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Mid-Week Technical Outlook: EUR

– With less than 24 hours until the highly anticipated European Central Bank Meeting (ECB), our currency spotlight shines on the euro!

Earlier in the week, we questioned whether ECB hawks could rescue EUR bulls…only for prices to later sink to levels not seen in two decades. The euro remains heavily pressured by recession fears with the conflict on its borders and an energy shock haunting investor attraction towards the currency. While fundamentally, the outlook for the euro points south – it will be interesting to see whether ECB hawks could offer short-term support for bulls this week. Prices are trading below 0.9900 as of writing and could extend losses if the dollar continues to appreciate.

Our focus this afternoon will be Euro crosses and the tool of choice is none other than technical analysis.

EURUSD waits on ECB

After slipping to levels not seen in 20 years, the EURUSD remains shaky and vulnerable to further losses. A solid daily close below 0.9900 could inspire a selloff towards 0.9700 as highlighted in the “Trade of the week” report. Should 0.9900 prove to be reliable support, a rebound towards parity and higher could be on the cards.

EURJPY eyes 144.00

As the Yen continues to weaken, this has propelled the EURJPY to levels not seen since late June. Prices are heavily bullish on the daily timeframe as there have been consistently higher highs and higher lows. ECB hawks could turbocharge the move higher, sending prices towards the 144.00 resistance level. Above 144.00 bulls could challenge 145.30 – a level not seen since December 2014.

Time for EURGBP to breakout?

A classic breakout opportunity could be forming on the EURGBP as prices slowly approach the 0.8680 resistance level. A solid breakout and daily close above this point may encourage a move towards 0.8720 and 0.8800, respectively. Technical indicators such as the 50, 100, and 200-day SMA and MACD favour further upside. If the EURGBP dips back toward 0.8580, then the next key level of interest can be found at 0.8500.

EURAUD gearing to push higher?

Things are turning bullish for the EURAUD with 1.4750 acting as a barrier for bulls. Beyond this point, we have the 100 -day SMA and 1.4900 which are likely to become key points of interest down the road. Should the upside take prices beyond 1.4900, the EURAUD could venture towards the 200-day SMA. Alternatively, a move back towards 1.4580 could be on the cards if 1.4750 proves to be a tough nut to crack.

EURNZD choppy and untamed

The EURNZD remains choppy and volatile as ever with prices swinging between losses and gains. A potential breakout could be on the horizon for this volatile currency as prices push beyond the 50, 100, and 200-day Simple Moving Average. A strong breakout and daily close above 1.6500 could inspire a move towards 1.6600 and 1.6800, respectively. Should 1.6500 prove to be reliable resistance, we may see a decline back towards 1.6300.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

05 Sep

Trade Of The Week: Can ECB Hawks Rescue Euro Bulls?

By ForexTime

– The fierce war against inflation is set to continue this week with more central banks heavily armed, locked, and loaded for battle.

Our focus falls on the European Central Bank (ECB) which is expected to unleash a monetary bazooka in the form of a 75-basis point rate increase! Such a move will place the ECB among the ranks of 40+ central banks that have increased rates by 75bp or more in one go this year in the face of soaring inflation.

Before we take a deep dive into what to expect from the ECB meeting on Thursday, it is worth keeping in mind that the Eurozone economy remains vulnerable and faces the growing risk of recession. The unsavoury combination of ongoing geopolitical tensions, untamed inflation, and energy crisis continues to darken the outlook for Europe with the latest development revolving around Russia’s Gazprom dumping salt into the wound.

Interestingly the euro was able to hold its ground versus most G10 currencies in August excluding the dollar. However, things are not looking too pretty quarter-to-date with the euro down roughly 5.6% against the king of the currency space.

Since the EURUSD secured a solid daily close below parity back in late August, prices have struggled to push higher thanks to technical and fundamental factors.

The outlook for the EURUSD remains bearish on the daily, weekly, and monthly timeframe with prices wobbling above 0.9900 as of writing. Given how the ECB is expected to join the jumbo hike club, could this be enough to cushion the downside and rescue euro bulls?

The low down…

Eurozone inflation hit a new record high in August at 9.1%.

This was higher than the 8.9% witnessed in July and above the 9% market forecast. With inflation hitting such lofty and uncomfortable levels, market expectations intensified over the ECB adopting an aggressive approach toward rates in an effort to cap inflation. According to Bloomberg, traders and predicting a 66% probability of a 75 bp rate hike in September. It does not end here.

Last Friday, Gazprom made a last-minute decision to suspend natural gas flows through the Nord Stream 1 pipeline – ultimately worsening the squeeze on Europe’s energy supplies. This move is likely to expose the economy to downside shocks and create more uncertainty and fuel inflationary pressures as gas prices soar.

What to expect from ECB?

Before thinking about what to expect from the ECB on Thursday, there are a couple of things to keep in mind before the big day. ECB hawks are certainly in the building but the question is how much resolve they have to tame inflation. It’s worth keeping in mind that the latest ECB economic forecasts could offer fresh insight into inflation expectations. It will be interesting to see what the central bank has to say about the energy crises and whether this will push the Eurozone into recession. Let’s not forget about the depreciating euro and how it could impact the central bank’s policy outlook.

Possible outcomes on Thursday

ECB hikes rates by 75 basis points and strikes hawkish tone opening doors to further jumbo hikes. This move may inject euro bulls with fresh inspiration, pushing the EURUSD back above parity towards 1.0100. However, upside gains may be capped by the gloomy outlook for the Eurozone.
ECB hikes rates by 75 bp but expresses concern over the economic outlook, reducing bets of more aggressive hikes down the road. Euro pops higher but bears seize control – limiting gains below parity
ECB surprises markets with a 50 bp hike and strikes dovish tone, this could excite euro bears – triggering a selloff that breaches the 0.9900 floor.

EURUSD: The path of least resistance south…

As the subtitle says, the path of least resistance for the EURUSD points south.

Earlier we identified how the currency pair was bearish on the daily, weekly and monthly timeframe. Looking at the weekly timeframe, prices are respecting a bearish channel and trading well below the 50-, 100- and 200-week Simple Moving Average. Sustained weakness below parity could trigger a selloff towards 0.9700 and 0.9600, respectively. A strong weekly move back above 1.1000 may suggest an incline towards 1.0200.

