A Quiet Economic Calendar Leaves the ECB and the EUR in the Spotlight

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. Inflation figures from China were in focus this morning.

From China

In August, the annual rate of inflation softened from 1.0% to 0.8%, with consumer prices rising by just 0.1% in the month. Both sets of figures fell short of forecasts.

By contrast, however, the annual wholesale rate of inflation accelerated from 9.0% to 9.5%. Economists had forecast for the annual wholesale rate of inflation to hold steady at 9.0%.

The Aussie Dollar moved from $0.73548 to $0.73528 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.12% to $0.73552.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.05% to ¥110.190 against the U.S Dollar, while the Kiwi Dollar was down by 0.13% to $0.7090.

The Day Ahead

For the EUR

It’s a big day ahead on the economic calendar.  Early in the day, trade data from Germany will be in focus. We don’t expect July figures to have a material impact, however.

The ECB monetary policy decision and all-important press conference will be the main event of the day. Uncertainty over the economic outlook has tested the EUR early in the week. Expect any hawkish outlook and plans to begin taking the foot of the gas to support a EUR breakout.

At the time of writing, the EUR was down by 0.01% to $1.1815.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will continue to leave the Pound in the hands of market risk sentiment on the day.

At the time of writing, the Pound was down by 0.08% to $1.3760.

Across the Pond

It’s a relatively quiet day ahead on the economic data front. Weekly jobless claims will be in focus later in the day.

Following the disappointing NFP numbers, a marked fall in claims would reignite talks of a nearer term shift in policy.

At the time of writing, the U.S Dollar Spot Index was up by 0.10% to 92.749.

For the Loonie

It’s a particularly quiet day ahead for the Loonie.

There are no material stats due out to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.12% to C$1.2706 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Pares Gains on Dovish Fed Speak, Before ECB Meeting

New York Fed Bank President John Williams said that more progress is needed in the labor market to achieve the “substantial further progress” for the Fed’s maximum employment goal.

He added, however, that it may be appropriate for the Federal Reserve to start reducing the pace of its asset purchases later this year if the economy continues to improve.

“The Fed is clearly in wait-and-see mode over the next couple of months to see how the economy holds up. Fed’s Williams delivered some dovish comments that support the idea that the soonest the Fed could taper is December,” Edward Moya, senior market analyst at OANDA in New York, said in a report.

Separately, the Fed said in its latest Beige Book that the U.S. economy “downshifted slightly” in August as the renewed surge of the coronavirus hit dining, travel and tourism.

The dollar index, which measures the currency against six rivals, gained 0.14% to 92.66, after earlier rising to 92.86, the highest since August 27.

Benchmark 10-year Treasury note yields fell to 1.33%, after earlier trading at 1.38%. The yields have risen since data on Friday showed that U.S. jobs growth slowed while wage inflation was higher than expected.

An uptick in inflation is complicating the picture for Fed officials who want to see further progress in employment before reducing bond purchases.

“At its very worst, there is some concern that nominal wages are still lagging consumer price increases by cycle extremes … and that nominal wages are struggling to keep up with prices, which is how a wage-price spiral develops,” Alan Ruskin, a macro strategist at Deutsche Bank, said in a report on Tuesday.

Data on Wednesday showed that U.S. job openings rose to almost 11 million in July.

The euro dipped before the European Central Bank meeting set for Thursday. The ECB could tighten policy sooner than many anticipate as inflationary pressures could prove to be persistent, ECB policymaker Robert Holzmann said in a contribution to Eurofi Magazine on Wednesday.

Analysts polled by Reuters see PEPP purchases falling possibly as low as 60 billion euros a month from the current 80 billion, before a further fall early next year and the scheme’s end in March.

The single currency was last down 0.13% on the day at $1.1823.

The greenback also gained against Canada’s loonie on worries that the global economic outlook is deteriorating even as the Bank of Canada looked past a soft patch in the domestic economy.

Sterling dropped after the British government on Tuesday announced a tax hike to fund health spending and social care.

Meanwhile, cryptocurrencies struggled to rebound from hefty losses from Tuesday, when El Salvador became the first country to adopt bitcoin as legal tender and several trading platforms said they experienced performance issues.

Bitcoin dipped 1.22% to $46,283 after sinking as low as $42,900 on Tuesday. Earlier that day it had touched an almost four-month high of $52,956.

For a look at all of today’s economic events, check out our economic calendar.

(Editing by Sandra Maler)

 

USD/JPY Price Forecast – US Dollar Gives Up Early Gains

The US dollar initially tried to rally during the trading session on Wednesday but gave back the gains as we continue to see a lot of resistance just above. That should not be a huge surprise, because quite frankly this is an area that has been difficult. At the ¥110.750 level, there is a lot of selling pressure that we had seen multiple times, so the fact that we are pulling back just a bit is not a huge surprise.

USD/JPY Video 09.09.21

To the downside, the ¥109 level has been massive support, just as the 200 day EMA has reached towards it. All things being equal, the market is likely to continue seeing a lot of choppy behavior as the 50 day EMA is also sideways. With this, the market is likely to continue to see confusion and probably is a scenario where if you are a short-term trader, it may work out but if you are looking for any type of significant move, forget it.

