Your weekly fundamental view 2016.07.26

Červenec 26, 2016 14:30

Need to know

The main focus of this week is the FOMC statement in the US. The Federal Reserve will meet on Wednesday to release their views on the US economy, market data and interest rate.

Coming up

The Federal Open Market Committee (FOMC) statement came Tuesday 26 July. The FOMC is gathered for a two-day meeting to discuss the US monetary policy. Traders and analysts kept an eye on this week's main event for clues regarding the timing of future interest rate hikes. Investors do not expect a hike soon, but they will try to figure out whether later this year is a serious option. EUR/USD resistance at 1.10 and 1.1050; EUR/USD support at 1.08-1.0850.

The Bank of Japan (BOJ) had a two-day meeting on Thursday 28 July. Here they'll discuss (as usual) further easing of Japan's monetary policy. BOJ governor H. Kuroda already hinted to such a possibility during the weekend. The monetary easing would be a stimulus to reach the 2% inflation rate target set by the central bank. At the moment, the Japanese economy is seriously struggling due to weak growth, deflationary trends and a strengthening Yen. Key levels USD/JPY: a break of 107.50 resistance could start a Yen weakness trend, a break of 105 could see retest of 102.50-101-100 support.

The British preliminary quarterly GDP results are released Wednesday 27 July. Investors will be carefully watching the first GDP figures since the British voters chose to exit out of the European Union (Brexit). This will provide a first indication whether the referendum and Brexit result had a negative impact on the British economy, during the 2nd quarter of 2016. The previous figure was 0.4% and the forecast is 0.5%. EUR/GBP resistance is at 0.8425, support is at 0.83 and 0.81.

Chart to watch: FTSE 100

Brexit did cause the FTSE 100 to dip and test 5750, but the support held strongly. The subsequent bullish rebound was strong and price has managed to reach the first Fibonacci target at 6712. But another factor could soon be playing a role in this zone - the previous resistance levels (dark red box). These levels will provide the FTSE 100 with a strong challenge. Will the index manage to break bullishly or bounce bearishly? A bullish break should see price head to the second Fibonacci target and previous top at 7075-7125. A bearish bounce could take price back down to 6500, 6450 or 6300.