BOC Hikes Interest Rates, Yellen Testimony, Remains Non-Committal

The Bank of Canada hike interest rates by 25 basis points as widely expected. The markets are expecting to see further rate hikes from the central bank which saw the Canadian dollar strengthening.

In the US, the Fed Chair Janet Yellen continued to remain non-committal in regards tofurther rate hikes. According to many economists, Yellen’s congressional testimony suggested that a September rate hike is unlikely to happen. In her prepared remarks, the Fed chair said that the strong labor market would eventually put pressure on wages and inflation.

In the UK, the jobs data showed that the UK’s unemployment rate fell to 4.5%, marking a 43-year low. Wages continued to remain mixed and weak with wages excluding bonuses posting a modest increase while wages including bonuses stayed subdued.

Looking ahead, Ms. Yellen will continue her second day of testimony to the US congress. The producer prices index data will also be coming out later today.

EUR/USD intraday analysis

EUR/USD 4 Hour Chart

EUR/USD (1.1436) closed bearish yesterday after posting a fresh intraday high at 1.1489. Price action is seen consolidating above the 1.1400 handle. On the 4-hour chart, we can see that EUR/USD is currently trading within a rising wedge pattern. Expect to see a near term retest towards 1.1444 region. A reversal here by means of establishing resistance could signal a near-term weakness in price. Support comes in at 1.1312 – 1.1311 which could be tested on a downside breakout. Given the bullish momentum in the EUR/USD, a breakout above 1.1444 could, however, signal continuation to the upside.

GBP/USD intraday analysis

GBP/USD 4 Hour Chart

GBP/USD (1.2897) turned bullish yesterday, and the price action is expected to continue its consolidation at the current levels. On the 4-hour chart, the decline towards 1.2800 has not yet been complete which could suggest aweakness to the downside. However, if GBP/USD manages to break above 1.2890 level of resistance where it is trading currently, then expect further upside in price. The next technical resistance is found at 1.2970 which could be tested on the upside breakout.

USD/JPY intraday analysis

USD/JPY 4 Hour Chart

USD/JPY (113.04) broke below the downside range at 113.71 from the outside bar that was formed two days ago. The downside breakout was led by a strong bearish momentum. Therefore, we can expect to see a continuation to the downside with the next main support seen at 111.77 on the daily chart. On the 4-hour chart, price action is seen currently testing the lower end of the rising median line. Resistance is seen at 113.39 which could be tested in the near term. A reversal off this level will signal a continuation towards the initial support at 111.77 followed by a further decline to the next support at 110.81.

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