Market sentiment continues to improve

Peter Iosif, ACA, MBA IronFX

USD halts its drop in the FX market

BoJ and RBA proceeded to hike rates and remain on hold, respectively, as was widely expected, with no major turbulence in the FX market. The USD halted its drop, which tended to signal some doubts in the market for the US-Iran deal, given that the full deal is not publicly known. We expect the USD’s bearish tendencies to be renewed should the market sentiment continue to improve, given its safe-haven status, while market attention may start shifting towards the Fed’s interest rate decision tomorrow.

US stock markets jump

US stock markets were on the rise yesterday, pushed higher by the market’s improved sentiment, yet the bulls seem to have taken a break in today’s Asian session as if the markets have overplayed their hand. Should we see the market continue to be risk on we may see US stock markets extending their gains.

Oil prices continue to drop

Oil prices ended their day in the red yesterday as the US-Iran intermediate peace deal verified the market’s hopes for a possible reopening of the Straits of Hormuz. It may take some time for the Straits to become fully functional, and the details of the deal are still unclear, yet should the oil market’s hopes be enhanced, bearish pressures may continue to be exercised on oil prices.

Bitcoin benefits from the improved market sentiment

The improvement of the market sentiment derived from the US-Iran peace deal benefited riskier assets, including the crypto market, given also that worries for inflation may start easing. The cryptocurrency king reached a two-week high yesterday, rising above $66k and should the market sentiment continue to improve, we may see Bitcoin’s price rise further.

As for the rest of the week

Today we note that BoJ Deputy Governor Uchida, RBA Governor Bullock and ECB Board Member Lane speak. We also get Germany’s ZEW indicator for June, the US Building Permits and House Starts for May and the weekly API crude oil inventories figure. In tomorrow’s Asian session, we get New Zealand’s Current Account balance for Q1, and from Japan, we get the Tankan indexes for June, the machinery orders for April and trade data for May, while RBA’s Assistant Governor Jones speaks.

Charts to keep an eye out

USD/CAD continued to be on the rise nearing the 1.4020 (R1) resistance line. We intend to maintain a bullish outlook for USD/CAD, as long as the upward motion guiding it remains intact. The RSI indicator has risen above the reading of 70, implying that the pair may be at overbought levels, possibly ripe for a correction lower. On the flip side the pair’s price action remains still below the upper Bollinger band, implying that there is still room for the bulls to play. Should the bulls remain in the driver’s seat, we may see USD/CAD breaking the 1.4020 (R1) line, opening the gates for the 1.4145 (R2) resistance level. Should the bears be in charge, USD/CAD’s price action, may break the prementioned upward trendline continue to break also the 1.3880 (S1) support line and paving the way for the 1.3730 (S2) support base.

WTI continued to drop remaining below the 82.00 (R1) resistance line. We maintain the bearish outlook for WTI, as expressed in yesterday’s report given also the intense bearish market sentiment as suggested by the RSI indicator. Yet we note that WTI’s price action is still flirting with the lower Bollinger band, which may slow down the bears. Should the bears maintain control as expected, we may see WTI’s price aiming for the 76.60 (S1) support line, while even lower we note the 69.00 (S2) support base. For a bullish outlook which we consider as a remote scenario at the current stage, we would require WTI’s price to break the 88.60 (R2) resistance level, paving the way for the 98.50 (R3) resistance hurdle.

Calendar follows

USD/CAD daily chart

Support: 1.3880 (S1), 1.3730 (S2), 1.3550 (S3).
Resistance: 1.4020 (R1), 1.4145 (R2), 1.4375 (R3).

WTI daily chart

Support: 76.60 (S1), 69.00 (S2), 60.90 (S3).
Resistance: 82.00 (R1), 88.60 (R2), 98.50 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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