All things been equal, I think the ¥110 level continues to be a bit of a magnet for price, so with this being the case I think it is very difficult to see a reason to get overly excited one way or the other. You should keep your position size relatively small, mainly due to the fact that eventually we will get a big move, and then we probably take off rather quickly. With this, I think this is probably a market that you should be using the stochastic oscillator with, as it can give you a bit of a heads up as the wind to go back and forth.

For a look at all of today’s economic events, check out our economic calendar.

Monetary Policy Puts the Loonie in the Spotlight, with the BoC in Action

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. The Japanese Yen was in action this morning.

For the Japanese Yen

2nd estimate GDP numbers for the 2nd quarter were in focus this morning.

Quarter-on-quarter, the economy grew by 0.5%, which was up from a prelim 0.3%. In the 1st quarter, the economy had contracted by 0.90%.

Year-on-year, the economy expanded by 1.90%, which was up from a prelim 1.3%. In the 1st quarter, the economy had contracted by 3.7%, year-on-year.

The Japanese Yen moved from ¥110.310 to ¥110.280 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% to ¥110.290 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.14% to $0.7396, with the Kiwi Dollar up by 0.13% to $0.7108.

The Day Ahead

For the EUR

It’s a quiet day ahead on the economic data front.  French non-farm payrolls for the 2nd quarter are due out ahead of the European open.

Barring dire numbers, however, we don’t expect the numbers to influence as the markets look ahead to the ECB policy decision on Thursday.

At the time of writing, the EUR was up by 0.06% to $1.1847.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will likely leave the Pound in the hands of market risk sentiment on the day.

At the time of writing, the Pound was down by 0.01% to $1.3784.

Across the Pond

It’s a relatively quiet day ahead on the economic data front. JOLT’s job openings for July are due out later today.

Following the disappointing NFP numbers for August, expect any weak numbers to further test Dollar support.

At the time of writing, the U.S Dollar Spot Index was down by 0.01% to 92.504.

For the Loonie

It’s a big day ahead for the Loonie.

While Ivey PMI figures for August will draw interest, the Bank of Canada monetary policy decision will be key late in the day.

The markets will be looking for the BoC’s outlook on growth, following the disappointing GDP numbers for Q2. Expect any hawkish chatter to give the Loonie a material boost on the day, with the markets expecting some dovish guidance.

At the time of writing, the Loonie was up by 0.11% to C$1.2633 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Gains as U.S. Yields Rise Before ECB Meeting

Cryptocurrencies, including Bitcoin, also dropped sharply in volatile trading as several trading platforms said they experienced performance issues.

On Friday, the greenback tumbled to its lowest levels since early August after a surprisingly soft U.S. payrolls report prompted analysts to raise bets the Federal Reserve will not unwind its stimulus plans in coming months.

But the dollar has gained in the past two sessions. The greenback rose 0.33% on Tuesday to 92.42, after touching its lowest since Aug. 4 on Friday.

“It does appear that after the sell-off the dollar has maybe established a short-term base at least,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

“The Federal Reserve we think is still likely to move toward tapering by the end of this year, the U.S. economy is likely to perform relatively strongly, so our view is minor dollar dips, minor dollar weakness is probably a buying opportunity,” he said.

Data on Friday showed speculators’ net long bets on the U.S. currency grew in the latest week, with the value of the net long dollar position at $10.98 billion for the week ended Aug. 31, the largest long position since March 2020.

The dollar also benefited from rising U.S. Treasury yields with the U.S. government selling new debt this week, including $58 billion in three-year notes, $38 billion in 10-year notes and $24 billion in 30-year bonds. [US/]

The yield increase “has helped the dollar index to recoup its post-NFP (non-farm payrolls) losses and then some,” Brown Brothers Harriman strategists said in a note.

U.S. 10-year yields, which were around 1.299% before Friday’s data release, stand now at 1.373%.

The euro was last at $1.1844, below Friday’s one-month peak of $1.1909.

The ECB is seen debating a cut in stimulus at its meeting on Thursday, with analysts expecting purchases under the ECB’s Pandemic Emergency Purchase Programme (PEPP) falling possibly as low as 60 billion euros a month from the current 80 billion.

The Australian dollar weakened after the Reserve Bank of Australia stuck with plans to taper its bond buying but said it would extend the timeline as the economy struggles with coronavirus lockdowns.

The pound also dropped after the British government set out a plan to raise taxes.

Cryptocurrencies plunged sharply on Tuesday with bitcoin dropping as much as 19% on the day and ether falling 23%, before paring losses.

Several crypto trading platforms said they experienced performance issues on Tuesday, though it was not clear if these were a contributor to, or a result of, the volatility.

The drop also came as El Salvador on Tuesday became the first country to adopt bitcoin as legal tender.

Bitcoin was last down 10% on the day at $47,153 and ether was down 12% at $3,460.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Saikat Chatterjee in London, editing by Mark Heinrich and David Gregorio)

USD/JPY Price Forecast – US Dollar Sits at ¥110

The US dollar initially pulled back just a bit during the course of the trading session on Tuesday but then turned around to go back towards the ¥110 level yet again. This is an area that we seemingly find every day, so it is not overly surprising to report to you that we are sitting there again. To the upside, we still see the ¥110.75 level as a major resistance barrier and would be difficult to overcome. That is an area that has been extraordinarily difficult to get above, and therefore I think that if we did somehow break out above there then the market could go much higher, perhaps reaching towards the ¥112 level.

