Free Forex Trading Signal July 2016 (EURUSD, Gold)

• ■ Market: Forex, Metals
• ■ Assets: EURUSD, Gold
• ■ Forecast: Gold Uptrend Continuation (↑), EURUSD to Range

General Outlook

The global financial markets can still feel the vibrations of the Brexit earthquake. The panic of the first few days is gone but there is still high uncertainty regarding what happens next in Europe. The political turmoil is expected to last for quite some time as Poland and other Eurozone members have started to doubt the France/Germany leadership, and as Scotland will probably demand a new referendum regarding its independence. In the current environment, any forecast is particularly risky. Nevertheless, going long on gold seems a good idea whatever happens.

Our Previous Trading Signal

In our previous Trading Signal (late April 2016), we forecasted EURUSD to range without clear direction and commodity currencies to move lower in May 2016. We said “May 2016 is expected to be a corrective month for commodity currencies. If you want to go long on commodity currencies it seems wise to wait for a correction in May”. Actually, a correction in the price of commodity currencies did happen in May, and it was quite intense (6-9%). At this moment, we are optimistic regarding the performance of commodity currencies.

 

EURUSD Technical Analysis

Everyone is seeking stability nowadays and EURUSD is a good tool for stabilizing financial markets, at least to some extent. EURUSD is expected to continue ranging during summer 2016.

■ Resistance (↑) 1.126-1.127 | 1.137 | 1.142 | 1.149-1.150 | 1.160-1.162

■ Support (↓) 1.0828 | 1.070-1.074 | 1.050-1.051 | 1.042

Chart: EURSUD Broader Range (D1, RSI, MACD)

EURUSD Statistics

Gold Price Grows on Strong Momentum

When uncertainty increases in the world, the demand for Gold is getting stronger. Gold is a safe haven for investors during a turmoil. At this moment, Gold is an attractive choice based on both fundamental and technical analysis data.

Gold is trading today at $1,340 and the momentum indicates a movement up to $1,390. At these levels, close to $1,400, we should expect strong supply and profit-taking action. Nevertheless, Gold could be one of the best-performing instruments of the year 2016.

Chart: Gold Price (D1, RSI, MACD)

Federal Reserve Policy Towards Rate Hike

According to the Fed's Dot Plot, we should expect one more rate hike in 2016 (+0.25). According to the CME Group 30-Day Fed Fund futures prices, the markets are pricing a rate hike but not before December 2016.

The Chair of the Board of Governors of the Federal Reserve System, Janet Yellen, said once more that every Fed's meeting is a live meeting, and that means nobody knows when the next policy change will occur. She also said that even at the July meeting we could see a policy change. But that was before the Brexit. Given the current economic and political conditions in Europe, we shouldn't expect any dramatic change in the Fed's rate policies before the end of the year.

Job creation in the US

The US economy was able to create +38,000 jobs in May 2016, and that is the-the slowest pace of job creation of the past five years. As economists suggest, the US economy needs about +150,000 new jobs on a monthly basis just to keep up with the domestic population growth. As concerns the past couple of years, the US economy was able to add more than 150,000 new jobs on a monthly basis (typical monthly average +200,000 jobs).

■ Free Forex Trading Signals: EURUSD, Gold

George Protonotarios for TradingCenter

July 4th, 2016