The US Dollar index, which measures the strength of greenback against a trade-weighted basket of six major currencies, lost ground on Friday and closed the week on a negative note. The Dollar index experienced a continuous bearish pressure this week and gave a weekly closing at 96.61 below the support level of 96.70.
The week ahead is expected to be another flat week on the back of absence of major economic data as the only major economic report which is going to release next week is service-sector ISM survey. However, the upcoming UK general elections can give the market bit volatility next week.
On the technical ground, the US Dollar Index had crossed its major support level of 96.70 by making a bearish candle and it is signaling the controls of bears on the index which may push the price further down near to the level of 95.50 in coming trading sessions. This downward movement is supported with medium term moving averages and which supports the current down trend.
However it the index is able to take ground near to the level of 96.10 and rejects the down movement by sustaining above this level then we can expect it to consolidate in near term.
The darling pair of trades EUR/USD turned bullish on the back of the weak USD which gave the pair enough volatility to break the medium-term resistance level of 1.1270 and now the pair is heading to break the eight months high of 1.1300.
However, the bullish movement in the pair is majorly depended on the upcoming European Central Bank’s Interest rate decision due on Thursday this week and on the President Draghi’s press conference after the interest rate announcement. This meeting is an important central bank meeting as the recent improvements in the economy and the declined political risk can result in an updated outlook by ECB.
The terrorist attacks on London put negative pressure on the GBP/USD pair and as the upcoming UK general election is near the volatility in the pair is expected to be high and the majority of it can be negative for the Pound as the increasing uncertainty will terminate any big bullish movement in the pair.
The political scenario in the UK is turning speculative as the highly anticipated victory of UK PM Theresa May is not looking as easy as it seems as her view on the Brexit is very clear and it is not at all going to be an easy step for the UK economy which may result in a week victory in the general elections.
On the technical ground, the GBP/USD pair rejects the 1.3000 mark and it is sustaining below this level with bearish pressure for past weeks. This clearly indicates the control of bears on the pair which is confirmed with the medium-term swings and averages. In the coming week, we may see a bearish movement in the pair.
However the majority of the movement this week is depended on the UK General Elections which is holding the pair to give any big movement and keeping it in a tight range. The two very important levels in the pairs are the resistance zone of 1.3000 and the support zone near to the level of 1.2750.
In line with other currency pairs, USD/CAD is also expected to consolidate in coming future on the back of the lack of economic report data this week. The pair is taking support near to the level of 1.3460 where the short term trend line rests. We expect that the pair may trade sideways next week and if the Crude Oil will give a good movement then only the pair break its consolidation this week.
If USD/CAD will break the support zone of 1.3400 in coming sessions supported by the Crude Oil then we can see a bearish movement in the pair till 1.3200 The levels of 1.3420 and 1.3540 is the near term support and resistance levels are the levels where we may see the pair hovering this week.
With the support at 110.20 getting stronger USD/JPY is expected to trade sideways in coming week with bearish sentiments supported by the weak USD. On the technical ground the pair had taken the support near 110.20 levels and trading sideways the break of this support can push the price further down to the level of 108.50.
The increasing political instability in the US and the pressurized global market due to the terrorist attack in the UK will play a significant role in the movement in the Forex market this week.
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