USD/JPY Video 08.09.21

To the downside, the ¥109 level continues to be important, especially now that the 200 day EMA has offered support there. With this, the market looks very likely to see a lot of value hunters in that area. If we were to break down below the 200 day EMA, then the market could break down rather significantly, perhaps kicking off more of a trend. With this being the case, the market is likely to continue falling rather rapidly if that happens. Nonetheless, the market is very noisy, and I think you need to keep in mind that the pair is highly sensitive to risk appetite, so we could go back and forth based upon that as well. Either way, you are going to be a short-term trader, or you are going to be sitting on the sidelines in order to wait for some type of certainty coming back into this market, something that has been lacking for a while.

For a look at all of today’s economic events, check out our economic calendar.

USD/JPY Forex Technical Analysis – Choppy Trade; Strengthens Over 109.957, Weakens Under 109.569

The Dollar/Yen is under pressure early Tuesday despite a slight rise in U.S. Treasury yields. The price action in the Forex pair has been choppy the last couple of days since the release of Friday’s disappointing U.S. Non-Farm Payrolls report. Some traders are blaming the strength in the Japanese Yen on worries about a weakening global economy.

At 03:14 GMT, the USD/JPY is trading 109.773, down 0.083 or -0.08%.

In economic news, Japan’s household spending grew less than expected in July as a resurgence in COVID-19 cases hindered consumer activity, throwing broader economic recovery prospects into doubt.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.590 will change the main trend to down. A move through 110.420 will signal a resumption of the uptrend.

On the downside, the next downside target and potential support zone is 109.569 to 109.076.

On the upside, the first resistance is a minor pivot at 109.957, followed by a short-term retracement zone at 110.185 to 110.531.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the minor pivot at 109.957.

Bearish Scenario

A sustained move under 109.957 will indicate the presence of sellers. The first downside target is the support cluster at 109.590 to 109.569. Look for a technical bounce on the first test of this area.

The USD/JPY should continue to weaken on a sustained move under 109.569. The first downside target is the minor bottom at 109.414. This price is a potential trigger point for an acceleration into another support cluster at 109.114 to 109.076.

Bullish Scenario

A sustained move over 109.957 will signal the presence of buyers. The next move should lead to a labored rally with potential upside targets lined up at 110.185, 110.420 and 110.531.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR back into Focus, with the RBA and the Aussie also in the Spotlight

Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Pound and the Japanese Yen were in action in the early hours, with economic data from China in focus. Later this morning, the RBA will deliver its September policy decision amidst rising COVID-19 cases in the country

For the Japanese Yen

Household spending fell by 0.70% in July, month-on-month, following a 3.2% slide in June. Economists had forecast a 1.1% increase. Year-on-year, household spending was up 0.70% versus a forecasted 0.10% increase. In June, household spending had been down by 5.10%, year-on-year.

According to the Statistic Bureau,

  • Spending on transportation & communication surged by 14.2%.
  • There were also increases in spending on food (+1.9%), clothing & footwear (+2.7%), and culture & recreation (+1.7%).
  • Spending on education and on furniture & household utensils slid by 9.9% and by 8.4% respectively, however.
  • There were also declines in spending on medical care (-7.0%), fuel, light, & water charges (-5.9%), and housing (-1.7%).

The Japanese Yen moved from ¥109.835 to ¥109.827 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.08% to ¥109.770 against the U.S Dollar.

From China

Trade data was in focus this morning.

In August, China’s USD trade surplus widened from US$56.59bn to US$58.35bn. Economists had forecast a narrowing to US$51.05bn.

  • Imports increased by 33.1%, year-on-year, versus a forecasted 26.8%. In July, imports had been up by 28.1% year-on-year.
  • Exports were up by 25.6%, year-on-year, versus a forecasted 17.1%. In June, exports had been up 19.3% year-on-year.

The Aussie Dollar moved from $0.74484 to $0.74441 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.7439.

Elsewhere

The Kiwi Dollar was up by 0.01% to $0.7137.

The Day Ahead

For the EUR

It’s a busy day ahead on the economic data front.  German industrial production figures are due out along with 2nd quarter GDP numbers for the Eurozone.

ZEW Economic Sentiment figures for Germany and the Eurozone will also influence.

At the time of writing, the EUR was up by 0.08% to $1.1880.

For the Pound

It’s a quiet day ahead on the economic calendar. Housing sector numbers for August are due out that will likely have a muted impact on the Pound.

Earlier in the day, BRC Retail Sales Monitor increased by 1.5%, year-on-year, in August. In July, the Monitor had been up by 4.7%.

At the time of writing, the Pound was up by 0.09% to $1.3850.

Across the Pond

There are no stats due out of the U.S to provide the markets with direction following the Labor Day holiday.

At the time of writing, the U.S Dollar Spot Index was up by 0.09% to 92.118.

For the Loonie

There are also no stats due out of Canada following the Labor Day holiday. The lack of stats will leave the Loonie in the hands of market risk sentiment and crude oil prices, with China’s trade data likely to set the tone.

At the time of writing, the Loonie was up by 0.06% to C$1.2526 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

September 7th 2021: AUD/USD Eyeing Possible Test of H4 Decision Point at $0.7393-0.7410

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

South of ascending support-turned resistance, taken from the low $1.1641, June’s 3.0 percent loss persuaded EUR/USD to retest support from $1.1857-1.1352. A bullish revival shines light on 2021 peaks at $1.2349.

