InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0298
• Prev Close: 1.0319
• % chg. over the last day: +0.20%

Data on Thursday showed that producer prices in the US unexpectedly fell in July amid falling energy costs. Meanwhile, core producer inflation is also trending lower. In the labor market, jobless claims rose for the second week in a row. Traders of federal funds futures contracts currently estimate a 66% chance of a 50 basis point increase and a 34% chance of a 75 basis point increase in September.

• Support levels: 1.0286, 1.0247, 1.0201, 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0317, 1.0365, 1.0415, 1.050

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is now forming a small balance with the borders of 1.0286-1.0317. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 1.0286, but with confirmation. Sell trades can be considered from the resistance level of 1.0317, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.0201 support level and fixes below, the downtrend will likely resume.

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2218
• Prev Close: 1.2199
• % chg. over the last day: -0.16%

In the UK, the week ends with Friday’s second quarter GDP report and manufacturing data. Markets expect weak data – GDP is forecasted to fall by 2.5% annually. For the quarter, GDP is forecast to be down by 0.2% after rising by 0.8% in the first quarter. The pound rose strongly on Wednesday thanks to US inflation data. But if GDP and manufacturing data are worse than forecast, the pound will likely lose ground.

• Support levels: 1.2130, 1.2063, 1.2000
• Resistance levels: 1.2240, 1.2294

From the technical point of view, the currency pair GBP/USD trend on the hour timeframe is still upward. The price has corrected to the levels of the moving averages, where a small balance is forming. The MACD indicator has become inactive. At the moment, it is best to look for buy trades on intraday time frames from the support level of 1.2130, but only with confirmation. Sell trades can be considered from the resistance level of 1.2240, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.2063 support level and fixes below, the downtrend will likely resume.

• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 132.89
• Prev Close: 132.97
• % chg. over the last day: +0.06%

According to the Corpay chief strategist, in connection with the prospect of less aggressive monetary and credit policy from the Federal Reserve System, the appetite for risk has somewhat recovered, which allowed the Japanese yen to strengthen against the background of the dollar decline. But investors should not count on a long-term downward trend, as the difference in interest rates is not in favor of strengthening the Japanese Yen.

• Support levels: 132.41, 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, so a test of this zone is very likely. Under such market conditions, buy trades can be sought from the support level of 132.41, but with additional confirmation. For sell deals, it is possible to consider the level of resistance 134.36, but 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 above 136.02, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2769
• Prev Close: 1.2760
• % chg. over the last day: -0.07%

Canadians have a chronic housing shortage, and the Canada Mortgage and Housing Corporation estimate that about six million housing units must be built by 2030 to make housing more affordable. Banks are considering lending to Canadians, but amid rising interest rates, the appeal of such lending and mortgage programs is falling. According to a recent Manulife survey, about a quarter of Canadian homeowners say they will have to sell their properties if interest rates continue to rise. A recession is also looming, which could prove disastrous for already overstretched owners.

• Support levels: 1.2750, 1.2701
• Resistance levels: 1.2817, 1.2871, 1.2918, 1.2965

In terms of technical analysis, the USD/CAD currency pair trend has changed to bearish. The price has consolidated below the priority change level and below the moving averages. The MACD indicator has become negative, but the divergence is observed. Under such market conditions, buy trades should be considered on the lower time frames from the support level 1.2750, but only with confirmation and short targets. For sell deals, it is better to consider the resistance level 1.2817 or 1.2871, but with confirmation.

Alternative scenario: if the price breaks out and consolidates above the 1.2871 resistance level, the uptrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0212
• Prev Close: 1.0297
• % chg. over the last day: +0.83%

The EUR showed the largest one-day gain against the USD in the last five months. The euro’s strengthening came at the expense of the US Dollar Index as the US inflation data showed a slowdown in growth, raising expectations for a less aggressive rate hike cycle from the Fed. Now the most likely scenario at the US Federal Reserve’s September meeting will be a move to raise rates by 50 bps rather than the 75 bps previously forecast. But some analysts believe the market reaction was an overreaction as the cycle of rate hikes continues, and the Fed will begin reducing its balance sheet by $95 billion a month starting in September.

