Daily Insights Report 13/07/2017

• 13 Jul 2017

AUD/USD

The AUD/USD pair broke through the 0.760 level earlier in the trading week and continued the strong bullish momentum towards a previous market top at 0.768. Price action has bounced off and pulled away from the 20-period EMA, however the indicator has flattened. MACD has turned more positive and RSI has an upward trajectory. However, RSI is approaching overbought territory at the 70 level. This indicates that there may be a bearish reversal soon, however volume has been increasing into the bullish move, indicating that buyers outnumber sellers. The question is whether buyers have enough conviction to push through the 0.768 level and create a new market top.

Impact event: Janet Yellen Testifies at 17:00 GMT+3 which will impact all dollar pairs.

GBP/USD

The GBP/USD pair has broken the 1.286 resistance level and 20-period EMA. Another candle after the break has cleared the resistance line. This could mark the start of a bullish reversal from a previous downtrend. The next couple of trading sessions will provide insight into where the pair is heading next. The dollar has suffered broad-based weakness and lost ground over major peers. However, from a fundamental perspective can the pound continue to rally? MACD remains in positive territory yet RSI is bouncing fairly flat along the 50 support level.

EUR/GBP

The 0.884 price level has proved to be a significant psychological level for the EUR/GBP pair, first of all playing the role of resistance on both 12th June 2017 and 27th June 2017.  Now the price level has taken on the role of support and clearly, a break of this level will mean significant bearish conviction. To confirm the bearish reversal, a break of the 20-period EMA would be required, as the indicator is also currently acting as a support line. According to MACD momentum remains strongly bullish, however the indicator is lagging. RSI bounced off the overbought zone yet has reversed, taking an upward trajectory once again.

USD/CAD

With broad-based weakness in the dollar remaining a theme in recent weeks the USD/CAD has entered into a bearish trend. The Canadian dollar has been supported by rising oil prices as a result of OPEC supply cuts and diminishing crude oil inventories. The headline story for yesterday which resulted in a significant appreciation in the Canadian Dollar; was the decision of the Bank of Canada to raise interest rates for the first time since 2010 to 0.75%. Fundamental factors are likely to continue impacting the pair which has continuously touched and at times, broken the lower Bollinger band yet prices continued to push lower. RSI is indicating the pair is strongly oversold and MACD is strongly bearish. Rising volume indicates that sellers are likely to dominate the direction of the pair for some time.