Month to date, September trades 0.5 percent higher.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Analysis largely unchanged from previous writing.

Monday observed the greenback trim losses sustained on Friday, following disappointing headline US non-farm payrolls. Ultimately, though, markets welcomed a narrow range as a result of US banks closing in observance of Labour Day.

Buyers and sellers, as you can see, remain squaring off around late July tops at $1.1909ish. Cementing a close north of the latter seats resistance between $1.2033 and $1.1994 in the firing range, organised by way of a 61.8% Fib, the 200-day simple moving average and Quasimodo support-turned resistance. What’s interesting here is a break of $1.1909 highs likely trips buy-stops, perhaps generating enough upside oomph to fill $1.2033-1.1994 offers.

With regards to long-term trend, 2021 has been directionless, despite healthy gains in 2020.

As for momentum, the relative strength index (RSI) is on the verge of crossing swords with trendline resistance just ahead of overbought territory. Also of note is resistance plotted at 80.39. This shows momentum is perhaps gearing up to level off.

H4 timeframe:

Analysis unchanged from previous writing.

$1.1907 resistance, a level holding back buyers since late June, called for attention Friday, with Monday touching $1.1856. The interesting feature, however, is the stops above $1.1907, and the zone of resistance at $1.1955-1.1933. Also seen is Quasimodo resistance at $1.1956.

Buy-stops above $1.1907 may be enough to fuel offers at $1.1955-1.1933, creating a short-term bearish phase back to at least $1.1907.

H1 timeframe:

Monday shook hands with a minor Fibonacci cluster, made up of a 100% Fib projection at $1.1860 and a 61.8% Fib retracement at $1.1863. Buyers established a tentative defence off the noted floor amid London hours and remains supportive ahead of the closing bell.

Pursuing higher levels shifts focus back to $1.19, a psychological barrier aligned with a 100% Fib projection at $1.1904, a longer-term 38.2% Fib retracement at $1.1896 (taken from the $1.2266 May 25th high) as well as a 1.618% Fib expansion at $1.1913.

From the standpoint of the relative strength index (RSI), the indicator grasped the lower limits of its two-week range between 40.00 and 50.00 in recent movement. It is common to watch the 40.00-50.00 region serve as a temporary oversold threshold during rising markets. And this is what we’re seeing here.

Observed levels:

Seeing H1 defending the $1.1860ish zone—reinforced by a H1 RSI oversold signal and monthly support from $1.1857-1.1352—puts forth a bullish vibe, targeting north of $1.19 to H4 resistance at $1.1955-1.1933.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Month to date, September is higher by 1.6 percent, consequently trimming a portion of the recent three-month decline.

Long-term areas to be mindful of are support at $0.6305-0.6872 and supply coming in at $0.8303-0.8082, along with trendline support-turned resistance, taken from the low $1.4776.

Trend studies (despite the trendline resistance [drawn from the high $1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Analysis unchanged from previous writing.

AUD/USD bulls strengthening their grip and overthrowing Quasimodo resistance at $0.7414 emphasises a bullish setting.

Addressing resistance between $0.7665 and $0.7590, therefore, is possible, an area made up of a 61.8% Fib retracement at $0.7665, a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7605 and another 61.8% Fib retracement at $0.7590.

Interestingly, in conjunction with the resistance breach, the relative strength index (RSI) climbed above trend line resistance, taken from the high 80.12. This places overbought space in range, in particular resistance at 80.19.

H4 timeframe:

Analysis unchanged from previous writing.

Short-term volatility thinned Monday thanks to US banks shutting for Labour Day. In light of the muted start to the week, the technical background remains unaltered.

Under the influence of channel resistance, drawn from the high $0.7271, Friday concluded a touch off best levels. Earlier, however, commanded a bullish presence and formed a clear-cut decision point at $0.7393-0.7410 to drive through daily Quasimodo resistance mentioned above at $0.7414 (now a serving support).

Dip-buyers are likely to show interest in $0.7393-0.7410 should a test form, aided by channel support, taken from the low $0.7107, and neighbouring daily support at $0.7414. A realistic upside objective resides at $0.7494: a Quasimodo resistance joined by a 1.618% Fib projection at $0.7497.

H1 timeframe:

The decision point underlined in Monday’s technical briefing at $0.7429-0.7438 had its limits challenged yesterday, possibly concerning longs at this base.

Below the area is $0.74, which shares chart space with the 100-period simple moving average at $0.7392. North of the decision point, nonetheless, draws attention to Quasimodo resistance at $0.7472 and the $0.75 region.

The relative strength index (RSI) is seen crawling along the lower edge of its range between overbought and the 50.00ish level. The 40.00-50.00 area acting as oversold is common during lengthy moves higher. Therefore, it’s worth keeping a close eye on this area.

Observed levels:

In light of the lacklustre performance Monday, the observed levels remain unchanged.

From the bigger picture, observing daily price manoeuvre north of Quasimodo resistance at $0.7414 communicates a bullish vibe towards resistance between $0.7665 and $0.7590.

With this in mind, the H4 decision point at $0.7393-0.7410 offers a primary area of support. Not only joined closely by daily support at $0.7414, the H4 zone also works closely with H4 channel support.

Chart studies, therefore, suggest the H1 decision point at $0.7429-0.7438 echoes a precarious tone. This places $0.74 in the line of fire as a possible support, joined by the noted H4 supports underlined above.

