The EUR/USD currency pair

• Prev Open: 1.0159
• Prev Close: 1.0170
• % chg. over the last day: +0.11%

Investors will be closely watching the FOMC minutes today, looking for new signals on how much a rate hike could come in September. Currently, federal funds futures traders are estimating a 60% chance of a 50 basis point hike and a 40% chance of a 75 basis point hike. The US Retail Sales data will also provide new insight into the condition of consumers. Sales are expected to rise 0.1% in July compared to June. Eurozone GDP for the quarter should also be on the list. Analysts expect the region’s economy to show 0.7% growth, which will be the last this year.

• Support levels: 1.0136, 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0185, 1.0230, 1.0286, 1.0365, 1.0415, 1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The price confidently broke through the priority change level and consolidated below the moving averages. The price is now trading in a narrow range ahead of the FOMC minutes. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 1.0136, but with confirmation in the form of a reverse initiative. Sell trades can be considered from resistance levels of 1.0185 or 1.0230, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0286 resistance level and fixes above, the uptrend will likely resume.

• – Eurozone GDP (q/q) at 12:00 (GMT+3);
• – US Retail Sales (m/m) at 15:30 (GMT+3);
• – US FOMC Member Brainard Speaks at 16:30 (GMT+3);
• – US FOMC Meeting Minutes (m/m) at 21:00 (GMT+3);
• – US FOMC Member Bowman Speaks at 21:20 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2051
• Prev Close: 1.2097
• % chg. over the last day: +0.38%

British economists see a growing risk of recession due to a spike in inflation. Today’s inflation report may show an annualized rate of 9.8%, which is not yet the tip of the iceberg. A sub-par rate hike announced on August 4 is expected to be followed by a similar hike in September as policy makers struggle with double-digit inflation. A subsequent quarter-point hike in November would raise the Bank of England benchmark rate to 2.5%, above the previously projected peak of 2%. But there is also a high probability that the UK will avoid a recession: a slight slowdown in the fourth quarter may change to stagnation in the first months of 2023 and then resume modest growth. However, the risks of a recession are growing. The probability of recession is currently estimated at 75%.

• Support levels: 1.2059, 1.2028, 1.2000
• Resistance levels: 1.2167, 1.2215, 1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is now trading at the levels of the moving averages. The MACD indicator has become positive, but buyer pressure is weak. It is best to look for sell trades from the resistance level of 1.2167, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support levels of 1.2059 or 1.2028, but only with confirmation.

Alternative scenario: if the price breaks out through the 1.2215 resistance level and fixes above, the uptrend will likely resume.

• – UK Consumer Price Index (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 133.33
• Prev Close: 134.23
• % chg. over the last day: +0.67%

The Japanese currency, which is affected by the difference between interest rates in the United States and Japan, rose last week on expectations that lower US inflation would mean less aggressive Fed tightening and therefore lower US yields. However, several Fed policymakers have recently been discussing the need for further rate hikes, so USD/JPY quotes are rising again. Fundamentally, no change in the monetary policy of either country is imminent at the moment.

• Support levels: 133.47, 132.27, 131.08, 130.85
• Resistance levels: 134.36, 136.02, 137.12

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. The price has formed an accumulation zone above the 134.36 level and has now come to test this zone. But the sellers’ reaction is weak, so the price will likely continue to increase after a small pullback. Under such market conditions, buy trades can be sought from the support level of 133.47, but with additional confirmation. For sell deals, it is possible to consider the resistance level of 134.36. Still, only with additional confirmation in the form of a reverse initiative, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 131.37, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2902
• Prev Close: 1.2842
• % chg. over the last day: -0.47%

Canada’s Consumer Price Index for July was 7.6% y/y (forecast 7.6%), down from June’s 8.1% y/y. The core CPI was 6.1% y/y against expectations of 6.1% and 6.2% in June. Canada’s inflation is slowing, and consumer prices will likely have peaked. At the Bank of Canada’s last interest rate meeting on July 13, the Bank of Canada raised the rate by 100 bps to 2.5%, noting that inflation will remain around 8% for the next few months. The Canadian dollar has unexpectedly strengthened on inflation data, though usually, the reaction to such news is accompanied by a weakening of the national currency on expectations that the central bank will behave less aggressively. The next meeting of the Bank of Canada will be held on September 7.

• Support levels: 1.2817, 1.2761
• Resistance levels: 1.2903, 1.2927, 1.2965

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. Now the price has corrected to the average value. Indicator MACD has become negative, but sellers’ pressure is weak. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2817 or 1.2761, but only with confirmation. It is better to consider the resistance level of 1.2903, but also with confirmation.

Alternative scenario: if the price breaks down and consolidates below the 1.2761 support level, the downtrend will likely resume.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).