• We don’t do that (setting policy based on one data point)
• Inflation has picked up a little bit
• But it could just be that monetary policy is taking longer to feed through to the services sector
• The right policy response to that, clearly, would be to hold your nerve
• We’re coming down in a slightly bumpy way, but we are coming down (on inflation)

His is saying that the RBA should not produce a kneejerk reaction to the latest inflation data. That means they will still keep things in view for August. But if we get more stubborn price numbers especially in the Q2 CPI report on 31 July, that might change up the picture again.

This article was written by Justin Low at www.forexlive.com.

The USD continues to be
backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Although such
data keeps the interest rates expectations stable around two cuts by the end of
the year, it should also support the risk sentiment amid a pickup in growth.
This could be a headwind for the greenback.

This week the US Dollar has
been in the driving seat, although it looks like the price action is being
influenced more by month-end, quarter-end and half year-end flows rather than
something fundamental. We had also a key breakout in USDJPY yesterday and flows
there might have spilled over to other major pairs.

We got also the Canadian CPI figures this week which surprised
to the upside and trimmed rate cuts expectations for July with the market now
pricing a 65% chance of no change. That was not enough to break out of the
strong support zone around the 1.36 handle as it didn’t change much the bigger picture,
but it might keep the Loonie supported going forward once the quarter-end flows
fade out.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD bounced on the key support zone around the 1.36 handle. That’s where the
buyers continue to step in with a defined risk below the support to position
for a rally back into the 1.3785 resistance. The sellers will want to see the
price breaking lower to pile in more aggressively and target a drop into the
1.34 handle next.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price yesterday broke above the 1.3680 resistance and pulled back
to retest it today. We can also see that we have the 38.2% Fibonacci
retracement level for confluence
there.

This is where the buyers
will likely step in with a defined risk below the level to target an extension
of the rally towards the 1.3785 resistance. The sellers, on the other hand,
will want to see the price falling back below the level to regain some control
and position for a break below the 1.36 support with a better risk to reward
setup.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we had also a downward trendline adding some extra confluence to the
1.3680 resistance. This breakout might give the buyers more conviction for a
rally back into the 1.3785 resistance next. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the Canadian GDP and the US PCE report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The USD continues to be
backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Although such
data keeps the interest rates expectations stable around two cuts by the end of
the year, it should also support the risk sentiment amid a pickup in growth.
This could be a headwind for the greenback.

The GBP, on the other hand,
has been under pressure since the BoE policy decision where the central bank dropped some
dovish signals and kept the door open for a rate
cut in August. This week the Pound has been under pressure mainly due to some
US Dollar strength.

It looks like the price
action is being influenced more by month-end, quarter-end and half year-end
flows though rather than something fundamental. We had also a key breakout in
USDJPY yesterday and flows there might have spilled over to other major pairs.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is testing once again the support
at 1.2635 as the buyers continue to step in around this level to position for a
rally into new highs with a better risk to reward setup. The sellers, on the
other hand, will want to see the price breaking lower to gain more conviction
and increase the bearish bets into the 1.25 handle next.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the downside momentum seems to be slowing as the lower lows get
shallower. This might be a signal for a reversal although a break to the
downside could invalidate it.

The buyers will want to see
the price breaking above the downward trendline
to gain more conviction and increase the bullish bets into the 1.28 handle. The
sellers, on the other hand, might lean on the trendline to position for a break
below the support with a better risk to reward setup.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have the upper limit of the average daily range for today standing right around the
trendline. It’s unlikely that we will see a break to the upside today, but it
will be something to watch in the next days as quarter-end flows fade out.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the US PCE report.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.