Zooming in on the daily, prices remain bearish but there could be a period of consolidation if 0.9900 proves to be reliable support. A solid daily close below this level could trigger a selloff towards 0.9700. Should 0.9900 prove to be reliable support, a rebound towards parity and potentially higher could be on the cards before bears re-enter the scene.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

03 Sep

Australian dollar, Brazilian Real lead Forex Speculators bets while Euro bets hit 130-week low

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT Reports data is updated through Tuesday August 30th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Australian dollar, Brazilian Real lead the Weekly Speculator Changes

The COT currency market speculator bets were mostly higher this week as seven out of the eleven currency markets we cover had higher positioning while the other four markets had lower speculator contracts.

Leading the gains for the currency markets was the Australian dollar (2,635 contracts) with the Brazilian real (2,494 contracts), Mexican peso (2,286 contracts), Canadian dollar (952 contracts), US Dollar Index (416 contracts), Bitcoin (332 contracts) and the Swiss franc (143 contracts) also having higher bets on the week.

The currencies leading the declines in speculator bets this week were the Euro (-3,567 contracts) and the Japanese yen (-2,724 contracts) with the New Zealand dollar (-1,650 contracts) and the British pound sterling (-1,204 contracts) also registering lower bets on the week.

Currency Speculator Positioning Notes:

Highlighting the COT Reports (Week 35) changes this week was the Brazilian real’s gains in speculator bets. The Brazilian currency has now seen higher bullish bets in three out of the past four weeks and in five out of the past seven weeks as well. Speculators had previous strong sentiment for the real in February and March with bullish bets hitting an all-time record high in March above the +50,000 contracts level. However, the bullish strength only last a few months as sharp declines hit the real in July and resulted in a net bearish position of -1,130 contracts on August 2nd. Since then, speculators have started to build back their bullish positions and pushed the current standing to +8,859 contracts this week.

Australian dollar contracts rose this week but are looking like just a small rebound after a long bearish streak. The Aussie speculator bets had fallen for six straight weeks and pushed the overall net position to the most bearish level since March 8th, a span of twenty-four weeks. Overall, the Australian dollar’s speculative position has now been in a bearish standing for sixty-seven straight weeks, dating back to May 25th of 2021.

The Swiss franc speculator positions this week improved for a fourth consecutive week and are now at the least bearish level in just about a year. The overall net standing for the franc has been in a bearish position for fifty-one straight weeks, dating back to September 14th of last year.

Finally, the Euro net speculator position declined for a third consecutive week this week and has fallen by a total of -13,140 contracts over that time-frame. These declines have dropped the Euro’s net standing, currently at -47,676 contracts, to the most bearish level in the past one hundred and thirty weeks, dating back to March 10th of 2020. The EUR/USD exchange rate has fallen back to below parity after testing these levels in July. The currency pair currently trades near 20-year lows and closed the week at the 0.9956 exchange rate.

Data Snapshot of Forex Market Traders | Columns Legend

Aug-30-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
USD Index	60,184	89	35,515	84	-38,538	15	3,023	50
EUR	720,081	90	-47,676	20	28,860	84	18,816	6
GBP	262,004	85	-29,170	49	51,498	63	-22,328	0
JPY	247,030	87	-41,531	43	61,287	66	-19,756	13
CHF	47,168	35	-2,262	51	15,471	68	-13,209	13
CAD	158,165	36	24,179	67	-29,039	45	4,860	40
AUD	169,267	59	-57,393	32	62,503	66	-5,110	40
NZD	44,376	33	-3,124	66	6,533	40	-3,409	12
MXN	206,823	52	-29,030	15	25,765	84	3,265	57
RUB	20,930	4	7,543	31	-7,150	69	-393	24
BRL	66,706	63	8,859	59	-10,922	41	2,063	89
Bitcoin	14,440	84	1,296	100	-1,327	0	31	14

Bitcoin and US Dollar Index lead the Strength Scores

Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that Bitcoin Futures (100.0 percent) and the US Dollar Index (84.2 percent) lead the currency markets and are both in bullish extreme positions (above 80 percent). The Canadian Dollar (66.5 percent) and the New Zealand Dollar (66.0 percent) come in as the next highest in the currency markets in strength scores.

On the downside, the Mexican Peso (15.0 percent) comes in at the lowest strength level currently and is in a bearish extreme level (below 20 percent). The next lowest is the Euro (20.4 percent) followed by the Australian Dollar (31.6 percent) and the Japanese Yen (43.3 percent).

Strength Statistics:
US Dollar Index (84.2 percent) vs US Dollar Index previous week (83.5 percent)
EuroFX (20.4 percent) vs EuroFX previous week (21.5 percent)
British Pound Sterling (49.1 percent) vs British Pound Sterling previous week (50.1 percent)
Japanese Yen (43.3 percent) vs Japanese Yen previous week (45.0 percent)
Swiss Franc (50.8 percent) vs Swiss Franc previous week (50.4 percent)
Canadian Dollar (66.5 percent) vs Canadian Dollar previous week (65.4 percent)
Australian Dollar (31.6 percent) vs Australian Dollar previous week (29.2 percent)
New Zealand Dollar (66.0 percent) vs New Zealand Dollar previous week (68.8 percent)
Mexican Peso (15.0 percent) vs Mexican Peso previous week (14.0 percent)
Brazil Real (59.1 percent) vs Brazil Real previous week (56.6 percent)
Bitcoin (100.0 percent) vs Bitcoin previous week (94.2 percent)

Bitcoin, Swiss Franc and British Pound lead the 6-Week Strength Trends

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that Bitcoin (31.6 percent) leads the past six weeks trends for the currency markets this week. The Swiss Franc (21.9 percent), the British Pound Sterling (21.9 percent) and the Canadian Dollar (19.7 percent) fill out the other top movers in the latest trends data.

The Australian Dollar (-13.2 percent) leads the downside trend scores currently while the next market with lower trend scores were the US Dollar Index (-5.9 percent) followed by the Euro (-1.5 percent).

