InvestMacro

The EUR/USD currency pair

• Prev Open: 0.9998
• Prev Close: 1.0015
• % chg. over the last day: +0.17%

Germany’s inflation climbed to an annual rate of 7.9% in August, returning to its all-time high of May, its highest level in almost 50 years. There are increasing signs from ECB officials that the Central Bank must aggressively hike rates at its next meeting. At the same time, there is a growing possibility that the US Federal Reserve will also raise rates by 0.75% at its next meeting. Traders raised their rates for the third consecutive 75 basis point increase in September to 76.5% from 70% following the release of US jobs data which showed that the US labor market remains strong.

• Support levels: 0.9951
• Resistance levels: 1.0032, 1.0112, 1.0146, 1.0230, 1.0286, 1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading between the moving averages, which makes it difficult to find good entry points. The MACD indicator is in the positive zone, but buyer pressure is weak. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 0.9951, but with confirmation. Sell trades can be considered from resistance levels of 1.0032, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0146 resistance level and fixes above, the uptrend will likely resume.

• – French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – French GDP (q/q) at 09:45 (GMT+3);
• – German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US FOMC Member Mester Speaks at 15:00 (GMT+3);
• – US ADP Non-Farm Employment Change (m/m) at 15:15 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1704
• Prev Close: 1.1653
• % chg. over the last day: -0.44%

The CBI’s business optimism balance, which measures the difference between the share of optimistic and pessimistic firms, has fallen to its lowest level since May 2020 for both consumer and business services. The energy crisis and rising inflation are hurting households and every business sector. At this point, all economic and fundamental factors point to weakness in the British economy, which is negatively affecting the national exchange rate.

• Support levels: 1.1659, 1.1561
• Resistance levels: 1.1715, 1.1814, 1.1838, 1.1901, 1.1994, 1.2035, 1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The British pound continues to lose ground. The price is trading below the moving levels, and the MACD indicator is in the negative zone, but there are the first signs of divergence. At the moment, it is better to look for sell trades from the resistance level of 1.1814, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1659 or 1.1561 if the price drops lower.

Alternative scenario: if the price breaks out through the 1.1901 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 138.74
• Prev Close: 138.79
• % chg. over the last day: +0.04%

The Japanese yen is under pressure from a soft monetary policy from Japan’s Central Bank. And as the US Fed continues to raise interest rates aggressively. The rate differential is widening, so the USD/JPY is inclined to rise fundamentally. Official data released Wednesday showed that industrial production in Japan increased by 1.0% in July from the previous month. Retail sales rose for the fifth straight month, raising hopes that the world’s third-largest economy will benefit from the strength in consumer spending this quarter.

• Support levels: 138.53, 137.67, 136.85, 135.89, 135.35, 134.23, 133.47, 132.27
• Resistance levels: 139.40

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving average lines again, and the buyers’ pressure is increasing. The MACD indicator remains positive, with no signs of reversal. Under such market conditions, buy trades can be sought from the support level of 138.53 or 137.67, but with additional confirmation. For sell deals, it is possible to consider a resistance level of 139.40, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 136.85, the downtrend will likely resume.

• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3004
• Prev Close: 1.3089
• % chg. over the last day: +0.65%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Canadian Central Bank but also on the oil price. Oil decreased by $6 yesterday amid rumors that Iran and the US have reached an agreement on the nuclear deal, allowing Iran to export oil to the world markets again. The drop in oil had a negative effect on the Canadian currency.

• Support levels: 1.3026, 1.2992, 1.2958, 1.2940, 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading near the moving averages. The MACD indicator is in the positive zone, but there are signs of divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3027 or 1.2992, but only with confirmation. For sell deals, it is best to consider the resistance level of 1.3105, but only with short targets.

Alternative scenario: if the price breaks down and consolidates below the 1.2900 support level, the downtrend will likely resume.

