GBP/USD and EUR/GBP Show Signs of Weakness
GBP/USD failed to climb above 1.2750 and trimmed all gains. EUR/GBP is declining and trading below the 0.8580 pivot level.
Important Takeaways for GBP/USD and EUR/GBP Analysis Today
- The British Pound is attempting a fresh increase from 1.2580.
- There is a key bearish trend line forming with resistance near 1.2655 on the hourly chart of GBP/USD at FXOpen.
- EUR/GBP is declining and showing bearish signs below 0.8580.
- There is a major bearish trend line forming with resistance near 0.8560 on the hourly chart at FXOpen.
GBP/USD Technical Analysis
On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.2745 zone. As mentioned in the previous analysis, the British Pound struggled to recover and declined below the 1.2655 support level against the US Dollar.
The pair even tested the 1.2580 support zone. A low was formed near 1.2577 and the pair is now attempting a fresh increase. There was a move above the 1.2600 zone and it is now testing the 23.6% Fib retracement level of the downward move from the 1.2702 swing high to the 1.2577 low.
On the upside, the GBP/USD chart indicates that the pair is facing resistance near 1.2620. The next major resistance is near a bearish trend line at 1.2655 and the 50-hour simple moving average.
The trend line is close to the 61.8% Fib retracement level of the downward move from the 1.2702 swing high to the 1.2577 low. A close above the 1.2655 resistance zone could open the doors for a move toward 1.2700.
Any more gains might send it toward 1.2745. If not, the pair could resume its decline below 1.2600. On the downside, there is a key support forming near 1.2580.
If there is a downside break below the 1.2580 support, the pair could accelerate lower. The next major support is near the 1.2550 zone, below which the pair could test 1.2500. Any more losses could lead the pair toward the 1.2450 support.
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Economic Calendar: US PMI Data, Stock Market Decline, and Oil Surge
After falling for the majority of August, stocks managed to rally in the last week of the month. The Nasdaq Composite surged by over 3%, the S&P 500 increased by 2.5%, and the DJI rose by 1.4%. History says September is primarily the worst period for the American stock market – the S&P 500 and Nasdaq usually go down this month. However, some analysts believe that a downward shift in consensus views on inflation and its risks may change the market sentiment to positive.
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The US Dollar Is Up after Mixed News
[SIZE=5]EUR/USD[/SIZE]
The euro fell on Friday as the dollar rose after the August jobs report showed that the labor market is still strong despite some signs of deterioration. Employers added 187,000 jobs in August, beating expectations for an increase of 170,000. But data for July was revised down to show 157,000 jobs added instead of the previously reported 187,000. The unemployment rate rose to 3.8%, higher than expected 3.5%. Average hourly wages rose 4.3% year-on-year, below expectations for a 4.4% increase. The US dollar index last rose 0.58% to 104.23. It gained 0.08% over the week, overcoming a price drop earlier in the week caused by softening economic data. The euro fell 0.59% to USD 1.0773. Immediate resistance can be seen at 1.0847, an upside break could trigger a move towards 1.0859. On the other hand, immediate support is seen at 1.0763, a break lower could take the pair to 1.0740.
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The Price of Oil Sets Maximum of the Year
Yesterday, the price of WTI oil rose above USD 85.50 per barrel. This has not happened since November 2022.
On August 24, we wrote that the price of oil could find support for growth from the lower border of the rising channel, as well as from the level of USD 78.50. Since then, the price of WTI oil has risen by more than 9%. Fundamentally this contributed to:
→ the policy of limiting production by OPEC+ countries;
→ expectations that the Chinese economy will recover thanks to the incentives of the authorities.
According to Trafigura, a large company trading mainly in metals and energy resources, investment in the development of the oil industry is not enough, and a price of up to USD 88 can be considered fair in the current circumstances.
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AUD/USD Falls Sharply after the Decision of the Reserve Bank of Australia
The Reserve Bank of Australia (RBA) kept interest rates at 4.10% for the third month today, fueling rumors that the tightening cycle is over. Although according to Reuters, the majority of economists polled by the agency expect another increase by the end of the year after the release of the inflation report for the third quarter.