Strength Trend Statistics:
US Dollar Index (-5.9 percent) vs US Dollar Index previous week (-5.4 percent)
EuroFX (-1.5 percent) vs EuroFX previous week (-5.8 percent)
British Pound Sterling (21.9 percent) vs British Pound Sterling previous week (24.3 percent)
Japanese Yen (10.9 percent) vs Japanese Yen previous week (13.1 percent)
Swiss Franc (21.9 percent) vs Swiss Franc previous week (16.0 percent)
Canadian Dollar (19.7 percent) vs Canadian Dollar previous week (22.1 percent)
Australian Dollar (-13.2 percent) vs Australian Dollar previous week (-17.1 percent)
New Zealand Dollar (0.9 percent) vs New Zealand Dollar previous week (6.4 percent)
Mexican Peso (0.7 percent) vs Mexican Peso previous week (-3.4 percent)
Brazil Real (-1.6 percent) vs Brazil Real previous week (-3.8 percent)
Bitcoin (31.6 percent) vs Bitcoin previous week (19.9 percent)

Individual Markets:

US Dollar Index Futures:

The US Dollar Index large speculator standing this week came in at a net position of 35,515 contracts in the data reported through Tuesday. This was a weekly lift of 416 contracts from the previous week which had a total of 35,099 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 84.2 percent. The commercials are Bearish-Extreme with a score of 14.6 percent and the small traders (not shown in chart) are Bearish with a score of 49.6 percent.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	85.9	3.0	9.0
– Percent of Open Interest Shorts:	26.8	67.1	4.0
– Net Position:	35,515	-38,538	3,023
– Gross Longs:	51,672	1,822	5,431
– Gross Shorts:	16,157	40,360	2,408
– Long to Short Ratio:	3.2 to 1	0.0 to 1	2.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	84.2	14.6	49.6
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-5.9	4.7	6.5

Euro Currency Futures:

The Euro Currency large speculator standing this week came in at a net position of -47,676 contracts in the data reported through Tuesday. This was a weekly fall of -3,567 contracts from the previous week which had a total of -44,109 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 20.4 percent. The commercials are Bullish-Extreme with a score of 84.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 5.6 percent.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.1	57.2	11.2
– Percent of Open Interest Shorts:	34.7	53.2	8.6
– Net Position:	-47,676	28,860	18,816
– Gross Longs:	202,258	411,684	80,871
– Gross Shorts:	249,934	382,824	62,055
– Long to Short Ratio:	0.8 to 1	1.1 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	20.4	84.2	5.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.5	3.2	-10.8

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week came in at a net position of -29,170 contracts in the data reported through Tuesday. This was a weekly lowering of -1,204 contracts from the previous week which had a total of -27,966 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 49.1 percent. The commercials are Bullish with a score of 62.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 0.0 percent.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	22.3	66.0	7.1
– Percent of Open Interest Shorts:	33.5	46.3	15.7
– Net Position:	-29,170	51,498	-22,328
– Gross Longs:	58,477	172,796	18,706
– Gross Shorts:	87,647	121,298	41,034
– Long to Short Ratio:	0.7 to 1	1.4 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	49.1	62.9	0.0
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	21.9	-11.6	-21.2

Japanese Yen Futures:

The Japanese Yen large speculator standing this week came in at a net position of -41,531 contracts in the data reported through Tuesday. This was a weekly lowering of -2,724 contracts from the previous week which had a total of -38,807 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 43.3 percent. The commercials are Bullish with a score of 65.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 13.3 percent.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	22.1	66.4	8.7
– Percent of Open Interest Shorts:	38.9	41.6	16.7
– Net Position:	-41,531	61,287	-19,756
– Gross Longs:	54,513	163,991	21,436
– Gross Shorts:	96,044	102,704	41,192
– Long to Short Ratio:	0.6 to 1	1.6 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	43.3	65.6	13.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	10.9	-5.8	-12.0

Swiss Franc Futures:

The Swiss Franc large speculator standing this week came in at a net position of -2,262 contracts in the data reported through Tuesday. This was a weekly lift of 143 contracts from the previous week which had a total of -2,405 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 50.8 percent. The commercials are Bullish with a score of 68.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.8 percent.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	25.3	57.5	16.8
– Percent of Open Interest Shorts:	30.1	24.7	44.8
– Net Position:	-2,262	15,471	-13,209
– Gross Longs:	11,915	27,113	7,906
– Gross Shorts:	14,177	11,642	21,115
– Long to Short Ratio:	0.8 to 1	2.3 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	50.8	68.2	12.8
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	21.9	-6.0	-16.6

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week came in at a net position of 24,179 contracts in the data reported through Tuesday. This was a weekly gain of 952 contracts from the previous week which had a total of 23,227 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 66.5 percent. The commercials are Bearish with a score of 44.5 percent and the small traders (not shown in chart) are Bearish with a score of 39.9 percent.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	37.1	39.1	22.1
– Percent of Open Interest Shorts:	21.8	57.4	19.1
– Net Position:	24,179	-29,039	4,860
– Gross Longs:	58,704	61,821	35,000
– Gross Shorts:	34,525	90,860	30,140
– Long to Short Ratio:	1.7 to 1	0.7 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	66.5	44.5	39.9
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	19.7	-16.9	5.6

Australian Dollar Futures:

The Australian Dollar large speculator standing this week came in at a net position of -57,393 contracts in the data reported through Tuesday. This was a weekly rise of 2,635 contracts from the previous week which had a total of -60,028 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 31.6 percent. The commercials are Bullish with a score of 65.5 percent and the small traders (not shown in chart) are Bearish with a score of 40.0 percent.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	18.5	67.9	11.1
– Percent of Open Interest Shorts:	52.4	31.0	14.1
– Net Position:	-57,393	62,503	-5,110
– Gross Longs:	31,304	114,957	18,758
– Gross Shorts:	88,697	52,454	23,868
– Long to Short Ratio:	0.4 to 1	2.2 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	31.6	65.5	40.0
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-13.2	9.9	2.5

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week came in at a net position of -3,124 contracts in the data reported through Tuesday. This was a weekly decline of -1,650 contracts from the previous week which had a total of -1,474 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 66.0 percent. The commercials are Bearish with a score of 40.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.5 percent.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	37.0	56.0	5.1
– Percent of Open Interest Shorts:	44.0	41.3	12.8
– Net Position:	-3,124	6,533	-3,409
– Gross Longs:	16,407	24,861	2,266
– Gross Shorts:	19,531	18,328	5,675
– Long to Short Ratio:	0.8 to 1	1.4 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	66.0	40.5	12.5
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.9	-1.1	1.7