• – Canada GDP (q/q) at 15:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

The EUR/USD currency pair

• Prev Open: 0.9964
• Prev Close: 0.9998
• % chg. over the last day: +0.34%

The euro moved closer to parity against the dollar on Monday as representatives of the European Central Bank started talking about a tentative rate hike. Opinions are split, with some bankers calling for a 50 basis point hike and others seeking a 75 bps increase. According to Refinitiv, the probability of a 75 basis point hike on September 8 jumped to 67%. The inflation report will also be released this week, giving more hints. A rise in inflation figures in the Eurozone would give confidence to the euro, as a 0.75% hike scenario would be more likely.

• Support levels: 0.9951
• Resistance levels: 1.0032, 1.0112, 1.0146, 1.0230, 1.0286, 1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading between the moving averages again, which makes it difficult to find good entry points. The MACD indicator has become positive. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 0.9951, but with confirmation. Sell trades can be considered from resistance levels of 1.0032, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0146 resistance level and fixes above, the uptrend will likely resume.

• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – German Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• – US JOLTs Job Openings (m/m) at 17:00 (GMT+3);
• – US FOMC Member Williams Speaks at 18:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1722
• Prev Close: 1.1705
• % chg. over the last day: -0.14%

Goldman Sachs Group, Inc. expects the UK economy to slip into recession later this year, with the risk of a deep recession amid a surge in energy prices. The UK Gross Domestic Product (GDP) is expected to fall about 1% by mid-2023. The annual output is likely to fall by 0.6% next year. It is expected that the Bank of England may not want to tighten monetary policy sharply in the medium term, as a sharp growth cycle could exacerbate the impending recession. Against this backdrop, the sterling will lack the catalysts necessary for a sustained and prolonged recovery against the dollar.

• Support levels: 1.1659
• Resistance levels: 1.1715, 1.1814, 1.1838, 1.1901, 1.1994, 1.2035, 1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The British pound continues to lose ground. The price is trading below the moving levels, and the MACD indicator is in the negative zone, but there are the first signs of divergence. At the moment, it is better to look for sell trades from the resistance level of 1.1715 or 1.1814, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1659, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.1901 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 137.63
• Prev Close: 138.70
• % chg. over the last day: +0.78%

The Japanese yen depreciated after Federal Reserve Chairman Jerome Powell announced a hawkish stance by the central bank’s board. The Bank of Japan (BOJ) has pledged to maintain a soft monetary policy and is actively suppressing the Japanese Government Bond yield curve (JGB). Keeping rates low leads to further weakening of the yen.

• Support levels: 138.58, 137.49, 136.85, 135.89, 135.35, 134.23, 133.47, 132.27
• Resistance levels: 139.40

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving average lines again, and the buyers’ pressure is increasing. The MACD indicator is positive. Under such market conditions, buy trades can be sought from the support level of 137.49, but with additional confirmation. For sell deals, it is possible to consider a resistance level of 139.40, but only with additional confirmation, as fundamentally, the USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 136.85, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3031
• Prev Close: 1.3011
• % chg. over the last day: -0.15%

Crude oil prices jumped about 4% on Monday as expectations of OPEC+ cartel production cuts increase with each day. Apparently, OPEC+ countries are getting greedy and trying to push oil prices back to this year’s highs. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian dollar. In the near future, the USD/CAD rate dynamics will be determined only by changes in oil prices since the interest rates of the Bank of Canada and the US Federal Reserve are at the same level.

• Support levels: 1.2958, 1.2940, 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.3043, 1.3090, 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading near the moving averages and near the support areas. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2958 or 1.2940, but only with confirmation. For sell deals, it is best to consider the resistance level of 1.3043, but only with short targets.

