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Daily Analysis: Verbal Currency War Ensues between the ECB and the US

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Daily Analysis: Verbal Currency War Ensues between the ECB and the US

Introduction

This article was posted on Thursday, 20:16, UTC.

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2467 0.49%
DAX 12055 0.45%
WTI Crude Oil 47.36 3.05%
GOLD 1324.00 0.81%
Bitcoin 4708 -0.89%
EUR/USD 1.1742 3.17%

The recent surge in the EUR/USD hasn’t gone unnoticed among politicians and central bankers, and the arguably most important currency pair’s rise to 1.20 triggered a response today from the ECB that stated the risks of a too strong currency. It took only a few hours for the other side of the trade to respond, when Treasury Secretary Steve Mnuchin warned of the risks of a strong Dollar. As traders can imagine the currencies reacted with a crazy session to the verbal intervention, and the pair has now traded at 1.2075 and 1.1825 in only three days. With the recent reversal day in the Dollar, odds favor a rally in the Greenback, especially given the excessively negative sentiment towards the currency.

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EUR/USD, 4-Hour Chart Analysis

Stock markets mostly ignored the FX volatility, as especially in the US, the short-term strength of the major indices is still apparent. The NASDAQ is just shy of its all-time high right now, and given the positive momentum, a break-out to new highs looks baked in the cake. European equities are still under pressure, despite the dip in the Euro in the last couple of days, and that could spell trouble for the coming weeks. Gold regained its strength after a pull-back to $1300, confirming the recent key break-out in the precious metal, while oil is also showing signs of life today after a period of dismal performance.

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Gold, 4-Hour Chart Analysis

Cryptocurrencies

Litecoin is leading the way higher today, on a generally bullish day for cryptocurrencies. LTC finally touched the $70 level and reached our next target just above that key resistance. Bitcoin also hit a new high again, above $4700 while Ethereum failed to reach the $400 level yet. Dash and Mare trading below their recent record levels as both coins are stretched concerning the long-term picture, while NEO is still struggling to move away from the $30 zone after its deep correction. Ripple is also in a bullish move today, just as NEM, while Ethereum Classic remains the most notable laggard of the sector, at least regarding the short-term performance.

LTC/USD, 4-Hour Chart Analysis

Technical Picture

The tech benchmark is getting close to the 6000 level once again after a lengthy and volatile correction that ended yesterday with a clear break-out of the dominant pattern. The long-term uptrend remains intact in the NASDAQ, and although we expect weakness during the autumn, the short-term momentum is clearly bullish and a new high is likely in the coming days, as the sector is outperforming the rest of the market. Strong support levels are found near 5850 and 5725.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
3:00 CHINA Manufacturing PMI 51.7 51.3 51.4
3:00 CHINA Non-Manufacturing PMI 53.4 54.5
11:00 EUROZONE CPI Flash 1.5% 1.4% 1.3%
14:30 CANADA Prelim GDP 0.3% 0.1% 0.6%
14:30 US Unemployment Claims 236,000 237,000 234,00
14:45 US Chicago PMI 58.9 58.7 58.9
16:00 US Pending Home Sales 0.3% 0.4% 1.5%

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
10:30 UK Manufacturing PMI 55.0 55.1
14:30 US Average Hourly Earnings 0.2% 0.3%
14:30 US Non-Farm Payrolls 180,000 209,000
14:30 US Unemployment Rate 4.3% 4.3%
16:00 US ISM Manufacturing PMI 56.5 56.3

Featured image from Shutterstock

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Mate Cser

Mate Cser

Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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