27th July 2015 Currency markets, news and analysis

Forex Market Commentary  

EUR/USD showing considerable resilience pushing to the 1.11 mark in US session.

Euro equities suffered a knock on effect as sharp losses in Chinese equities trading saw the SSE Composite fall a massive 345 points or 8.45% in Monday's trading session. Euro STOXX50 fell 86 points to close at 3513.

US equities come down as a result of the Chinese rout. The Dow closed at 17440.59 dropping 127 points. See on Bloomberg: 

http://www.bloomberg.com/news/articles/2015-07-27/u-s-index-futures-signal-stocks-to-extend-drop-allergan-jumps

USDX comes under considerable pressure and falls back on the 50 day moving average which forex traders watch very closely at the 96.00 mark. Technicians will note that the USDX price action has always been above the 50 day moving average from July 2014 to May 2015. USDX is currently trading a sideways channel around the 50 day moving average. Conversely the EUR/ USD since its drop from 1.35 last July 2014 had consistently demonstrated price action below the 50 day moving average up til may this year. The EUR/ USD also sits on its 50 day moving average at the 1.11 mark with sideways channel price action the more likely scenario for the remainder of the year should, all things be equal, US interest rates remain on course for only a 25 basis points official rate hike.


An interesting article on Bloomberg appears today raising concerns about Deflation? Yes, that's right:  Deflation; and a mere 3-4 weeks ago we were all becoming concerned that US core inflation should hit 2% by the end of Q3, currently sitting at 1.7%. What a difference a month makes and the finger points squarely at China. Slowing commodities demand, falling prices, particularly gold, and nervous equities markets on falling revenues now create the scenario for US interest rates to remain at 25 basis points hike only to avert further loss in confidence in the global credit markets. Read on Bloomberg here:

http://www.bloomberg.com/news/articles/2015-07-28/treasuries-are-stars-of-the-markets-as-traders-see-deflation

Given the nervous situation in China crude oil takes a tumble to the bottom end of our anticipated trading range for the remainder this year at $45-55 with WTI futures currently sitting way below the 50 day moving average at $57 and gold bullion also way below its 50 day moving average at 1160. Weaker global commodities prices translates into weaker corporate income and a deflationary trend due to lower production costs.

Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.

USDX

US Dollar
96.524     -0.011 -0.01% 
Support 96.831 Resistance 97.829
Forward 1 year - 97.346s.

EUR  
1.108860     +0.008875 +0.81%

Support   1.09037      Resistance 1.10457
Forward 1 year - 1.10960s.

Crude Oil  

47.00     -0.39 -0.81%
Support 46.99   Resistance  49.61
Forward 1 year - 53.74s.

Gold

1094.435     -3.515 -0.32%
Support  1,057.6     Resistance 1,114.8
Forward 1 year  -  1,090.7s.

Pieter Bergli - DeLoren Trust Holdings

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