Alternative scenario: if the price breaks down and consolidates below the 1.2900 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 0.9973
• Prev Close: 0.9964
• % chg. over the last day: -0.09%

A recession in the Eurozone is now very likely. Still, it alone will not lower inflation, and the European Central Bank should opt for a significant interest rate hike next month, ECB policymaker Martins Kazaks said on Saturday. The ECB raised rates by 50 basis points in July, and a similar move is scheduled for September 8, but some policymakers have begun talking about even more hikes as the outlook for inflation worsens. Mr. Kazacs also added that with zero rates now, the ECB is still supporting the economy, and by the first quarter of next year, the bank should reach a neutral level that does not slow or stimulate the economy.

• Support levels: 0.9931
• Resistance levels: 1.0032, 1.0112, 1.0146, 1.0230, 1.0286, 1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages again. The MACD indicator has become negative. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 0.9931, but with confirmation. Sell trades can be considered from resistance levels of 1.0032, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0146 resistance level and fixes above, the uptrend will likely resume.

• – US FOMC Member Brainard Speaks at 21:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1833
• Prev Close: 1.1737
• % chg. over the last day: -0.82%

Amid talk that inflation will exceed 18% next year and families across the country are likely to face energy poverty this winter, Britain’s economic woes are worsening by the day. Analysts agree that the Bank of England will have no choice but to plunge the economy into a serious recession and cause massive job cuts to curb price pressures. Rising energy prices are fueling financial markets with higher inflation forecasts, leading traders to believe the Bank of England should be more aggressive. Money markets are now showing expectations of a 4.25% rise in the benchmark interest rate next year, the highest level since 2008.

• Support levels: 1.1659
• Resistance levels: 1.1838, 1.1901, 1.1994, 1.2035, 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 British pound is losing ground again and doing it faster than the euro. The MACD indicator has turned negative, and prices are below the moving levels again. At the moment, it is better to look for sell trades from the resistance level of 1.1838 or 1.1901, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1659, but only with confirmation and short targets.

Alternative scenario: if the price breaks out through the 1.1994 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 136.48
• Prev Close: 137.52
• % chg. over the last day: +0.76%

According to analysts, wage growth in Japan will lag behind inflation for the next 12 months. And that’s bad news for the economy. And it is one of the reasons why the Bank of Japan should keep its massive monetary stimulus and dovish policy until wages show more clear signs of growth. Thus, the Japanese yen will be under the pressure of low rates at least till the end of the year, which will contribute to the further growth of USD/JPY quotes amid the tightening of the policy by the US Fed.

• Support levels: 136.85, 135.89, 135.35, 134.23, 133.47, 132.27, 131.08, 130.85
• Resistance levels: 138.55

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving average lines again, and the buyers’ pressure is increasing. The MACD indicator has become positive. Under such market conditions, buy trades can be searched for from the support level of 136.85, but with additional confirmation. For sell deals, it is possible to consider the resistance level of 138.55, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 135.35, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2927
• Prev Close: 1.3027
• % chg. over the last day: +0.77%

The US Energy Information Administration says oil and natural gas will remain the dominant energy sources through 2050. Although renewables will expand rapidly, 70% of the world’s energy in 2050 will still come from fossil fuels. Canada is the world’s fifth-largest producer and fourth-largest exporter of oil and natural gas. The future of Canada’s oil and gas sector is to produce them with the lowest possible greenhouse gas emissions. This takes advantage of the fact that G7 countries, including Canada and the European Union, classify natural gas as a transitional form of green energy. Thus, the Canadian dollar will be even more dependent on the dynamics of oil and natural gas prices. And that is the reason why rising energy prices, along with monetary tightening by the Bank of Canada, are keeping the Canadian dollar in line with the US dollar.

• Support levels: 1.3036, 1.2965, 1.2943, 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.3090, 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is currently trading at the resistance level, with buyer pressure temporarily prevailing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3036, but only with confirmation. For sell deals, it is best to consider the resistance level of 1.3090, but only with short targets.

Alternative scenario: if the price breaks down and consolidates below the 1.2900 support level, the downtrend will likely resume.