Mexican Peso Futures:

The Mexican Peso large speculator standing this week came in at a net position of -29,030 contracts in the data reported through Tuesday. This was a weekly increase of 2,286 contracts from the previous week which had a total of -31,316 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 15.0 percent. The commercials are Bullish-Extreme with a score of 83.5 percent and the small traders (not shown in chart) are Bullish with a score of 56.9 percent.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	50.1	46.0	3.1
– Percent of Open Interest Shorts:	64.1	33.5	1.5
– Net Position:	-29,030	25,765	3,265
– Gross Longs:	103,623	95,098	6,441
– Gross Shorts:	132,653	69,333	3,176
– Long to Short Ratio:	0.8 to 1	1.4 to 1	2.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	15.0	83.5	56.9
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.7	-0.9	1.7

Brazilian Real Futures:

The Brazilian Real large speculator standing this week came in at a net position of 8,859 contracts in the data reported through Tuesday. This was a weekly advance of 2,494 contracts from the previous week which had a total of 6,365 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.1 percent. The commercials are Bearish with a score of 40.6 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 88.9 percent.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	45.6	49.0	5.3
– Percent of Open Interest Shorts:	32.4	65.4	2.2
– Net Position:	8,859	-10,922	2,063
– Gross Longs:	30,443	32,719	3,543
– Gross Shorts:	21,584	43,641	1,480
– Long to Short Ratio:	1.4 to 1	0.7 to 1	2.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	59.1	40.6	88.9
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.6	0.6	11.2

Bitcoin Futures:

The Bitcoin large speculator standing this week came in at a net position of 1,296 contracts in the data reported through Tuesday. This was a weekly gain of 332 contracts from the previous week which had a total of 964 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 13.6 percent.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	81.6	0.5	6.9
– Percent of Open Interest Shorts:	72.6	9.7	6.7
– Net Position:	1,296	-1,327	31
– Gross Longs:	11,777	75	996
– Gross Shorts:	10,481	1,402	965
– Long to Short Ratio:	1.1 to 1	0.1 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	0.0	13.6
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	31.6	-61.3	-12.3

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COT Updates CountingPips Forex Blog Forex and Currency News investing Opinions

02 Sep

The global risk of weaponization in semiconductors

By Dan Steinbock

– On August 9, President Biden signed the CHIPS Act. It is a prelude in an effort to weaponize the global IT supply chains.

In international media, the CHIPS and Science Act of 2022 is portrayed as a $52 billion package aiming to boost semiconductor manufacturing in the United States. But the underlying strategic objective is geopolitical.

Today Asia dominates global semiconductor manufacturing. Though a top exporter, US semiconductor industry no longer controls the global supply chains. However, it still accounts for over 80% of the world’s chip design equipment, 50% of intellectual property for chip designs, and half of the globe’s chip manufacturing equipment.

To dominate the semiconductors, which enable advanced military technology, the Biden team seeks to restore the past US superiority in global semiconductors.

The problem is that no single nation can any longer control entire supply chains. Hence, the effort to weaponize the system, to “counter” China.

Forcing semiconductor giants to pick sides

Currently, the US, Taiwan, South Korea and Japan supply most of the world’s semiconductors, whereas China represents the highest demand in the industry. The Biden administration would like to keep it that way.

In order to restore the US’ supremacy, the Biden administration needs to neutralize future rivals. That’s the likely reason why Washington is also considering restricting U.S. chipmaking equipment from being exported to Chinese memory chip makers.

Such restrictions are designed to hurt China and its progress in advanced technology. But they would also harm South Korea’s Samsung and SK Hynix, which have memory chip operations in China. Japanese semiconductor rivals were derailed already in the 1980s trade wars.

Unsurprisingly, Chinese critics of the “CHIP-4 alliance” call it a “hongmen Banquet”; a well-known Chinese expression for a feast that’s set up as a trap for the invitees.

Ambivalent “allies” divided

At present, six US-headquartered or foreign-owned semiconductor companies have 20 fabrication facilities (“fabs”) in America. South Korean Samsung is building a $17 billion fab in Texas, while the Taiwan Semiconductor Manufacturing Company (TSMC) is investing $12 billion on a plant in Arizona. The real costs are likely to prove far higher, as they have already affirmed.

Reportedly, the CHIPS Act would bar recipients of U.S. government funds from expanding or upgrading their advanced chip capacity in China, which has led South Korean firms to review their Chinese operations. That leaves Taiwan.

Hence, the recent Taiwan visit by the US House Speaker Nancy Pelosi, for which the way was paved by the Taiwan lobby (TECRO); Pelosi’s generous supporter that also helped to push through the recent $5 billion weapons sales deal to Taiwan.

In Taiwan, Pelosi insisted on a meeting with TSMC’s CEO Mark Liu, the largest contract chip maker. Reportedly, she said she hopes TSMC will side with the US.

In the long term, US and some of its allies hope to undermine Taiwan’s dominance in semiconductors, however. Effectively, such goals were initiated by the Obama administration, codified by the Trump White House and are now being executed by the Biden team.

Weaponizing semiconductors replaces competitiveness with geopolitics

In the 1980s, US technology giants pressed the Reagan administration to battle the Japanese competitors. By contrast, Trump and Biden administrations are pushing the reluctant US semiconductor giants to fight China.

The US-Sino ties soured and bilateral disputes escalated in July 2018, when the Trump administration imposed 25% tariffs on semiconductors imported from China, causing significant damage in the US industry. And as companies like Huawei bypassed US suppliers buying semiconductors from Taiwan and South Korea, the tariffs failed to have the desired effect. That’s why the White House is now trying to use an alliance to command the full semiconductor ecosystem.

In early 2021, the Biden administration signaled it planned to move ahead with a Trump administration-proposed rule to “secure” the information-technology (IT) supply chains. That allowed the Department of Commerce to monitor the transactions of governments, including those of China. Reportedly, it is part of the effort to weaponize the global IT ecosystem.

The activities of Eric Schmidt, ex-CEO of Google and financier of Obama, Clinton and Biden campaigns, reflects the new semiconductor geopolitics. Prior to his advisory role in artificial intelligence, Schmidt headed Pentagon’s advisory board to link Silicon Valley with Pentagon. “The US and its allies,” Schmidt urged, “should utilize targeted export controls on high-end semiconductor manufacturing equipment … to protect existing technical advantages and slow the advancement of China’s semiconductor industry.”