In the words of RBA chief Philip Lowe today:
→ data indicate that inflation could return to the 2-3% target range at the end of 2025;
→ the labor market remains strong and the economy operates at a high level of capacity utilization, although its development has slowed down;
→ further tightening is still acceptable if inflation is to be suppressed, which stands at 4.9% in July (at an 18-month low).
Reacting to the results of the RBA meeting, the AUD/USD rate fell to the lows of the year, to the level of 0.637.
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EUR/USD Nosedives While USD/JPY Surged Further
EUR/USD started a fresh decline from 1.0940. USD/JPY is rising and might climb further toward the 148.80 resistance zone.
Important Takeaways for EUR/USD and USD/JPY Analysis Today
- The Euro started a fresh decline below the 1.0860 support zone.
- There is a key bearish trend line forming with resistance near 1.0760 on the hourly chart of EUR/USD at FXOpen.
- USD/JPY climbed higher above the 146.10 and 147.00 levels.
- There is a connecting bullish trend line forming with support near 147.20 on the hourly chart at FXOpen.
EUR/USD Technical Analysis
On the hourly chart of EUR/USD at FXOpen, the pair started a fresh decline from the 1.0940 zone. The Euro declined below the 1.0860 support zone against the US Dollar.
The pair even settled below the 1.0805 zone and the 50-hour simple moving average. A low is formed near 1.0707 and the pair is now consolidating losses near the 23.6% Fib retracement level of the recent decline from the 1.0808 swing high to the 1.0707 low.
On the upside, the pair is now facing resistance near the 50-hour simple moving average at 1.0760 and a key bearish trend line. It is close to the 50% Fib retracement level of the recent decline from the 1.0808 swing high to the 1.0707 low.
The next major resistance is near 1.0805. The main resistance is now near 1.0860. An upside break above 1.0860 could set the pace for another increase. In the stated case, the pair might rise toward 1.0940.
If not, the pair might resume its decline. The first major support on the EUR/USD chart is near 1.0705. The next key support is at 1.0680. If there is a downside break below 1.0680, the pair could drop toward 1.0635. The next support is near 1.0620, below which the pair could start a major decline.
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The US Dollar Strengthens to a Maximum of Six Months
On Tuesday, financial market participants received a piece of data that gives signs of a slowdown in economies in different countries. Namely, the PMI index (an index of purchasing managers, which is considered a leading economic indicator) showed a negative trend in China and a number of European countries.
This led to a decrease in exchange rates against the US dollar.
Today, the US PMI data will be released, which is likely to affect the current strength of the US dollar index, as well as provide important information for the Fed’s interest rate decision. The next meeting will be held on September 19-20.
According to the CME FEDWatch tool, there is a 7% chance that rates will be raised in September. However, the probability that it will be increased by the end of the year is about 45%.
“I can well imagine, from what I see so far, that we might have to go a bit higher, that we might have to raise the policy rate a bit more,” Cleveland Fed President Loretta Mester said in an interview with German newspaper Börsen-Zeitung published on Tuesday.
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Nikkei 225 Reaches Psychological Level at 33,000
In 2023, Japan’s stock market is in a bullish trend (shown by the blue channel) as the country has an ultra-loose monetary policy (unlike other G7 countries that are fighting inflation). As a result, the cheap yen helps Japanese companies, which are largely export-oriented, to develop. According to the Cabinet of Japan, GDP in the second quarter of 2023 increased by 2% compared to the same quarter of the previous year.
The growth of the Japanese stock market from the beginning of the year to today is about 28%. And on Sept. 5, the Nikkei 225 closed above the psychological 33,000 level. Yahoo Finance reports that Kenji Abe, Daiwa Securities equity strategist, predicts the Nikkei could gradually rise to 35,000 after a strong reporting season this summer.
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USD/CAD Analysis: How the Bank of Canada Decision Affected the National Currency
Yesterday it became known that the Bank of Canada (BOC) decided to keep the rate at 5% — the highest level in 22 years.
Here are the key takeaways from CEO Tiff Macklem’s press conference:
→ excess demand is declining, but the BOC is remaining concerned about persistence of high inflation;
→ the labor market is gradually calming down, but wage growth remains high;
→ second-quarter GDP contraction attributed to a noticeable slowdown in consumption growth, a slowdown in housing market growth and the impact of wildfires across the country.
