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August 12, 2020

Fundamentals Behind Potential USD Rally

Frank Cabibi
USDBullish
NZDBullish
AUDBearish
BTC/USDBullish

USD/CAD

After good CPI news for the USD, the pair continues its downtrend. Expectations were .3% and we got .6% reported. Oil demand seems to be rising which helps out Canada's economy. Limiting supply has really helped with oil demand. The US expects a higher production for the rest of the year while investors think a recovery is underway. Some key support around 1.32100s, and a break in this level would be bearish sentiment. Inflation on the USD seems to be taking its toll on pairs like these. We're looking at a bounce off support and test the 200 DMA or next resistance at 1.34980.

NZD/JPY

NZD/JPY reported cash rates to stay the same yesterday, and the pair rallied on that good news. Some analysts think the Yen will rise on US-China tensions which is a bad sign for both economies and the Yen is considered a safe haven. We're looking to see price run up to resistance at 71.649 before we get bearish sentiment and the pair takes a second retest in the consolidation zone.

AUD/USD

Unemployment rate and employment change is to be reported later today on Aussie which will be a volatile moment for the pair. Expectations are low as unemployment forecasts at 7.8% from 7.4% last month. Both the USD and Aussie are suffering from their dollars weakening, however, with good news on the dollar, we may see a rally soon. The USD has been beaten down the past couple months and analysts are expecting a rally on the USD pairs. The dollar index (DXY) hovers around 93 after coming up from 92 last week. Long term, the dollar looks like it could weaken over the years as trillions of dollars are being printed, but for now, we're looking for a rally here soon. Now that the global economy has slowed, tensions between the US and China are terrible, and governments are concerned of another coronavirus wave, investors will turn to safe-havens like the USD.

BTC/USD

Speaking of safe-havens, Bitcoin might just be something investors want to put their money into. The idea of investing in something other than fiat money seems attractive during times of economic hardship, especially when a country's currency begins to weaken. When the crypto failed to break the 12000 level, investors talked about potential shorts. However, it looks like Bitcoin wants to come in for another test on resistance which could be the time it breaks to the upside.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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