Daily Analysis : July 28, 2016

The dollar lost ground late on Wednesday after the Fed left interest rates and monetary policy steady as expected and as investors look ahead to the view on policy from the Bank of Japan on Friday. In a 9-1 vote, the Federal Open Market Committee left the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50% on Wednesday. However, the FOMC mildly suggested that diminished risks could provide room for a rate hike this year. Earlier in the day, the National Association of Realtors said its pending home sales index rose by 0.2% last month, missing expectations for an increase of 1.4%. The report came after the U.S. Commerce Department said total durable goods orders fell 4.0% last month, compared to economists' expectations for a decline of 1.1%. The yen weakened following reports Prime Minister Shinzo Abe and his government will compile a stimulus package of nearly ¥28 trillion, or $265.3 billion, to tackle Japan's economic slowdown. For today, Germany is to report on unemployment change and consumer inflation, while later in the day, the U.S. is to release weekly data on initial jobless claims.

EUR/USD

The euro gained sharply against the dollar on Wednesday, reaching 1-week highs, as the Dollar and U.S. bond yields fell unexpectedly after the Federal Reserve held interest rates unchanged at a meeting in Washington D.C. the FOMC said in its July monetary policy statement that near term risks to the economic outlook have diminished, while economic activity since the committee last met in June has expanded at a moderate rate.The pair peaked at 1.1071, before falling back slightly to 1.1058, 0.65% lower for the session. For today, Germany is to report on unemployment change and consumer inflation, while later in the day, the U.S. is to release weekly data on initial jobless claims.

EUR/USD Chart

Pivot: 1.103Support: 1.103 1.1005 1.0975Resistance: 1.1105 1.1125 1.115Scenario 1: long positions above 1.1030 with targets @ 1.1105 & 1.1125 in extension.Scenario 2: below 1.1030 look for further downside with 1.1005 & 1.0975 as targets.Comment: the RSI is bullish and calls for further upside.

Gold

Gold prices recovered slightly on Wednesday, supported by the FOMC decision to leave interest rates unchanged as well as weak economic data on pending home sales and durable goods orders from the U.S. Since hitting 28-month highs earlier this month, gold fell 2% as investors have turned into global equities. Still, the precious metal is up by approximately 25% year to date and is on pace for one of its strongest years in a decade. Gold traders are now shifting their focus on the Bank of Japan monetary policy announcement due on Friday.

Gold Chart

Pivot: 1329.5Support: 1329.5 1320.5 1312Resistance: 1347 1353.5 1357.9Scenario 1: long positions above 1329.50 with targets @ 1347.00 & 1353.50 in extension.Scenario 2: below 1329.50 look for further downside with 1320.50 & 1312.00 as targets.Comment: the RSI is mixed to bullish.

WTI Oil

Crude oil prices fell sharply on Wednesday, reaching 3-month lows, as U.S. inventories rose unexpectedly, defying expectations for a slight drop. On Wednesday, the U.S. Energy Information Administration said that U.S. Commercial Crude inventories increased by 1.7 million barrels from the previous week when analysts expected a drop of 2.257 million. At 521.1 million barrels,U.S. crude oil inventories are at historically high levels for this time of year. In addition, the EIA reported an increase of 452,000 barrels in gasoline inventories adding further pressure on prices. Energy traders will be watching closely for a report on oil rigs count by Baker Hughes on Friday, for further indications on crude oil supply levels.

WTI Oil Chart

Pivot: 43.4Support: 41 40.6 40Resistance: 43.4 44.4 44.95Scenario 1: short positions below 43.40 with targets @ 41.00 & 40.60 in extension.Scenario 2: above 43.40 look for further upside with 44.40 & 44.95 as targets.Comment: technically the RSI is below its neutrality area at 50.

US 500

U.S. stocks showed mixed movement on Wednesday, posting some volatility after the unsurprising decision from the Federal Reserve to hold interest rates steady for a fifth consecutive meeting. As a result, the Dow Jones fell by 0.01%, suffering its first three-day losing streak since early-June, the NASDAQ gained by 0.58%, while theS&P 500 fell by 0.12% still remaining near record-highs. The top performer for the day was Apple Inc (NASDAQ:AAPL) which gained 6.95% after the tech giant reported sales of more iPhones than expected during the third quarter and provided optimistic forward guidance ahead of a planned launch of the iPhone 7 in September. Equity traders are now shifting their focus on the Bank of Japan monetary policy announcement due on Friday.

US 500 Chart

Pivot: 2072 Support: 2072 1992 1950 Resistance: 2190 2220 2250 Scenario 1: long positions above 2072.00 with targets @ 2190.00 & 2220.00 in extension. Scenario 2: below 2072.00 look for further downside with 1992.00 & 1950.00 as targets. Comment: the RSI is bullish and calls for further advance.