Such are the behind-the-façade strategic objectives.

Geopolitics derails supply chains, consumer welfare and innovation

The semiconductor debacles first intensified with the US-Japan trade wars of the 1980s. Eventually, Japan, heavily dependent on the US military, agreed to “voluntary restrictions” on contested export products, bilateral concessions, sky-high US tariffs, de facto currency revaluation, and structural reforms opening the Japanese market to the US.

As a result, Japan lost its mantle of world leader in microchips. Secular stagnation ensued soon thereafter. This precedent obviously makes executive teams uneasy in both South Korea and Taiwan.

Weaponization of the global semiconductor supply chains by any one country would be disastrous to the ecosystem. It would replace industry competition with geopolitical dicta. It would undermine consumer welfare. And it would derail innovation.

About the Author:

Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net

The original version was published by China Daily on August 29, 2022

Economics & Fundamentals Opinions

02 Sep

Making EVs without China’s supply chain is hard, but not impossible – 3 supply chain experts outline a strategy

By Ho-Yin Mak, Georgetown University; Christopher S. Tang, University of California, Los Angeles, and Tinglong Dai, Johns Hopkins University

Two electrifying moves in recent weeks have the potential to ignite electric vehicle demand in the United States. First, Congress passed the Inflation Reduction Act, expanding federal tax rebates for EV purchases. Then California approved rules to ban the sale of new gasoline-powered cars by 2035.

The Inflation Reduction Act extends the Obama-era EV tax credit of up to US$7,500. But it includes some high hurdles. Its country-of-origin rules require that EVs – and an increasing percentage of their components and critical minerals – be sourced from the U.S. or countries that have free-trade agreements with the U.S. The law expressly forbids tax credits for vehicles with any components or critical minerals sourced from a “foreign entity of concern,” such as China or Russia.

That’s not so simple when China controls 60% of the world’s lithium mining, 77% of battery cell capacity and 60% of battery component manufacturing. Many American EV makers, including Tesla, rely heavily on battery materials from China.

The U.S. needs a national strategy to build an EV ecosystem if it hopes to catch up. As experts in supply chain management, we have some ideas.

Why the EV industry depends heavily on China

How did the U.S. fall so far behind?

Back in 2009, the Obama administration pledged $2.4 billion to support the country’s fledgling EV industry. But demand grew slowly, and battery manufacturers such as A123 Systems and Ener1 failed to scale up their production. Both succumbed to financial pressure and were acquired by Chinese and Russian investors.

China took the lead in the EV market through an aggressive mix of carrots and sticks. Its consumer subsidies raised demand at home, and Beijing and other major cities set licensing quotas mandating a minimum share of EV sales.

China also established a world-dominating battery supply chain by securing overseas mineral supplies and heavily subsidizing its battery manufacturers.

Today, the U.S. domestic EV supply chain is far from adequate to meet its goals. The new U.S. tax credits are designed to help turn that around, but building a resilient EV supply chain will inevitably entail competing with China for limited resources.

A comprehensive national strategy entails measures for the short, medium and long term.

Short-term: What can be done now?

Six of the 10 best-selling EV models in 2022 are already assembled in the U.S., fulfilling the Inflation Reduction Act’s final assembly location clause. The Hyundai-Kia alliance, which has three of the other four bestsellers, plans to open an EV assembly line in Georgia. Volkswagen has also started assembling its ID.4 electric SUV in Tennessee.

The challenge is batteries. Besides the Tesla-Panasonic factories in Nevada and planned in Kansas, U.S.-based battery manufacturers trail their Chinese counterparts in both size and growth.

For the U.S. to scale up its own production, it needs to rely on strategic partners overseas. The Inflation Reduction Act allows imports of critical minerals from countries with free trade agreements to still qualify for incentives, but not imports of battery components. This means overseas suppliers like Korea’s “Big Three” – LG Chem, SK Innovation and Samsung SDI – which supply 26% of the world’s EV batteries, are shut out, even though the U.S. and Korea have a free trade agreement.

A Sankey chart, also known as a spaghetti chart, shows the flow of cobalt Congo, with some resources in the rest of the world, through to the production of EVs. — The bulk of the world’s cobalt is mined in the Democratic Republic of Congo but processed and turned into lithium-ion battery components by Chinese companies. This chart shows the pathways from mining to EVs.
Based on an NREL presentation in 2020, CC BY-ND

The Korea Automobile Manufacturers Association has asked Congress to make an exception for Korean-made EVs and batteries.

In the spirit of “friend-shoring,” the Biden administration could think of a temporary waiver as a stopgap measure that makes it easier for Korean battery makers to move more of their supply chain to the U.S., such as LG’s planned battery plants in partnerships with GM and Honda.

The 2021 Infrastructure Act also provided $5 billion to expand charging infrastructure, which surveys show is critical to bolstering demand.

Medium-term: Diversifying lithium and cobalt supplies

A strong and concerted effort in trade and diplomacy is necessary for the U.S. to secure critical mineral supplies.

As EV sales rise, the world is expected to face a lithium shortage by 2025. In addition to lithium, cobalt is needed for high-performance battery chemistries.

The problem? The Democratic Republic of the Congo is where 70% of the world’s cobalt is mined, and Chinese companies control 80% of that. The distant second-largest producer is Russia.

The Biden administration’s “friend-shoring” vision has a chance only if it can diversify the lithium and cobalt supply chains.

Bars on a map show countries with the most critical mineral production. — Lithium, cobalt and nickel are critical components in many EV batteries. The largest 2021 production sources included the Democratic Republic of Congo for cobalt; Australia, Chile and China for lithium; and Indonesia, the Philippines and Russia for nickel.
The Conversation, USGS Mineral Commodity Summaries 2022, CC BY-ND

The “Lithium Triangle” of South America is one region to invest in. Also, Australia, a key U.S. ally, leads the world in lithium production and possesses rich cobalt deposits. Waste from many of Australia’s copper mines also contains cobalt, lowering the cost. GM has reached an agreement with the Australian mining giant Glencore to mine and process cobalt in Western Australia for its Ohio battery plant with LG Chem, bypassing China.

