declined to a low of 110.74 after the strong Japan household spending data. On the four-hour chart, the pair moved below the upper side of the ascending channel. It is also between the middle and lower lines of the Bollinger Bands. Further, the histogram of the MACD has moved below the neutral line. Therefore, the pair may keep falling as bears target the next key support at 111.50.