• Support levels: 1.0286, 1.0247, 1.0146, 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0317, 1.0365, 1.0415, 1.050

Yesterday the price sharply jumped on the inflation data and consolidated above the balance. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.0247, but with confirmation. Sell trades can be considered from the resistance level of 1.0317, only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.0146 support level and fixes below, the downtrend will likely resume.

• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2070
• Prev Close: 1.2214
• % chg. over the last day: +1.19%

The representative of the Bank of England said yesterday that investors should not expect the return of quantitative easing in the next few years at least. The sentiment of politicians speaks for itself – the UK is preparing for a recession. Even though the Bank of England was one of the first central banks to begin the cycle of raising interest rates, the steps of the increase were too slow, analysts say. As a result, inflation in the country has not yet peaked, and the tightening cycle will stretch over time.

• Support levels: 1.2130, 1.2063, 1.2000
• Resistance levels: 1.2240, 1.2294

From the technical point of view, the trend on the currency pair GBP/USD on the hour timeframe is still upward, but now the price has deviated strongly from the average, we should wait for a pullback. The MACD indicator has turned positive. At the moment, it is best to look for buy trades on intraday time frames from the support level of 1.2130, but only with confirmation. Sell trades can be considered from the resistance level of 1.2240, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.2063 support level and fixes below, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 135.04
• Prev Close: 132.86
• % chg. over the last day: -1.64%

The dollar fell on Wednesday, showing the biggest decline against the yen since March 2020 after US inflation data. However, do not take this fall as a start of the Japanese currency. Fundamentally, the US Federal Reserve is tightening monetary policy by raising interest rates, while the Bank of Japan has a soft monetary policy, and no changes are planned before the end of the year. So, a huge difference in interest rates (+2.5% vs. -0.1%) will encourage USD/JPY quotes to grow in the mid-term.

• Support levels: 132.51, 131.08, 130.85
• Resistance levels: 134.36, 135.55, 136.02, 137.13

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, so a test of this zone is very likely. Under such market conditions, buy trades can be sought from the support level of 132.51, but with additional confirmation. For sell deals, it is possible to consider the level of resistance 134.36, but 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 above 135.55, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2887
• Prev Close: 1.2775
• % chg. over the last day: -0.87%

The slowdown in US inflation reduces the likelihood of a 75 basis point interest rate hike by the Bank of Canada next month. Swap markets suggest there is about a 45% chance that Bank of Canada officials will raise borrowing costs by three-quarters of a percentage point in their September 7 decision. Next week, Canada will release inflation data for July. If inflation slows or stays the same, Tiff Macklem and his officials may opt for a smaller rate hike. Last week, though, a senior strategist at Toronto-Dominion Bank indicated that the Bank of Canada is likely to raise rates another 0.75% before starting to lower the rate hike.

• Support levels: 1.2766, 1.2701
• Resistance levels: 1.2817, 1.2871, 1.2918, 1.2965

In terms of technical analysis, the USD/CAD currency pair trend has changed to bearish. The price has consolidated below the priority change level. The MACD indicator has become negative, and the sellers’ pressure is still present. Under such market conditions, buy trades should be considered on the lower time frames from the support level 1.2766, but only with confirmation and short targets. For sell deals, it is better to consider the resistance level 1.2817 or 1.2871, but with confirmation.

Alternative scenario: if the price breaks out and consolidates above the 1.2918 resistance level, the uptrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0191
• Prev Close: 1.0212
• % chg. over the last day: +0.20%

Inflation data will be released in the US today. Analysts expect consumer prices to stay about the same, indicating a slowdown in price growth. But if the data turns out to be worse than forecasted and inflation rises again, it may boost the US dollar index on expectations of further aggressive interest rate hikes by the Fed.