A way to avoid cobalt altogether also exists: lithium-iron-phosphate batteries are about 30% cheaper to make because they use minerals that are easy to find and plentiful. However, LFP batteries are heavier and have less power and range per unit.

For years, Chinese companies like CATL and BYD were the only ones making LFP batteries. But the patent rights associated with LFP batteries expire this year, opening up an important opportunity for the U.S.

Since not everyone needs a high-end electric supercar, affordable EVs powered by LFP batteries are an option. In fact, Tesla now offers Model 3s with LFP batteries that can travel about 270 miles on a charge.

The 2021 Bipartisan Infrastructure Law set aside $3.16 billion to support domestic battery supply chains. With the Inflation Reduction Act’s emphasis on supporting more affordable EVs – it has price caps for vehicles to qualify for incentives – these funds will be needed to help scale up domestic LFP manufacturing.

Long-term: US critical mineral production

Replacing overseas critical materials with domestic mining falls under long-term planning.

The scale of current domestic mining is minuscule, and new mining operations can take seven to 10 years to establish because of the lengthy permitting process. Lithium deposits exist in California, Maine, Nevada and North Carolina, and there are cobalt resources in Minnesota and Idaho.

Finally, to build an industrial commons for EVs, the U.S. must continue to invest in research and development of new battery technologies.

Also, end-of-life battery recycling is essential to the sustainability of EVs. The industry has been kicking the can down the road on this, as recycling demand has been minuscule thus far given the longevity of batteries. Yet, as a proactive step, the Inflation Reduction Act specifically permits battery content recycled in North America to qualify for the critical mineral clause.

To make this happen, the federal and state governments could use takeback legislation similar to producer responsibility laws for electronic waste enacted in more than 20 states, which stipulate that producers bear the responsibility for collecting, transporting and recycling end-of-cycle electronic products.

What’s ahead

With the new law, the Biden administration has set its sights on a future transportation system that is built in the U.S. and runs on electricity. But there are supply chain obstacles, and the U.S. will need both incentives and regulations to make it happen.

California’s announcement will help. Under the Clean Air Act, California has a waiver that allows it to set policies more strict than federal law. Other states can choose to follow California’s policies. Seventeen other states have adopted California’s emissions standards. At least three, New York, Washington and Massachusetts, have already announced plans to also phase out new gas-powered cars and light trucks by 2035.

About the Author:

Ho-Yin Mak, Associate Professor in Operations & Information Management, Georgetown University; Christopher S. Tang, Professor of Supply Chain Management, University of California, Los Angeles, and Tinglong Dai, Professor of Operations Management & Business Analytics, Carey Business School, Johns Hopkins University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions

02 Sep

The most cost-effective energy efficiency investments you can make – and how the new Inflation Reduction Act could help

By Jasmina Burek, UMass Lowell

Energy efficiency can save homeowners and renters hundreds of dollars a year, and the new Inflation Reduction Act includes a wealth of home improvement rebates and tax incentives to help Americans secure those saving.

It extends tax credits for installing energy-efficient windows, doors, insulation, water heaters, furnaces, air conditioners or heat pumps, as well as for home energy audits. It also offers rebates for low- and moderate-income households’ efficiency improvements, up to US$14,000 per home.

Together, these incentives aim to cut energy costs for consumers who use them by $500 to $1,000 per year and reduce the nation’s climate-warming greenhouse gas emissions.

With so many options, what are the most cost-effective moves homeowners and renters can make?

My lab at UMass Lowell works on ways to improve sustainability in buildings and homes by finding cost-effective design solutions to decrease their energy demand and carbon footprint. There are two key ways to cut energy use: energy-efficient upgrades and behavior change. Each has clear winners.

Stop the leaks

The biggest payoff for both saving money and reducing emissions is weatherizing the home to stop leaks. Losing cool air in summer and warm air in winter means heating and cooling systems run more, and they’re among the most energy-intensive systems in a home.

Gaps along the baseboard where the wall meets the floor and at windows, doors, pipes, fireplace dampers and electrical outlets are all prime spots for drafts. Fixing those leaks can cut a home’s entire energy use by about 6%, on average, by our estimates. And it’s cheap, since those fixes mostly involve caulk and weather stripping.

Illustration of a house showing common air leaks, primarily in the attic and along walls and vents. — Common places where homes leak – and where weatherization measures can save money.
Department of Energy

The Inflation Reduction Act offers homeowners a hand. It includes a $150 rebate to help pay for a home energy audit that can locate leaks.

While a professional audit can help, it isn’t essential – the Department of Energy website offers guidance for doing your own inspection.

Once you find the leaks, the act includes 30% tax credits with a maximum of $1,200 a year for basic weatherization work, plus rebates up to $1,600 for low- and moderate-income homeowners earning less than 150% of the local median.

Replace windows

Replacing windows is more expensive upfront but can save a lot of money on energy costs. Leaky windows and doors are responsible for 25% to 30% of residential heating and cooling costs, according to Department of Energy estimates.

Insulation can also reduce energy loss. But with the exception of older homes with poor insulation and homes facing extreme temperatures, it generally doesn’t have as high of a payoff in whole-house energy savings as weatherization or window replacement.

The Inflation Reduction Act includes up to $600 to help pay for window replacement and $250 to replace an exterior door.

Upgrade appliances, especially HVAC and dryers

Buildings cumulatively are responsible for about 40% of U.S. energy consumption and associated greenhouse gas emissions, and a significant share of that is in homes. Heating is typically the main energy use.

Among appliances, upgrading air conditioners and clothes dryers results in the largest environmental and cost benefits; however, HVAC systems – heating, ventilation and air conditioning – come with some of the highest upfront costs.

That includes energy-efficient electric heat pumps, which both heat and cool a home. The Inflation Reduction Act offers a 30% tax credit up to $2,000 available to anyone who purchases and installs a heat pump, in addition to rebates of up to $8,000 for low- and moderate-income households earning less than 150% of the local median income. Some high-efficiency wood-burning stoves also qualify.

The act also provides rebates for low- and moderate-income households for electric stoves of up to $840, heat-pump water heaters of up to $1,750 and heat-pump clothes dryers of up to $840.

Change your behavior in a few easy steps

You can also make a pretty big difference without federal incentives by changing your habits. My dad was energy-efficient before it was hip. His “hobby” was to turn off the lights. This action itself has been among the most cost-saving behavioral changes.

