EU Summit update favors Euro.

European Union (EU) hardliners are reportedly ready to accept EUR 390 billion in grants on corona virus recovery fund. This comes after the earlier Reuters report that the Frugal Four are ready to accept EUR 390 billion in grants and EUR 360 billion in loans. Austrian Chancellor Sebastian Kurz tweeted out on Monday, the European Union (EU) Summit discussions are difficult but we can be very satisfied with today’s result. Meanwhile, Dutch Prime Minister Mark Rutte said, “on the whole, we are making progress in EU summit.”

Diplomats said the leaders may abandon the summit and try again for an agreement next month, but as they negotiated into the early hours of Monday a deal still looked possible.

“I don’t know what to expect from the summit. But even if there is no agreement, the impact will be limited given the euro appears to have a fairly strong momentum these days,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

On the other hand, minutes of the latest BOJ meeting suggest that the policymakers may face less economic risks due to the heavy fiscal support. However, fears of the coronavirus (COVID-19) keep the broad outlook uncertain. Furthermore, Japan’s trade numbers for June suggest a decline in the headline Merchandise Trade Balance and Exports but the Imports have recovered somewhat.

EUR/JPY 4 Hour Chart:

Support: 121.97 (S1), 121.63 (S2), 121.33 (S3).

Resistance: 122.62 (R1), 122.92 (R2), 123.26 (R3).

Amid all these catalysts giving an optimistic view on EUR against JPY. We expect a bullish trend for EURJPY.

XAU/USD Weekly Forecast (20th July 2020 – 24th July 2020)

Fundamental view:

In the past week, Federal Budget deficit printed new record amount and Fed officials were increasingly doubtful about the sustainability of the economic recovery which decreased the dollar value whereas Gold moved upwards due to future inflation thus XAU/USD showed a bullish trend in the past week.

Central banks around the world continue to loosen monetary policy and that of course is good for gold, as it continues to see a lot of buyers looking to get a bit of safety into their portfolio and According to many analysts, the one factor that will continue to drive gold prices higher in the near term is weakness in the U.S. dollar. We expect an uptrend for XAU/USD in the next week.

The major economic events deciding the movement of the pair in the next week are Existing Home Sales, Crude Oil Inventories at Jul 22, Unemployment Claims, CB Leading Index monthly report at Jul 23, Flash Manufacturing PMI at Jul 24 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.16% lower than the previous week. Maintaining high at 1814.9 and low at 1790.3 showed a movement of 246 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the downside. A solid breakout above 1820.3 may open a clean path towards 1829.9 and may take a way up to 1845. Should 1795.7 prove to be unreliable support, the XAUUSD may drop to 1780.7 and 1771.1 respectively. In H4 chart the formation of spinning top favors our expectation of bullish trend also if the breakout of rectangular channel happens to the upside then bullish trend can be finalized.

Preference
Buy: 1794.2 target at 1814.3 and stop loss at 1784.8

 

Alternate Scenario
Sell:  1784.8 target at 1768.6 and stop loss at 1794.2

USD/JPY Weekly Forecast (20th July 2020 – 24th July 2020)

Fundamental view:

Japan Monetary Policy Statement at Jul 15 supported yen and henceforth created bearish move for the pair whereas Unfavorable Japan Tertiary Industry Activity monthly report at Jul 13  and Philly Fed Manufacturing Index at Jul 16 acted as a catalyst for the uptrend of the pair.

Reports like Revised Industrial Production of previous week and tweet of Boj’S Gov Kuroba on July 15th that Japan is in extremely severe situation portrayed the struggling pace of Japan thus last week USD/JPY reflected a bullish trend.

The major economic events deciding the movement of the pair in the next week are Japan National Core CPI yearly report at Jul 20, Japan Flash Manufacturing PMI,US Crude Oil Inventories at Jul 22, US Unemployment Claims at Jul 23, US Flash Manufacturing PMI at Jul 24.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.33% lower than the previous week. Maintaining high at 107.43 and low at 106.66 showed a movement of 77 pips.

In the upcoming week we expect USD/JPY to show a bullish trend. The currency pair is trading below the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 107.41 may open a clean path towards 107.80 and may take a way up to 108.17. Should 106.64 prove to be unreliable support, the AUDUSD may sink downwards 106.27 and 105.88 respectively. In H4 chart, Formation of Double bottom indicates of the trend creating prospects of a bullish trend Along with that doji formation braces our expectation.

Preference
Buy: 106.91 target at 107.67 and stop loss at 106.48

 

Alternate Scenario
Sell:  106.48 target at 105.96 and stop loss at 106.91