Although the decision to leave the rate unchanged is a move that economists expected in a Bloomberg survey, there has been some spike in volatility in the foreign exchange market. The first emotional reaction of market participants led to the depreciation of the CAD against other currencies. But at the end of the day, the Canadian dollar strengthened — apparently, market participants still see positive in the prospects of the Canadian economy, taking into account the statements of the head of the Bank of Canada.
At the same time, an interesting situation is emerging on the USD/CAD chart – the rate has declined from the important level of 1.365, from which reversals were repeatedly formed earlier this year (as the arrows show). What can we say about the formation of another bearish reversal?
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Commodity Currencies, Pound and Euro in Search of Medium-term Bottom
Yesterday’s multidirectional statistics from the US contributed to the test of significant levels by major currency pairs. Thus, the GBP/USD pair fell to 1.2500, the EUR/USD pair re-tested 1.0700, and commodity currencies managed to find temporary support.
AUD/USD
In early September, the Australian currency came under additional pressure due to negative economic data from China. The slowdown in the world’s second largest economy, provoked by the deepening decline in the real estate market, could not but affect the currencies of China’s trading partners. After the RBA left the base interest rate unchanged at the beginning of the week, the AUD/USD pair updated the August low of this year at 0.6360. Yesterday, buyers managed to keep the price above the recent lows, but if the situation in the commodity market does not stabilise, the downtrend may continue towards 0.6100-0.6000. Cancellation of the downward scenario may be considered after a firm consolidation above 0.6520.
From the point of view of fundamental analysis, today at 15:30 GMT+3, we are waiting for weekly data on the number of applications for unemployment benefits in the US.
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Bitcoin Sets September High
The price of the main cryptocurrency rose above the level of 26k US dollars. This was fueled by the news that Ark Invest and 21Shares filed applications with the US Securities and Exchange Commission (SEC) for a spot ETF on Ethereum.
Some say recent verdicts in favor of cryptocurrency firms Grayscale and Ripple Labs in lawsuits against the SEC increase the chances that ETF applications for Ethereum will be approved. We also note that applications for bitcoin ETFs from BlackRock and other funds are being reviewed by the SEC, but the deadlines for these applications, originally set for early September, have been postponed to a later date.
Meanwhile, Barrons writes that the NASDAQ exchange is preparing infrastructure for cryptocurrency trading, which is causing bullish sentiment among cryptocurrency enthusiasts. But the BTC/USD chart gives reason to doubt.
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AUD/USD and NZD/USD Could Start Fresh Increase
AUD/USD declined 0.6400 before the bulls appeared. NZD/USD is now attempting a fresh increase from the 0.5860 support zone.
Important Takeaways for AUD/USD and NZD/USD Analysis Today
- The Aussie Dollar started a fresh decline from well above the 0.6440 level against the US Dollar.
- There is a key contracting triangle forming with resistance near 0.6400 on the hourly chart of AUD/USD at FXOpen.
- NZD/USD declined heavily from the 0.6000 resistance zone.
- Recently, there was a break above a connecting bearish trend line with resistance near 0.5880 on the hourly chart of NZD/USD at FXOpen.
AUD/USD Technical Analysis
On the hourly chart of AUD/USD at FXOpen, the pair struggled to clear the 0.6520 zone. The Aussie Dollar started a fresh decline below the 0.6440 support against the US Dollar.
The pair even settled below 0.6400 and the 50-hour simple moving average. Finally, the bulls appeared near the 0.6360 zone. A low was formed near 0.6357 and the pair is now consolidating losses. It is slowly moving higher above the 50-hour simple moving average.
On the upside, an immediate resistance is near a key contracting triangle at 0.6400. It is close to the 23.6% Fib retracement level of the downward move from the 0.6522 swing high to the 0.6357 low.
A clear upside break above 0.6400 could send the pair toward the 50% Fib retracement level of the downward move from the 0.6522 swing high to the 0.6357 low at 0.6440. The next major resistance is near 0.6485, above which the price could rise toward 0.6520. Any more gains might send the pair toward 0.6550.
A close above the 0.6550 level could start another steady increase in the near term. The next major resistance on the AUD/USD chart could be 0.6600.