Just turning out the lights for an hour a day can save a home up to $65 per year. Replacing old lightbulbs with LED lighting also cuts energy use. They’re more expensive, but they save money on energy costs.

We found that a homeowner could save $265 per year and reduce emissions even more by adopting a few behavioral changes including unplugging appliances not being used, line-drying clothes, lowering the water heater temperature, setting the thermostat 1 degree warmer at night in summer or 1 degree cooler in winter, turning off lights for an hour a day, and going tech-free for an hour a day.

Some appliances are energy vampires – they draw electricity when plugged in even if you’re not using them. One study in Northern California found that plugged-in devices, such as TVs, cable boxes, computers and smart appliances, that weren’t being used were responsible for as much as 23% of electricity consumption in homes.

Start with a passive solar home

If you’re looking for a home to rent or buy, or even to build, you can make an even bigger difference by looking at how it’s built and powered.

Passive solar homes take advantage of local climate and site conditions, such as having lots of south-facing windows to capture solar energy during cool months to reduce home energy use as much as possible. Then they meet the remaining energy demand with on-site solar energy.

Studies show that for homeowners in cold climates, building a passive design home could cut their energy cost by 14% compared with an average home. That’s before taking solar panels into account.

The Inflation Reduction Act offers a 30% tax credit for rooftop solar and geothermal heating, plus accompanying battery storage, as well as incentives for community solar – larger solar systems owned by several homeowners. It also includes a $5,000 tax credit for developers to build homes to the Energy Department’s Zero Energy Ready Homes standard.

The entire energy and climate package – including incentives for utility-scale renewable energy, carbon capture and electric vehicles – could have a big impact for homeowners’ energy costs and the climate. According to several estimates, it has the potential to reduce U.S. carbon emissions by about 40% by the end of this decade.

About the Author:

Jasmina Burek, Assistant Professor of Engineering, UMass Lowell

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions

01 Sep

Forex Technical Analysis & Forecast for September 2022

By RoboForex.com

EURUSD, “Euro vs US Dollar”

As we can see in the daily chart, after completing the descending wave at 1.1200, forming a new consolidation range around this level, and breaking it downwards to reach the short-term target at 0.9955, EURUSD has returned to test 1.0080 from below. Possibly, the pair may continue trading within the downtrend to reach 0.9900, or even extend this structure down to 0.9700.

GBPUSD, “Great Britain Pound vs US Dollar”

On the daily chart, after finishing the descending wave at 1.1930 and failing to rebound from it, GBPUSD continues trading downwards with the short-term target at 1.1580. Later, the market may correct up to 1.1900 and then start a new decline to reach 1.1500.

USDJPY, “US Dollar vs Japanese Yen”

On the daily chart, after completing the ascending wave at 136.48 and forming a new consolidation range there, USDJPY has broken it to the upside; right now, it is still growing with the short-term target at 141.13. Later, the market may correct down to 136.48 and then start another growth to reach 142.52.

BRENT

As we can see in the daily chart, after failing to fix above 99.00 and forming a new consolidation range, Brent has broken it to the downside and may continue falling towards 91.60. Later, the market may resume trading upwards with the target at 105.20, or even extend this structure up to 120.50.

XAUUSD, “Gold vs US Dollar”

On the daily chart, after completing the descending wave 1725.00 and forming a new consolidation range there, Gold has broken it to the downside and may continue trading downwards to reach 1680.00. Later, the market may form one more ascending wave to return to 1725.00 and then start a new decline with the target at 1650.00. After that, the instrument may resume growing towards 1766.00.

S&P 500

On the daily chart, after finishing the descending wave at 3975.0 and forming a new consolidation range above this level, the S&P index has broken it to the downside. Possibly, the asset may grow to test 3975.0 from below and then resume falling towards 3888.0, or even extend this structure to reach the short-term target at 3700.0.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Forex and Currency News Opinions

31 Aug

Mid-Week Technical Outlook: USD

By ForexTime

– This could be another big week for king dollar as all attention falls on Friday’s nonfarm payroll report.

After receiving fresh inspiration from Fed hawks last week, the greenback could charge higher if the pending US jobs data ticks all the boxes for more aggressive rate hikes. Alternatively, bulls may be humbled if the data fails to meet expectations. Whatever the outcome on Friday, it may be wise to brace for explosive levels of volatility, especially in the FX space.

With market players tense and on the fence ahead of this major event, the dollar remains in a range – waiting for a potent fundamental spark to make its next big move. With this catalyst likely to be the NFP, this could provide a great opportunity to identify trading opportunities for September.

Our focus today will be major currency pairs with our tool of choice none other than technical analysis.

DXY hovers around 109.00

The path of least resistance for the dollar points north but a fresh catalyst may be needed for bulls to switch into a higher gear. A solid breakout and daily close above 109.14 could encourage an incline towards 110.00. If bulls run out of steam, a decline back towards 108.25 and 107.30 could be on the cards.

Equally-weighted USD remains bullish

Just like the DXY, the equally weighted USD index remains bullish on the daily charts. There have been consistently higher highs and higher lows while the MACD trades to the upside. The upside momentum could take prices towards 1.2184 and potentially higher. A move back below 1.1950 may open the doors back towards the 50-day Simple Moving Average at 1.1860.

EURUSD to retest 0.9900?

After breaking below parity, the EURUSD has remained shaky and vulnerable to losses. Bears clearly remain in a position of power with their eyes locked on 0.9900. A strong breakdown below this point may indicate a selloff towards 0.9800 and lower.

GBPUSD ventures towards 1.1600

An appreciating dollar continues to drag the GBPUSD lower. A strong break below 1.1600 may result in a decline towards 1.1500. If 1.1600 proves to be reliable support, prices could retest 1.17600.

AUDUSD breakdown on the horizon

A solid breakdown below 0.06850 could encourage a selloff towards 0.6700. If prices manage to keep above 0.6850, a rebound towards 0.7000 may be a possibility.

USDJPY ready to breakout?

