Tapering Anxiety and Mark Carney’s interest rate & Forward Guidance dilemma in focus

 

European stock markets are trading sharply lower during the early hours of trading. Once gain tapers talk in the US has spooked the investors and this is despite the fact that the US economy is on a train which is delivering much brighter economic growth prospects and this has been supported by the economic data. You may think that the tapering talk was already priced into the markets, but traders are certainly not convinced by this idea. The US market had its worst day in several weeks on the back of the news from two Fed governors who confirmed that the Central Bank is close to their tapering asset purchase program.

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AUD/USD- Bounced from its Support as predicted

 

The AUD/USD pair has bounced from its support on a daily time frame. This support zone was given in our analysis on 26th June. The price also pierced the Bollinger band at this level and the piercing of the Bollinger band does have a significant importance at an important level of support/resistance because this could reverse the trend or push the price back towards its mean. However, the price is still well below the  50 day (shown in green) and the 100day (shown in yellow) moving averages which means that the bears are still in strong control.

Technical Analysis

USD/JPY – Bounced from its support as predicted

The USD/JPY pair has bounced from its support on a 30 minute time. This support zone was given in our analysis on 29th June.  However, this support zone my no longer hold if the price visits this specific zone again as the price has already visited this level for 3 times. Generally speaking, the fresh levels are the best levels and there is more probability of price changing its direction when it visit that specific level.

Technical Analysis

FTSE 100- An upward move could continue

The FTSE 100 is trading above its upward trend line on a 30 minute time. The volatility for the pair is high as the price is trading far from the 20-day MA and it has pierced the Bollinger band. The piercing of the Bollinger band does have a significant importance at an important level of support/resistance and it could reverse the trend or push the price back towards its mean.

Technical Analysis

Economic Data is leading the Europe higher

European stock markets are trading higher in the light of another record finish in the US markets. The disappointed Non Farm Payroll number released on Friday has increased the optimism among the investors that Fed will not turn the heat on tapering the QE during their next FOMC meeting in September.  This non farm payroll data pushed the US bond yield which surged on Thursday after the GDP number.

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EUR/USD- Downward move continue

The EUR/USD pair has bounced from its support zone on a 30 minute time frame.  This support zone is not a fresh level as the price has already visited this level few times therefore, the price may be able to break this support zone if it visits this level again.  The pair has broken its upward channel which means that the upward trend is no longer stronger. Moreover, the price is also trading  below the 50 day (shown in green) and the 100 day (shown in yellow) moving averages which further confirms that the bulls are losing their control.

Technical Analysis

Despite increasing bond yield, NFP data and a downward risk warning, Europe trading higher

European stock markets are trading higher in the light of another record finish in the US markets yesterday. This record finish which was inspired by improving data has also pushed the Asian market’s ups with Nikkei surging more than 3% during the session.  Investors around the globe have digested the fact that the US economic data which is constantly surprising the markets, is not making much effect on the Central Bank’s decision to turn the heat lower on their ultra loose monetary policies.

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