Ultimately, any bullish scenario may take aim at $0.75ish, based on the H4 technical picture.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, September trades 0.1 percent in the red.

Daily timeframe:

Analysis unchanged from previous writing.

Technical support is evident around the 61.8% Fib retracement at ¥109.07. More engaging, nonetheless, is the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41, reinforced by supply-turned demand at ¥107.58-106.85.

When it comes to trend, USD/JPY has been higher in 2021.

From the relative strength index (RSI), a range has been in process between 40.94 and 54.43 since early July. This tells traders that upside momentum is weak: average losses exceed average gains.

H4 timeframe:

Analysis unchanged from previous writing.

Last week witnessed the unit cross swords with supply at ¥110.56-110.29 and subsequently explore lower levels.

Upside momentum, as demonstrated through the three blue arrows, has been diminishing since mid-August, which alerted traders to a possible bearish theme from the aforementioned supply.

Continued interest to the downside faces Quasimodo support at ¥109.48, with a break uncovering two Quasimodo support levels at ¥108.88 and ¥108.83.

H1 timeframe:

Despite Monday’s thin trading conditions, the currency pair extended recovery gains north of a mild Fibonacci cluster around ¥109.62ish (61.8% and 78.6%).

The decision point at ¥109.97-109.90, which connects with the 100-period simple moving average at $109.96 and is situated just south of $110, also made an entrance. There was very little on the charts suggesting a whipsaw above $110, hence the decision point standing firm.

Voyaging beneath the noted Fibonacci cluster underlines the ¥109 figure as a possible downside objective.

As for the relative strength index (RSI), we are testing the mettle of the 50.00 centreline, following a recent move out of oversold.

Observed levels:

From a shorter-term perspective, H4 Quasimodo support at ¥109.48 is unlikely to provide much of a floor if tested. A more realistic downside target is two Quasimodo support levels at ¥108.88 and ¥108.83, as they align closely with the daily timeframe’s 61.8% Fib retracement at ¥109.07.

As a result of the above, the H1 may welcome a bearish theme, with sellers possibly looking to take action south of the decision point at ¥109.97-109.90 for a potential break through the Fibonacci cluster between ¥109.58 and ¥109.63, targeting ¥109ish.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since February, GBP/USD has echoed an indecisive environment below $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, September trades 0.6 percent higher.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Analysis unchanged from previous writing.

The key technical move on the daily chart to be mindful of is the recent price cross above the 200-day simple moving average at $1.3808, a move some technicians label as bullish. This follows August 23rd recovery from Quasimodo support at $1.3609.

Overhead, resistance resides at $1.4003.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum is gaining traction, according to the relative strength index (RSI) crossing above the 50.00 centreline. This shows average gains exceed average losses.

H4 timeframe:

Analysis unchanged from previous writing.

$1.3939-1.3887 resistance made an appearance heading into the close Friday.

The $1.3766-1.3799 decision point is now in range as a possible downside objective, a base underpinning the 200-day simple moving average on the daily at $1.3808.

H1 timeframe:

Analysis unchanged from previous writing.

Situated a handful of pips beneath $1.39, Quasimodo resistance put in an appearance at $1.3890 a few hours ahead of the close on Friday. With that, a bout of profit taking emerged, and, with Monday’s modest decline, highlights a possible retest of $1.38.

$1.38 has ‘whipsaw’ written all over it. Potentially heavy bids, therefore, might be attracted to the area marked in yellow between $1.3774 and $1.3787 in order to welcome sell-stops beneath $1.38.

From the relative strength index (RSI), we are now below the 50.00 centreline, meaning average losses exceed average gains. The break of 50.00 helps confirm short-term bearish intent.

Observed levels:

Outlook unchanged from previous writing.

The daily timeframe making its way above the 200-day simple moving average at $1.3808 is considered a bullish signal among many technical traders, and could encourage buying.

The H4 decision point at $1.3766-1.3799 is well placed to receive sellers. In addition to this, the H1 timeframe’s $1.38 base is positioned nearby, which is calling for a whipsaw to the H1 area marked in yellow between $1.3774 and $1.3787.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

USD/JPY Price Forecast – Dollar Continues to Sit at The ¥110 Region

The US dollar has rallied during the trading session on Monday to kick off a very quiet session mainly due to the fact that the United States and Canada were both celebrating Labor Day. Because of this, there would have been a significant amount of liquidity missing from the market, as the major banks in New York were not online. Ultimately, we need to see what happens in a complete cycle around the world, and we did not get that opportunity on Monday. However, as we have seen multiple times before, the ¥110 level seems to be a bit of a anchor for price.

USD/JPY Video 07.09.21

The 50 day EMA is also going sideways at this point, as the indicator tends to be widely followed. With that being sideways, that suggests that we just do not have anywhere to go in the meantime. To the upside, the ¥110.75 level is an area that will probably continue to show resistance, just as the ¥109 level underneath will offer support. This is especially true as the 200 day EMA is starting to reach towards that ¥109 level.