The USDJPY remains bullish on the daily charts as there have been consistently higher highs and higher lows. Prices are trading above the 50, 100, and 200-day Simple Moving Average while the MACD trades above zero. A strong breakout above 139.380 could inspire an incline towards 140.00. A move back below 135.00 may trigger a selloff towards the 100-day Simple Moving Average and 131.34, respectively.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

29 Aug

Bitcoin and Ethereum: No Safety Net

By Ino.com

– Earlier this month, I updated on the crypto market with a title, ‘It Ain’t Over Yet”. I considered the recent strength in the main cryptocurrencies a “dead-cat bounce” within a classic sideways consolidation with a high probability of resuming collapse.

This time, I spotted new signals as the chart moves to the right building new bars over time. Let us start with the main coin in the weekly chart below.

Source: TradingView

The price of Bitcoin moves within large bearish trend channel (black). The top of above-mentioned sideways consolidation within red trendlines did not even approach the resistance, it stays intact.

The RSI indicator could not raise its head to test the “waterline” of 50 level. This means that the market has considered this short-term strength as a “dead-cat bounce” as well.

The chart bar of last week has punctured below the red support. This is a harbinger of another drop. The main coin indeed is looking into the abyss as the strong support appears only after the price halves down. The largest area of the Volume Profile histogram (orange) is located between $9k and $10k. The mid-channel (red dashed) fortifies that support with its intersection.

Your biggest bet last time was the drop of the Bitcoin down to $12.2k, where the second leg down is equal to the first one. It almost coincides with the above-mentioned double support.
The next volume area is located at the $4k level and this option was your least favorite.

This time I added the simple moving average (purple) covering the preceding 52 weeks (1 year). It has been offering a strong support to the price starting from 2020. This year it has flipped to become a strong resistance after the price has dropped below it. The $40k level is the barrier to break to confirm the new bullish cycle.

A rather interesting situation has developed for the main coin. The price should either half down to find support or it should double up from this level to crack the bearish cycle.

Now, let us check the Ethereum chart.

Source: TradingView

In spite of all the hype around the upcoming transition of Ethereum onto the proof-of-stake (PoS) mechanism, the shadow of falling Bitcoin remains a backbreaking burden.

The black downtrend remains intact for the second largest coin also. There is a visible difference with the Bitcoin chart. The red mid-channel intersects with the red trendline support that contours consolidation.

Although the RSI was stronger here as it approached the barrier, it failed to break up and then dropped. Thus, the bearish mode continues.

Indeed, there is no safety net once the price slides below the red trendline support and the mid-channel until it touches the Volume Profile (orange) support of $250. It accords with the total annihilation model posted in May. Most of you agreed with this doomed forecast earlier.

The simple moving average (purple) for the preceding year stands at $2,845. The price should almost double to touch this resistance. This is a similar situation with Bitcoin. However, the downside gap is worse for Ethereum.

The forecasted collapse should show us for sure if the RSI will establish a new valley or not building the Bullish Divergence. HODL-ers will watch this event closely.

Intelligent trades!

Aibek Burabayev
INO.com Contributor

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Bitcoin and Ethereum: No Safety Net

Cryptocurrencies Opinions

29 Aug

Trade of the Week: Gold to retest $1700 support?

By ForexTime

At the start of this new trading week, spot gold has been dragged down to closer to the $1700 mark, although prices have trimmed losses at the time of writing.

And depending on how this Friday’s US nonfarm payrolls report turns out, the precious metal could retest that psychologically-important level for support.

Why has gold tumbled again?

The precious metal is clearly wilting in the wake of the scorching US dollar and the uptrend in Treasury yields.

These moves (gold down, dollar/Treasury yields up) have been fuelled by revived bets that US interest rates will move higher, and more importantly – stay elevated, for longer.

Markets have been gripped by Fed Chair Jerome Powell’s hawkish speech delivered at Jackson Hole this past Friday.

Here are the key takeaways:

The Fed is set to persist with sending US interest rates higher.
US interest rates are set to stay higher “for some time” (as in, the Fed isn’t likely to unwind its rate hikes in a hurry, as some segments of the markets had predicted up until recently).

In essence, the US central bank remains committed to subduing in inflationary pressures, even if it results in some pain for the economy.

Such language heralds a stronger US dollar and Treasury yields marching higher: a bad mix for bullion bulls.

What does the upcoming US jobs report have to do with gold prices?

Depending on the demonstrated strength of the US jobs market, that would inform the Fed as to how high it could send US interest rates.

A still-resilient US labour market would essentially give the green light for the Fed to send its benchmark rates even higher.
In turn, that should heap more downward pressure on gold.
Signs that the US labour market is starting to creak under the weight of higher interest rates may force the Fed to adopt a more gradual approach with its rate hikes; thus spelling some relief for gold.

What to look out for in this Friday’s US jobs report?

As things stand, markets are forecasting the following:

US labour market added a further 300,000 jobs in August, judging by the headline US nonfarm payrolls (NFP) figure. If so, that would mark a 20th consecutive month of job gains.
However, an official print of 300k would also mark its lowest number of jobs added since December 2019.
The August unemployment rate would stay at 3.5% – at its pre-pandemic lows.

Overall, the US jobs market is expected to remain resilient, even though the Fed has been hiking interest rates since March.

How might gold react to the upcoming NFP?

If the US labour market adds more jobs than forecasted, that could lead to more declines in gold prices.

Potential support levels:

$1712: using the downward trendline that has gone from resistance to support level.
$1700: stronger support should arrive at this psychologically-important line, noting that previous dips below $1700 have proved short-lived in recent years.

Such declines would be based on the notion that still-robust hiring in the US is likely to give the green light to the Fed to continue sending interest rates higher, which in turn should heap more downward pressure on gold prices.

However, if the US jobs market is starting to creak, that could force the Fed to adopt a more ‘gradual’ approach with its rate hikes.

That is to say policymakers may be more comfortable with triggering rate hikes that are relatively smaller than the 75bps hikes it has already triggered at each of its past two policy meetings. Smaller rate hikes may then be the way forward for policymakers, if they begin to fear choking the US jobs market and sending the US economy into a deep recession.

Such a narrative could then prompt a short-term rebound in spot gold.

Potential resistance levels:

$1764: around 50-day simple moving average (SMA)
$1800: stronger resistance set to arrive at psychologically-important mark

In summary:

Markets are currently forecasting a slightly higher chance (21.5%) of spot gold touching $1700, rather than prices reaching its 50-day SMA (20.8%) around $1764.

Ultimately, it could all come down to whether or not this Friday’s US nonfarm payrolls reports exceeds market expectations.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

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