Mid-Week Technical Outlook: Breakouts

– A sense of anticipation has gripped financial markets as investors brace for the latest US inflation report this afternoon.

Inflation is expected to cool 8.7% in July compared with 9.1% in June. As highlighted on multiple occasions this week, the pending report could spark explosive levels of volatility given the market obsession with rising prices.

Before the report is published at 1:30 pm London time, there are a couple of technical setups to keep a close eye on.

Dollar wobbles above 106.00

It has been a shaky week for the dollar thus far. Prices are wobbling above 106.00 as of writing. A hot inflation report could inject bulls with enough confidence to retest 106.70 and 107.30. Alternatively, one that meets or prints below expectations could drag the DXY back towards 105.00.

EURUSD trapped in a range

The EURUSD is clearly waiting for a fresh fundamental spark to breakout of the current range. Support can be found at 1.0100 and resistance at 1.0270. This afternoon’s US CPI report could trigger a breakout with a move above 1.0270 opening doors towards 1.0350. If 1.0100 is breached, bears may target parity.

GBPUSD breakdown pending?

The subtitle says it all. Prices are struggling to keep above the 1.2060 support level. A breakdown could be on the horizon which opens the doors towards 1.1900. If 1.2060 proves to be reliable support, prices could rebound back towards the 50-day SMA and 1.2260.

Same old story for AUDUSD

Since punching back above 0.6850 back in mid-July, the AUDUSD has been trapped within a range. Support can be found at 0.6850 and resistance at 0.7050. Given how prices are trading above the 50-day SMA and the MACD is above zero, bulls have a platform to push prices higher. However, the currency pair could be waiting for a fundamental catalyst to experience a breakout/down.

USDJPY presses against 135

After staging a sharp bounce from the 100-day SMA at the start of August, the USDJPY is trading around 135.0 as of writing. A strong breakout above this level could open a path towards 137.00 and 139.380. Sustained weakness below 135.00 may trigger a selloff towards 131.34.

NZDUSD waits for catalyst

Prices remain in a range with support at 0.6220 and resistance at 0.6375. A strong breakout above 0.6375 could trigger a move towards 0.6450 and 0.6570. If prices slip back towards 0.6220, we could see a selloff back towards 0.6100.

EURJPY breakout on horizon?

The EURJPY has the potential to push higher if a strong breakout above 138.00 is secured. This may open a path towards 139.00 and 141.50. Sustained weakness below 138.00 may open the doors back towards 136.70 and 134.500.