This is a pair that is highly sensitive to risk appetite as the Japanese yen is considered to be a “safety currency” that a lot of people will run towards if there is concerned. Furthermore, you need to keep an eye on the interest rate differential between the United States and Japan, especially on the 10 year bond market. Those markets do tend to move the differential in this pair quite drastically, so that of course comes into play as well. In the short term though, I would not expect too much.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Shakes Off Jobs Report Blues in Big Central Bank Week

The dollar index, which measures the currency against six rivals, edged 0.1% higher to 92.23, after dipping to 91.941 for the first time since Aug. 4 on Friday, when a closely watched U.S. labour report showed the world’s largest economy created the fewest jobs in seven months in August.

But the weak jobs report did not spark a new wave of dollar selling on Monday as the greenback spent the Asian session pushing higher against its rivals, prompting some major currencies including the euro and the Australian dollar to move back to pre-Friday jobs report levels.

Benchmark 10-year U.S. Treasury yields firming to more than one-week highs also boosted the dollar. U.S. markets are shut for a holiday, contributing to lower volumes.

While analysts remain bearish on the outlook for the greenback with Citibank strategists expecting it to weaken in the coming months as the Fed postpones tapering plans to November, hedge funds have quietly ramped up bullish bets.

Latest data showed they have increased bets on the greenback versus the euro for a second consecutive week, boosting net bets to their highest since March 2020.

Most of the dollar’s gains was focused on the Australian dollar which weakened 0.17% to $0.7435 ahead of a central bank decision on Tuesday where analysts remain divided on whether the Reserve Bank of Australia will call time on its stimulus plans.

National Australia Bank predicts the central bank will reduce asset purchases again, “although the optics of tapering amid protracted lockdowns means it is likely to be a close decision,” NAB analyst Tapas Strickland wrote in a report.

The euro also failed to extend its gains on Monday after rising above the $1.19 levels for the first time since the end of July. It was trading 0.1% weaker at $1.1873 before an European Central Bank policy decision on Thursday.

Economists reckon it is still too early for the ECB to call time on emergency stimulus, but it could agree to slow the pace of its bond buys after euro area inflation surged to a 10-year high at 3% last week.

In cryptocurrencies, bitcoin was about flat at $51,785.60, after earlier touching $51,920, a level not seen since May 12. Smaller rival ether traded little changed at $3,942.77 after topping $4,000 last week for the first time since mid-May.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Saikat Chatterjee; Editing by Alexander Smith)

USD/JPY Forex Technical Analysis – Strengthens Over 109.957, Weakens Under 109.590; Low Volume to Hamper Trade

The Dollar/Yen is edging higher early Monday on light volume as investors try to claw back some of its losses from Friday. Trading volumes are expected to remain low with U.S. markets closed for the Labor Day holiday.

At 05:29 GMT, the USD/JPY is trading 109.803, up 0.095 or +0.09%.

The early price action also suggests traders are still assessing the impact of Friday’s U.S. Non-Farm Payrolls report on future Federal Reserve policy.

The initial reaction to the headline number on Friday was bearish, but late in the session, traders took notice of the jump in Average Hourly Earnings and a drop in the unemployment rate. Both suggested the economy may not be as weak as initially suspected. This news helped drive Treasury yields higher which probably put a floor in the USD/JPY.

Nonetheless, the general consensus among traders is that the Fed will not announce plans to taper at its September 21-22 policy meeting.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.590 will change the main trend to down. A move through 110.420 will signal a resumption of the uptrend.

On the downside, the support comes in at 109.569 to 109.076. On the upside, the resistance zone is 110.185 to 110.531.

The short-term range is 110.800 to 109.114. The USD/USD is currently trading below its pivot at 109.957.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to 109.707.

Bullish Scenario

A sustained move over 109.707 will indicate the presence of buyers. This could lead to a labored rally with potential upside targets coming in at 109.957, 110.185, 110.420 and 110.531.

Bearish Scenario

A sustained move under 109.707 will signal the presence of sellers. The first downside target is a support cluster at 109.569 to 109.590.

Prices could start to accelerate to the downside if 109.590 is taken out with strong volume. The first target is the minor bottom at 109.414, followed by the main bottom at 109.114 and the Fibonacci level at 109.076.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data from Germany Puts the EUR in the Spotlight

Earlier in the Day:

It was a quiet start to the day on the economic calendar this morning. There were no major stats for the Asian markets to consider in the early hours. The lack of stats left the markets to respond to the U.S nonfarm payroll numbers from Friday.

The Majors

At the time of writing, the Japanese Yen was down by 0.02% to ¥109.730 against the U.S Dollar, with the Aussie Dollar down by 0.09% to $0.7453. The Kiwi Dollar was down by 0.04% to $0.7155.

The Day Ahead

For the EUR

It’s a relatively quiet start to the week on the economic data front.  German factory orders are due out along with German construction PMI figures.

Following some disappointing numbers out of China last week, weak factory orders would likely test EUR support upon release.

At the time of writing, the EUR was up by 0.02% to $1.1882.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Construction sector PMI numbers for August are due out later today.

We don’t expect too much influence from the numbers, however, leaving the Pound in the hands of market risk sentiment.

At the time of writing, the Pound was down by 0.05% to $1.3864.

Across the Pond

There are no stats due out of the U.S, with the markets closed for Labor day.

At the time of writing, the U.S Dollar Spot Index was flat at 92.116.

For the Loonie

There are no stats due out of Canada, with the Canadian markets closed for Labor Day. The lack of stats will leave the Loonie in the hands of market risk sentiment and crude oil prices.

