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  • Market Insights  >  Daily Market Analysis

3 July 2024,06:32

Daily Market Analysis

Japanese Yen Trades to New Low in Decades

3 July 2024, 06:32

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Market Summary

The Japanese Yen plummeted to its weakest level since 1986 at 160.87 against the greenback. The currency pair has lost more than 12% this year and is well above the tolerance level for the BoJ to intervene. The BoJ hinted at a potential rate hike in July, and the Japanese CPI reading due tomorrow may provide clues about the likelihood of an interest rate increase.

Meanwhile, as the dollar continues to strengthen on the back of strong economic indicators, traders should pay attention to today’s Initial Jobless Claims and GDP data to gauge the dollar’s strength. As the dollar strengthened in the last session, gold prices were hammered and are currently trading at recent low levels. Oil prices, on the other hand, traded sideways due to a lack of catalysts.

In addition, after a technical rebound for both BTC and ETH, the bullish momentum for both cryptocurrencies seems to be easing.


Current rate hike bets on 31st July Fed interest rate decision

Source: CME Fedwatch Tool

0 bps (91.7%) VS -25 bps (8.3%)

Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The US Dollar extended its gains, buoyed by rising US Treasury yields and widening yield differentials with several major central banks. Despite the recent underperformance of the US economy, potential rate cuts and more easing monetary policy expectations from other central banks, including the European Central Bank, the Bank of England, and especially the Bank of Japan, have widened the interest differentials gap between US Treasury yields and other countries. This appreciation of the Dollar is primarily a technical rebound. For more substantial trend clarifications, investors should monitor crucial US economic data due later this week, including GDP, the Core PCE Price Index, and Initial Jobless Claims.

The Dollar Index is trading higher following the prior breakout above the previous resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the index might enter overbought territory. 

Resistance level: 106.35, 106.85

Support level: 105.65, 105.15


XAU/USD, H4

Gold prices retreated slightly, weighed down by the appreciation of the US Dollar and a technical breakout suggesting a more bearish momentum for the commodity. The rising US Treasury yields, despite the pessimistic economic performance, have prompted investors to shift their portfolios toward the US Dollar, diminishing the appeal of dollar-denominated gold. Moving ahead, investors should continue to monitor crucial US economic data due later this week for further trading signals.

Gold prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 29, suggesting the commodity might enter oversold territory. 

Resistance level: 2330.00, 2365.00

Support level: 2295.00, 2260.00


GBP/USD,H4

The Pound Sterling continues to trade in its downtrend trajectory, forming a lower-high and lower-low price pattern. As the UK CPI has dropped to the favourable 2% target rate, the BoE Governor’s speech due later today may provide insight into the BoE’s upcoming monetary moves and their implications for the Pound Sterling. Meanwhile, the pair is also expected to be impacted by today’s U.S. Initial Jobless Claims and GDP data, which could further influence market sentiment and the direction of the GBP/USD pair.

GBP/USD has dropped to a new low, suggesting a bearish bias for the pair. The RSI remains in the lower territory, while the MACD continues to flow below the zero line, suggesting that the bearish momentum is overwhelming. 

Resistance level: 1.2660, 1.2760

Support level: 1.2600, 1.2540


EUR/USD,H4

The EUR/USD pair continues to trade within a sideways range between 1.0745 and 1.0680 levels. After being rejected at the liquidity zone earlier, the pair has found support at its crucial level of 1.0680. With the euro lacking catalysts, the pair is likely to be influenced by today’s U.S. economic indicators. If the GDP and Initial Jobless Claims data favor the dollar, the pair may break below its crucial support level at 1.0680, providing a bearish signal for further downside movement. Traders should closely monitor these key economic releases to gauge the pair’s direction.

The EUR/USD is currently trading within its sideways trend, awaiting a catalyst to pick a direction. The RSI remains in the lower region, while the MACD has a higher high pattern, suggesting a potential rebound for the pair. 

Resistance level: 1.0730, 1.0770

Support level: 1.0630, 1.0570


NZD/USD,H4

The New Zealand Dollar has broken below its key support level at 0.6100, suggesting a potential bearish trend for the pair. This movement is primarily driven by the strengthening of the U.S. dollar, bolstered by upbeat economic indicators. However, with New Zealand’s CPI remaining high, the Reserve Bank of New Zealand (RBNZ) may maintain its current monetary tightening policy, providing some buoyancy for the New Zealand dollar. Traders should keep an eye on RBNZ’s policy statements and upcoming economic data from both regions to gauge the pair’s future direction.

The pair has broken below the 0.6100 support level suggesting a bearish signal for the pair. The MACD failed to break above the zero line and edge lower while the RSI has been kept at below 50 level suggesting the bearish momentum is overwhelming. 

Resistance level: 0.6100, 0.6150

Support level: 0.6050, 0.6000


USD/JPY, H4

The Japanese yen dipped to its lowest level against the US Dollar in 38 years as wide interest rate differentials between the US and Japan prompted investors to sell off the yen. Market participants should be highly alert for any signs of intervention from Japan. Analysts are closely watching the Japan Ministry of Finance and the Bank of Japan’s reaction, recalling that approximately $62 billion was spent in late April to support the currency after it fell past 160.

USD/JPY is trading higher following the prior breakout above the previous resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 72, suggesting the pair might enter overbought territory. 

Resistance level: 161.30, 163.85

Support level: 159.35, 157.95


CL OIL, H4

Crude oil prices remained flat, hovering around a strong support level as investors await further market catalysts. With several important reports, including US economic data, due later this week, oil traders maintain a wait-and-see approach to gauge the overall US economic performance. On the other hand, oil faced bearish momentum following a bearish inventory report. According to the Energy Information Administration (EIA), US crude oil inventories rose by 3.591 million barrels, significantly higher than the expected decrease of 2.600 million barrels.

Oil prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 45, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 81.50, 84.00

Support level: 79.75, 78.00


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