On the downside, initial support is near the 50-hour simple moving average at 0.6385. The next support could be the 0.6360. Any more losses might send the pair toward the 0.6320 support.
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Dollar Strengthens Amid Good Data
Data on business activity in the US for August was published. In general, indicators are recovering, but the pace is slowing down, and the beginning of a recession in the near future is seen as quite possible. Nevertheless, investors still hope that a recession in the US economy will be avoided. Weekly data from the American labour market were also published yesterday. Thus, the number of initial applications for unemployment benefits amounted to 216.0k, which turned out to be lower than both the forecast of 234.0k and the previous value of 229.0k. The total number of citizens receiving assistance from the state decreased from 1.719 million to 1.679 million, while experts estimated 1.715 million, confirming the stable state of the sector, which may contribute to a new increase in the US Fed interest rate.
[SIZE=5]EUR/USD[/SIZE]
The euro fell on Thursday as Europe’s economic outlook continued to deteriorate. Data showed German industrial production fell slightly more than expected in July. The Ifo Institute said Germany’s economy would contract by 0.4% this year, confirming its previous forecasts published in June. Meanwhile, European statistics agency Eurostat revised down its estimate that eurozone GDP rose 0.1% in the second quarter from the previous three months. On an annualised basis, GDP increased by 0.5%, Eurostat said, revising its previous growth estimate of 0.6%. The immediate resistance can be seen at 1.0744; a breakout to the upside could trigger a rise towards 1.0788. On the downside, immediate support is seen at 1.0697, and a break below could take the pair towards 1.0672.
A new downward channel has formed at the lows of the week. Now, the price is in the middle of the channel and may continue to move towards the upper border.
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Watch FXOpen’s 4 - 8 September Weekly Market Wrap Video
Weekly Market Wrap With Gary Thomson: APPLE IN TROUBLE, DOLLAR STRENGTHENED, USD/CAD, NIKKEI 225
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- The dollar strengthened to a maximum in six months
- Nikkei 225 reaches psychological level at 33,000
- USD/CAD analysis: how the decision of the Bank of Canada affected the national currency
- Apple in trouble: shares fall more than 3.5%
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GBP/USD Could Recover While USD/CAD Trims Gains
GBP/USD retested the 1.2450 support and is now correcting losses. USD/CAD is correcting gains and trading below the 1.3655 support.
Important Takeaways for GBP/USD and USD/CAD Analysis Today
- The British Pound is eyeing a fresh increase above the 1.2580 resistance.
- There is a key bearish trend line forming with resistance near 1.2550 on the hourly chart of GBP/USD at FXOpen.
- USD/CAD declined below the 1.3655 and 1.3615 support levels.
- A connecting bearish trend line is forming with resistance near 1.3615 on the hourly chart at FXOpen.
GBP/USD Technical Analysis
On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.2700 resistance zone. The British Pound traded below the 1.2550 support to enter a bearish zone against the US Dollar, as discussed in the previous analysis.
Finally, the bulls appeared near the 1.2450 zone. The pair is now attempting a recovery wave above the 50-hour simple moving average and 1.2480. There was a break above the 23.6% Fib retracement level of the downward move from the 1.2642 swing high to the 1.2447 low.
The RSI moved above the 50 level on the GBP/USD chart and the pair is now showing a few positive signs. Immediate resistance is forming near a key bearish trend line at 1.2550 and the 50% Fib retracement level of the downward move from the 1.2642 swing high to the 1.2447 low.
The next resistance is near 1.2580. An upside break above the 1.2580 zone could send the pair toward 1.2655. Any more gains might open the doors for a test of 1.2700.
On the downside, initial support is near the 1.2480 area. The next major support is 1.2450. If there is a break below 1.2450, the pair could extend its decline. The next key support is near the 1.2400 level. Any more losses might call for a test of the 1.2345 support.
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USD/JPY Analysis: Yen Rises Sharply after Hawkish Government Announcements
Since 2016, the interest rate in Japan has been in the negative zone and has remained unchanged — for more than 7 years it has been -0.10%. This makes Japan fundamentally different from other countries. But over the weekend the Yomiuri newspaper published an interview with Bank of Japan CEO Kazuo Ueda. He said the central bank could end the era of negative interest rates once it becomes clear that the 2% inflation target has been achieved.
