Daily Insights Report 04/07/17

• 4 Jul 2017

USD/JPY

The USD/JPY is approaching a significant support area at 113.07 and if price action breaks this area, the downward momentum will likely continue. RSI confirms the change in momentum; bouncing off of the 70 resistance level. MACD is representing positive momentum, however, and trading volume appears to be dropping. The selling activity could be a result of market participants closing previous positions rather than any true bearish conviction.

AUD/USD

The AUD/USD did indeed continue its bearish reversal and has hit a previous resistance area at 0.761 which is now a potential support area. If price action can break this price level, momentum should continue to the 0.754 price level. RSI confirms the reversal with a fairly sharp move away from the 70 resistance level. The spike in volume to start the move indicates there is still significant interest in the pair.

GOLD

Given the trajectory for the AUD/USD pair, it is unsurprising that yesterday there was a large Gold sell-off. However, as highlighted yesterday, there appears to be a break in the bearish momentum especially when looking at longer timeframes. A break of lower Bollinger band highlights that the pair is oversold, which is further confirmed by RSI. However RSI has bounced off the 30 zone with a bullish candle. If the current candle can close above 30- a bullish reversal is indicated.

USD/CAD

The USD/CAD has reached and bounced back from an oversold position. However, there is little conviction in the move; MACD remains significantly bearish and RSI has dipped below the 30 zone but does not appear to be moving strongly in a more positive direction. Volume appears to be declining which explains the lack of conviction. The pair’s direction will be determined by fundamentals, most specifically oil price. Oil Prices have been rising intermittently which has resulted in selling pressure for the pair.

Impact event: API Weekly Crude Oil Stock data will be released at 23:30 GMT+3.