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Trading ideas for EUR/USD, USD/JPY and XAU/USD

July 06, 2022


EUR/USD
: The euro sank to a two-decade low versus the dollar as a jump in natural gas prices reignited worries about the euro zone economy and data showed business growth in the region slowed sharply in June. Recession fears in the eurozone were exacerbated by worries over an energy crisis in Europe. Tuesday’s data showed a sharp slowdown in business growth in June, after Monday’s news of a seasonally adjusted trade deficit in Germany versus expectations for a surplus. Be it Germany’s energy crisis or Italy’s drought, or the Bank of England’s grim economic outlook, everything contributed to the pessimism surrounding the economic conditions in the EU. Adding to the downside pressure was the hawkish bias of the European Central Bank policymakers, which in turn suggested aggressive central bank action and further strain on the bloc.

SELL LIMIT 1.0301/TP 1.0235/SL 1.0330

 

USD/JPY: The dollar rose against the Japanese yen as the dollar stood tall as investors awaited non-farm payroll data later in the week. The payrolls report on Friday is forecast to show jobs growth slowing to 270,000 in June, with average earnings slowing a touch to 5.0%. Monday and Tuesday offered little in the way of economic data, but later this week the U.S. Federal Reserve and European Central Bank release their minutes from recent policy meetings, and on Friday widely watched U.S. payrolls data will be published. On the Tokyo front, yen bulls have strengthened on rising expectations for higher price pressures. Seisaku Kameda, a former chief economist at the Bank of Japan said that the sharp decline in the yen on a broader note will lift the inflation outlook. The inflation rate may remain well above 2% this year.

SELL STOP 135.00/TP 134.60/SL 135.20

 

XAU/USD: Gold Price consolidates the biggest daily fall in three weeks around $1,770, refreshing intraday high during Wednesday’s Asian session. Even so, the precious metal remains below the key support-turned-resistance after confirming the bearish inverted cup-and-handle formation the previous day. Growing fears of global recession joined speculations that China may recall covid-led lockdowns to weigh on the gold prices the previous day. The pessimism intensified after Germany and Italy flashed economic warnings while the Bank of England also released a report conveying the grim economic outlook. On the same line was China’s mass covid testing announcement. Additionally, strong prints of the US Factory Orders for May also propelled concerns about Fed’s aggressive rate hikes and contributed to the market’s pain.

SELL LIMIT 1775.50/TP 1763.50/SL 1781.50