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Economic Calendar: A Torrent of UK and Chinese Releases, US Inflation and Inventories, and ECB Meeting
A torrent of key economic data releases is coming out this week, which will significantly impact the markets. First up is UK unemployment and average earnings on Tuesday (10:00). Unemployment is expected to tick up to 4.3%, while earnings remain steady at 8.2%, presenting a quandary for the Bank of England, as it battles to reduce inflation while not induce a recession.
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Oil Price Stabilizes Near Year’s Highs
Last week, the Russian Federation and Saudi Arabia confirmed plans to reduce production by the end of the year, which contributed to an increase in oil prices.
At the beginning of this week, the WTI price stabilized in the range of 85.50 - 87.50. Will the upward trend continue, which will benefit oil producers?
On Tuesday morning, the price is within the triangle formed from the median line of the ascending channel (shown in blue) and the level of 87.50. A breakout of this triangle can occur in both directions.
Bullish arguments:
→ The price is within the ascending channels, both short-term (built on the 1h and 4h charts) and long-term (built on the daily chart).
→ A series of rising lows is forming on the chart, indicating that demand is active.
→ Technically, the market may be supported by the level of 85.50, which previously served as resistance.
→ Oil supplies may be disrupted due to various storms. For example, in eastern Libya, 4 ports were closed due to flooding and a storm, which killed about 2,000 people.
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TSLA Share Price Soars 10%
The reason for the growth is the increase in the target price for TSLA shares by analysts at Morgan Stanley from USD 250 to USD 400 (about +45% from current levels).
Analysts see huge potential in Tesla Dojo — this supercomputer is capable of processing millions of terabytes of video of real-life situations captured from more than 4 million Tesla vehicles. It is designed to train artificial intelligence models to ultimately help the driver drive a car (Full Self-Driving, FSD system). Analysts say Dojo could serve as the same catalyst as AWS services that helped drive Amazon stock higher.
After analysts at Morgan Stanley upgraded their rating, TSLA’s price soared 10%, exceeding USD 270 per share.
This momentum could help develop the current bullish trend that describes the trend channel in the provided chart of TSLA stock, with:
→ the level of USD 260, overcome with a gap, can now provide support;
→ after overcoming this resistance, the price reached the median line of the channel. Here, supply and demand tend to balance out — this could help the bulls gain a foothold above the breakout level of USD 260.
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EUR/USD Attempts Recovery, USD/CHF Faces Uphill Task
EUR/USD started a recovery wave above the 1.0715 resistance. USD/CHF is struggling to clear the key 0.8940 resistance zone.
Important Takeaways for EUR/USD and USD/CHF Analysis Today
- The Euro gained pace after it broke the 1.0705 resistance against the US Dollar.
- There is a major bullish trend line forming with support near 1.0715 on the hourly chart of EUR/USD at FXOpen.
- USD/CHF is consolidating gains below the 0.8940 resistance.
- There is a connecting bearish trend line forming with resistance near 0.8930 on the hourly chart at FXOpen.
EUR/USD Technical Analysis
On the hourly chart of EUR/USD at FXOpen, the pair started a recovery wave from the 1.0685 level. The Euro even cleared the 1.0715 barrier to move into a short-term bullish zone against the US Dollar.
The bulls pushed the pair above the 50-hour simple moving average and 1.0735. Finally, the pair tested the 1.0760 resistance. It is now consolidating gains below the 23.6% Fib retracement level of the upward wave from the 1.0705 swing low to the 1.0764 high.
Immediate support on the downside is near the 50-hour simple moving average at 1.0735. The next major support is near a bullish trend line at 1.0715.
The trend line is close to the 76.4% Fib retracement level of the upward wave from the 1.0705 swing low to the 1.0764 high. A downside break below the 1.0715 support could send the pair toward the 1.0685 level.
Immediate resistance on the EUR/USD chart is near the 1.0760 zone. The first major resistance is near the 1.0780 level. An upside break above the 1.0780 level might send the pair toward the 1.0850 resistance.
The next major resistance is near the 1.0920 level. Any more gains might open the doors for a move toward the 1.1000 level.
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