• Support levels: 1.0200, 1.0146, 1.0112, 1.0035, 1.0000
• Resistance levels: 1.0233, 1.0264, 1.0284, 1.0365, 1.0415, 1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bullish. The price is still forming a wide volatile balance with the borders of 1.0112-1.0284. Under such market conditions, buy trades are best to consider on intraday time frames from the support level of 1.0200. Sell trades can be considered from the resistance level of 1.0233 or 1.0264, but only after additional confirmation and only with short targets.

Alternative scenario: if the price breaks down through the 1.0112 support level and fixes below, the downtrend will likely resume.

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2079
• Prev Close: 1.2074
• % chg. over the last day: -0.04%

According to a SocGen strategist, the British pound could fall below $1.20 next month as the US Federal Reserve’s interest rate hike continues to outpace the Bank of England. According to the analyst, the Bank of England’s recent recession warning, combined with growing expectations of another 75 basis points US interest rate hike, could put the pound at risk of falling below $1.20. The pound has fallen 10% against the dollar since the beginning of the year, ranking among the three worst G-10 currencies.

• Support levels: 1.2063, 1.2006, 1.1803
• Resistance levels: 1.2098, 1.2209, 1.2294

From the technical point of view, the trend on the GBP/USD currency pair on the hour time is bullish, but now the price is forming a balance, where the sellers prevail. The MACD indicator has become inactive. If the price dips below 1.2063 again and stays lower, there will be a trend change. At the moment, it is better to look for buy trades on the intraday time frames from the support level of 1.2063, but only with a confirmation. Sell trades can be considered from the resistance level of 1.2098, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.2063 support level and fixes below, the downtrend will likely resume.

• – US Consumer Price Index (m/m) at 15:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 134.84
• Prev Close: 135.13
• % chg. over the last day: +0.22%

In Japan, the Producer Price Index, which shows the factory inflation rate, declined from 9.4% to 8.6% annually. This indicates that the consumer inflation rate is also set to decline, which is bad for the Japanese currency as the Bank of Japan, on the contrary, aims to raise the consumer price level. Thus, traders should not expect any changes in the monetary policy of the central bank of Japan in the direction of tightening.

• Support levels: 134.29, 133.42, 132.12, 131.37, 130.85
• Resistance levels: 135.29, 136.03, 137.11

From the technical point of view, the medium-term trend on the USD/JPY currency pair is close to changing to the uptrend. The price is now trading at the priority change level but has not yet consolidated higher. A break of 135.29 will change the trend. Under such market conditions, buy trades can be sought from the support level of 134.29 or 133.42, but with additional confirmation. Resistance levels of 135.29 may be considered for sell deals, but only with additional confirmation in the form of a reverse initiative, as the price has already tested it.

Alternative scenario: If the price fixes above 135.29, the uptrend will likely resume.

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2845
• Prev Close: 1.2883
• % chg. over the last day: +0.29%

Currently, the Bank of Canada and the US Federal Reserve keep interest rates at 2.5%, so parity prevails on the USD/CAD currency pair with a short-term shift of initiative from the dollar to the Canadian and vice versa. The labor market remains strong in both the US and Canada, which leaves room for central banks to raise interest rates further. Therefore, the only imbalance in the USD/CAD quotes will be oil. It is well known that the Canadian dollar is a commodity currency, so a rise in oil prices always gives confidence to the Canadian.

• Support levels: 1.2800, 1.2786
• Resistance levels: 1.2895, 1.2926, 1.3006, 1.3085, 1.3154

In terms of technical analysis, the USD/CAD currency pair trend has changed to bullish. At the moment, the price is trading at the level of moving averages. The MACD indicator has become inactive, and the volatility has declined in anticipation of inflation and oil reserves data. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.2800, but only with confirmation and short targets. For sell deals, it is better to consider the resistance level of 1.2895 or 1.2926, but with confirmation.

Alternative scenario: if the price breaks out and consolidates below the 1.2786 support level, the downtrend will likely resume.

• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).