At the time of writing, the Loonie was down by 0.03% to C$1.2528 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Introduction to the Major Fundamental Influences on Forex Prices

When most individuals think of trading, they think of stocks and futures. This is probably because of the long-term history of these investment vehicles. Some may even think of cryptocurrencies because of their huge popularity with a younger generation of investors.

What they may not realize, however, that in terms of market value, there is one asset class that dwarfs them all and, in fact, some may not have even realized that they’ve already speculated in it when they’ve traveled internationally or bought something from a foreign country.

This huge investment class is the foreign exchange market, also known as FOREX. In the FOREX market, an estimated $6 trillion is traded on a daily basis. To put this in perspective, the U.S. stock market trades around $257 billion a day; quite a large sum, but only a fraction of what FOREX trades.

For a novice trader, there is a lot to learn about trading in the foreign exchange market because it lacks the familiarity of stocks like Apple, IBM and Google, as well as the glamor of gold and silver futures.

Before even attempting to trade or invest in the FOREX market, individuals have to become aware of the macro-economic and geo-political factors that help drive the price action in this trading vehicle.

Table of contents

What is FOREX?

Simply stated, the word FOREX is derived by combining parts of foreign currency and exchange. It is also referred to as FX trading.

Foreign exchange is the process of changing one currency into another for a variety of reasons, usually for commerce, trading, finance or tourism. FOREX markets tend to be the largest and most liquid asset markets in the world.

Briefly, Forex markets exist as spot (cash) markets as well as derivatives markets, offering forwards, futures, options, and currency swaps.

Market participants use Forex to hedge against international currency and interest rate risk, to speculate on geopolitical events, and to diversify portfolios, among other reasons.

What is a FOREX Pair?

In foreign exchange, currencies trade against each other as exchange rate pairs. For example, EUR/USD is a currency pair for trading the Euro against the U.S. Dollar.

A FOREX pair or currency pair is simply the quotation of the value of a given currency against another. The first is termed the base currency and is the currency being sold, while the second is known as the quote currency and is the currency being bought.

For example, the quotation EUR/USD = 1.0700 would mean 1 Euro is exchanged for $US1.07.

What are the Factors Affecting Forex Pairs?

If you desire to become a successful FOREX trader then you have to develop an understanding of the fundamentals that drive the price action. This is the information that will help you to establish an informed hypothesis about whether a particular FOREX pair is being fairly valued at present and what potential upsides or downsides might be from current price levels.

These include: central bank policy, interest rates, inflation, economic growth, trade data, and political/government factors.

How Does Central Bank Policy Influence FOREX Prices?

The major central banks influence Forex prices by controlling open market operations and interest rate policies. They are responsible for fixing the price of its domestic currency on Forex.

Any action taken by a central bank in the FOREX market is done to stabilize or increase the competitiveness of that country’s economy. A central bank may weaken its own currency by creating additional supply during periods of long deflationary trends, which is then used to purchase foreign currency. This effectively weakens the domestic currency, making exports more competitive in the global market.

Central banks use these strategies to calm inflation. Their doing so also serves as a long-term indicator for FOREX traders.

How Do Interest Rates Influence FOREX Prices?

Interest rates have a significant influence on currency movements. So much so that a currency pair will often spike up or down following a central bank announcement.

The main reason for the volatility is the so-called carry trade, where investors borrow at lower interest rates in one currency and invest at higher interest rates in another.

Basically, investors tend to chase yields so when a central bank raises rates, it tends to make that country’s currency a more attractive investment.

How Does Inflation Influence FOREX Prices?

Central banks raise and lower interest rates to control inflation. Therefore, movement in the inflation rate can impact currency prices. For example, if a country’s central bank believes inflation is rising too quickly, it may raise interest rates to lift the cost of borrowing and to take money out of the system. This action is designed to slow the economy.

For this reason, the national consumer price index (CPI) is one of the most closely watched pieces of information for FOREX traders.

How Does Economic Growth Influence FOREX Prices?

Economic growth is tied directly to the inflation rate, which relates to interest rates. When a country’s economy is growing quickly as measured by the Gross Domestic Product (GDP), for example, the rate of inflation will typically start to rise. This usually means the central bank will need to lift interest rates to slow the rate of growth.

This is why the currency of a country showing strong economic growth will often appreciate against those of other countries showing slow or negative growth.

How Does Trade Data Influence FOREX Prices?

Balance of Trade data, which is based on the relationship between a country’s imports and exports, also has an impact on the direction of a currency’s prices. Trade figures can also be seen by some as a sign of the strength of the economy, which in turn has implications for inflation and interest rates, and therefore the domestic currency.

If a country is exporting more goods than it imports, for example, it increases demand for its currency as the money used to pay for those exports ultimately needs to be converted into the domestic currency.

How Does Political/Government Factors Influence FOREX Prices?

Government policy can have profound implications on FOREX prices especially if it influences the inflation rate.

A government could decide to trim spending and pay down debt, which may end up causing the economy to slow.

Following the pandemic of 2020, many governments flooded their economies with fiscal stimulus. As this money trickled through the economy, it caused inflation which is fueling a response from central banks in the form of interest rate hikes.

In response, Forex markets have experienced heightened volatility as the major central banks race to stem runaway inflation by raising rates. Investors will become more attracted to the currency of the country that raises interest rates more aggressively.

