Will the CPI Crash the USD?
The most impactful releases of this week will fill the market with volatility and sharp movements.
Market updates on July 25
Information is not investment advice
Key events ahead:
Interest rate decision by the Central bank of Turkey – 14:00 MT (11:00 GMT) time
ECB monetary policy statement – 14:45 MT (11:45 GMT) time
ECB press conference – 15:30 MT (12:30 GMT) time
US core durable goods orders – 15:30 MT (12:30 GMT) time
- During the Asian trading session, the Reserve bank of Australia governor Philip Lowe commented that the bank would ease its policy further if demand disappoints. The Australian dollar reacted negatively to his comments and fell lower. On H4, AUD/USD tested the lower border of the long-term ascending trading channel below the 0.6967 level. If bears manage to break this border, the next support will lie at 0.6957. After that pay attention to the 0.6946 level. From the upside, the first significant resistance level lies at 0.6989. The next resistance will be placed at 0.6998.
- EUR/USD is consolidating near the support at 1.1127 ahead of the ECB rate decision. There’s a 50% chance of a rate cut, so pay attention to the meeting. If the euro weakens more, the pair will break the support at 1.1127 and test the support at 1.1118 on H4. The dovish ECB will increase the possibility for the pair to fall further to the 1.1076 level. On the other hand, if the central bank is less dovish, the first resistance will lie at 1.1155. The next resistance levels will be placed at 1.1166 and 1.1177.
- USD/TRY, in its turn, is awaiting the decision by the Turkish central bank. After the Turkish president Recep Tayyip Erdoğan fired the head of the central bank earlier this month due to his disagreement to make the interest rate lower, now the market anticipates the rate cut decision. The US dollar has become stronger against the Turkish lira as the rate cut worries have been priced in. If the Turkish lira continues to weaken, the pair will break the 5.7048 level and return within the borders of the ascending trading channel. The next resistance will lie at 5.7219. In case of the reversal, the pair will fall below the 5.6887 level. The next support will be placed at 5.6766. (50-period SMA). The break of this level will provoke further fall to the next support at 5.6620.
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