Weekly Outlook | Positive risk sentiment returns

Last week, the Bank of England did cut interest rates. Despite that, the amount of members voting for a rate cut was less than previously anticipated, which might be a reason, why the Pound has stabilized leading to a further gain in markets. In general, the weakness of the Dollar seems to return, helping the positive risk sentiment in general. This can also be observed in crypto markets, as most tokens resumed fresh upside momentum. In particular altcoins have resumed sharp upside momentum.

This week will offer only limited data with likely the Royal Bank of Australia’s interest rate decision being the biggest news event after all. With potential further weakness of the Greenback the positive sentiment might hence continue. Consumer prices should be also observed as they might give some insights into the US economy in particular with the implantation of tariffs. Also producer prices follow later in the week and might be of similar importance.

Important events this week:

– AU – interest rata decision– The interest rate decision in Australia might move markets further. It is expected that the Central bank will cut rates by 25 basis points from the current 3.85%. The positive sentiment in markets is currently being reflected by positive momentum of the AUD.

AUDUSD monthly chart

Currently the rate of the pair keeps rising with potential chances of further upside momentum as the monthly chart above shows. There is still room towards the falling trendline, which is consistent with the 50- moving average line as well at around 0.6700. The strong rejection to the downside from April might pave the way to higher levels. While the potential rate cut might cause the AUD to weaken initially fresh upside momentum might be found as traders will be able to enter the market at lower prices. Above the level of 0.6590 the pace might intensify if the recent resistance zone will be broken. The rate decision will occur on Tuesday, 12th of August at 06:30 CET.

– US consumer price index – US consumer prices continue to remain in tight levels. Spending figures of the US population continue to decline, which means that hidden inflation figures weigh on the economy as well. Financial markets focus on the CPI data release, which might also move the Dollar. Typically, a rise of the figure will support the Dollar against other currencies.

EURUSD weekly chart

The EURUSD currency pair shows a steady uptrend since Donald Trump took office in the US. Despite the Fed not cutting rates the trust in the Dollar seems to erode further. Furthermore, the potential rate cuts at some point keep driving the market to higher levels. Rising consumer prices would push the currency pair lower, while a weaker reading might help pushing the EUR above the next technical resistance zone of 1.1800. The news will be released on Wednesday, 16th July at 14:30 CET.