Market Focus

US market fell as the concern of inflation raised and the Treasury yields fell for a three-consecutive week. Energy and materials shares led the S&P500 lower while Amazon extended its retreat from all-time highs, sending the Nasdaq 100 lower on Friday. US stocks market erased an earlier gain this week after a report showed the University of Michigan’s preliminary sentiment index dropped to 80.8 in July from 85.5 in June. Investors wondered how long the US Fed could remain dovish stance as many countries, including Canada and New Zealand, are turning hawkish.

OPEC+ and its allies agreed to increase more oil supplies to the market, boosting output by 400,000 barrels daily each month from August; this compromise eventually ended a two-week spat between the United Arab Emirates and Saudi Arabia. In the meantime, the compromise or the truce also eases a looming supply squeeze and reduces the risk of an inflationary oil price surge.

China signals to end the $2 trillion US stock listing juggernaut. These years, many technology firms have flocked to the US stock market, due to a friendly regulatory environment in one of the world’s biggest economies. However, with the US-China tension heats up, China decides to increase the requirement for all businesses trying to go public in other countries. As a result, Hong Kong will become an alternative for Chinese companies who plan to list in other countries.

Main Pairs Movement

The British Pound edged lower, trading in the near July’s lows at 1.3755 at the end of the week as the Covid-19 cases resurged to another record. While the pound was down, the US dollar regained strength after the US Retail Sales surpassed expectations by 0.6%.

The precious metal, gold, erased gains, declining 0.94%, as the Fed Chair Jerome Powell defended the stimulus plan, suggesting that it is still too early to scale back stimulus despite the inflation runs at uncomfortable levels at the moment.

The Aussie dropped 0.77%. on Friday as the US dollar regained strength amid risk. Sentiment and the better-than-expected US economic data. In the absence of high-tier Australian economic releases, the USD’s market valuation continues to impact the currency pair.

USDCAD climbed 0.67% to its highest level since April at 1.2615. Not only the US economic data has driven the US dollar, but also the falling crude oil prices have fueled USDCAD’s upside on Friday.

Technical Analysis

XAUUSD (Daily Chart)

Gold first with daily lows, trading around the 1815 region. Gold pulls back from weekly tops after hitting the resistance at 1829 and the upper bound of the Bollinger band. The outlook remains bullish on the daily chart as gold continues to trade steadily above the 20 Simple Moving Average. In the meantime, the MACD sustains its positive tone, lending supports to bulls. One thing to consider is that the retreat from the highs is not caused by the overbought scenario. To the upside, if a break of the resistance level at 1829 is successful, then gold will have some potential to move further north, 1876. The downside pressure will occur if gold trades below the 20 Simple Moving Average.

Resistance: 1829, 1876

Support: 1770, 1676

 

EURUSD (4- Hour Chart)

EURUSD battles around 1.1800 after mixed US economic data. From the technical perspective, EURUSD looks to consolidate slightly below the 50 Simple Moving Average, suggesting that the pair is suffering from the downside momentum on the 4- hour chart at the moment. Additionally, the RSI is outside of the oversold territory, indicating that there is room for more falls. On the downside, if the pair fails to trade above the bearish SMA, then it will have the potential to aim for the next support at 1.1704. On the upside, the pair needs to trade above the SMA to change its current bearish stance.

Resistance: 1.1837, 1.1919, 1.1985

Support: 1.1704

 

GBPUSD (4- Hour Chart)

GBPUSD is pressured below the 1.3800 level after the release of US Retail Sales, which upbeats the estimates. GBP suffers from downside on the 4- hour chart, trading below the 20 and the 50 Simple Moving Averages whilst having a negative MACD. The pair is expected to continue falling as the RSI has not yet reached the oversold territory, giving room to decline further. However, the decline of GBPUSD might not persist as the pair has reached the lower bound of the Bollinger band, which is due to a pullback. That being said, the price action looks to fall between 1.38 and 1.3744 for the next trading days.

Resistance: 1.3926, 1.4000

Support: 1.38, 1.3744, 1.3675