The expectation for a Fed rate hike in September remains high, but Steven Woodcock, Senior FX analyst at Plutus FX, expects the Fed to remain patient in September.
With a light data week ahead, Woodcock believes that the markets will remain susceptible to comments and press speculation. A little bit of consolidation might be seen in the markets, and this thin market conditions will keep Woodcock away from his trading desk, but favour the technical traders. He further advices that trend spotting, Daily and Weekly charts will remain key trading drivers this week.
Outlook for Forex
NZD/USD remains in a downtrend
>New Zealand’s PM’s comments would have give the kiwi bears a shock, but the cross remains comfortable in its downtrend.
USD/CAD expected to test 1.3250
Woodcock sees the upside as the only move possible for USD/CAD ahead. The break above 128.20/40 favours a further bullish extension towards 1.3250.
GBP/USD downside favoured towards 1.5250
GBP/USD remains trapped in a 1.5350-1.5650 range, but is turning heavy. The pair can’t get any higher, the upmove looks done. Woodcock targets a move lower towards 1.5250 for cable.
EUR/USD: Upside possible on a soft GBP outlook
EUR/USD outlook largely depends on the price action in EUR/GBP. The pair has attracted sellers around 1.11 level previously. Although the price action suggests further downside ahead, exhaustion is seen in selling.
GBP/USD is expected to head lower, and hence some upside towards 1.10 or consolidation at current levels might be seen in EUR/USD. Failing to hold the support zone might lead to a move lower towards 1.05.
Cautious on the dollar trade
The long-term bullish view on the dollar stands, but the upmove is more likely to be gradual for now. The bearish outlook for EUR/USD over the long-term stands. The market focus is likely to shift away from Greece rhetoric, and turn to the rate hike scenario. Hence, Woodcock further adopts a cautious outlook on the dollar in the near-term.