Other Factors to Consider When Trading FOREX

Although fundamental data and daily news events play a major role in the price action of a currency, it is important to note that an estimated 90% of the daily FOREX volume is fueled by speculators (traders). So in addition to knowing the major fundamental influences on the long-term direction of currencies, traders will also need to learn about the technical factors that play a major role in the movement of currency prices.

The Week Ahead – Monetary Policy Decisions Put the EUR, the Loonie, and the Aussie Dollar in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 38 stats in focus in the week ending 10th September. In the week prior, 80 stats had also been in focus.

For the Dollar:

It’s a quiet week ahead and a quiet start to the week, with the U.S markets closed for Labor Day on Monday.

On Tuesday, JOLT’s job openings will draw interest, with little else for the markets to consider.

The focus will then shift to the weekly jobless claim figures on Thursday.

Wholesale inflation numbers wrap things up at the end of the week.

In the week ending 3rd September, the Dollar Spot Index fell by 0.70% to 92.035.

For the EUR:

It’s a relatively busy week on the economic data front.

The German economy will be back in the spotlight in the week ahead.

German factory orders and industrial production figures will be in focus on Monday and Tuesday.

On Thursday, German trade data will also draw plenty of attention.

ZEW Economic Sentiment figures for Germany and the Eurozone will also influence on Tuesday.

The main event of the week, however, will be the ECB monetary policy decision.

With the markets expecting the ECB to stand pat on policy, the focus will be on the ECB Press Conference. Will the ECB continue to see reflation as transitory?

For the week, the EUR rose by 0.72% to $1.1880.

For the Pound:

It’s a busier week ahead on the economic calendar.

BRC Retail sales figures will be in focus early in the week. With the markets looking to see how the UK economy is faring, the numbers should have more influence than usual.

A lack of stats mid-week will leave the Pound in the hands of market risk sentiment ahead of a busy Friday.

Industrial and manufacturing production and trade data due out on Friday will be the key stats of the week.

The Pound ended the week up by 0.78% to $1.3871.

For the Loonie:

It’s a quiet week ahead on the economic calendar.

Ivey PMI numbers will be in focus on Wednesday ahead of employment figures on Friday.

While the employment numbers will be key, the BoC policy decision on Wednesday will be the main event.

BoC forward guidance will be the key area of focus on the day.

The Loonie ended the week up 0.76% to C$1.2524 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no material stats to consider in the week.

While it’s a quiet week on the economic data front, the RBA is in action on Tuesday.

Have the latest lockdown measures left the RBA in a lengthier holding pattern on policy?

The Aussie Dollar ended the week up by 2.02% to $0.7460.

For the Kiwi Dollar:

It’s a quiet week ahead.

Electronic card retail sales figures on Friday will be the only key stat of the week.

From elsewhere, economic data from China will also influence, as will COVID-19 news updates.

The Kiwi Dollar ended the week up by 2.10% to $0.7158.

For the Japanese Yen:

Household spending will be in focus on Tuesday. On Wednesday, 2nd quarter GDP numbers will also draw interest. The markets will be looking for any revisions from the 1st estimates.

The Japanese Yen rose by 0.12% to ¥109.71 against the U.S Dollar.

Out of China

Trade data will have a material impact on market risk sentiment on Tuesday.

Private sector PMIs for July and August disappointed. Weak trade data will raise further question marks over the economic recovery.

With inflation still a hot topic, Inflation numbers on Thursday will also be key.

The Chinese Yuan ended the week up by 0.25% to CNY6.4560 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia will continue to be the main areas of interest for the markets. News updates from the Middle East, in particular, will need monitoring following recent events in Afghanistan.

Weekly Technical Market Insight: 6th – 10th September 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

The US dollar—measured by the US dollar index—extended losses last week, down 0.6 percent.

Back-to-back weekly declines, south of a Fibonacci cluster (resistance) between 94.07 and 93.90, pulled the benchmark to within reach of July 30th low at 91.78. A subsequent drop this week (taking out 91.78 stops) exposes the 200-day simple moving average at 91.33 (mean price), grouped together with substantial support at 90.64-91.40 and neighbouring demand at 90.32-90.70.

From a trend perspective, the buck has exhibited a modest bullish phase since the beginning of the year, following sizeable declines in 2020. After realising support at 89.34 (a level displaying historical significance since early 2009), the index eventually clocked fresh highs at 93.73 in late August this year. Of note, year-to-date movement is higher by 2.4 percent.

The relative strength index (RSI), a popular momentum gauge, muscled through key support between 40.76 and 47.49 last week. This informs technicians average losses exceed average gains; momentum is, therefore, to the downside, unlocking the likelihood of oversold space making an entrance, in particular support at 21.36.

  • Technically speaking, a test of support at 90.64-91.40 emerging this week should not surprise. Tripping sell-stops south of July 30th low at 91.78 is likely to exacerbate any selling. Efforts to hold 90.64-91.40 may also fuse with an RSI oversold signal.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

South of ascending support-turned resistance, taken from the low $1.1641, June’s 3.0 percent loss persuaded EUR/USD to retest support from $1.1857-1.1352. A bullish revival shines light on 2021 peaks at $1.2349.

Month to date, September trades 0.6 percent higher.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technically underpinned by Quasimodo support priced in from $1.1688, the currency pair—with the exception of one session—has shaped a series of daily gains since August 20th.

Friday, as you can see, touched gloves with late July tops at $1.1909ish, though closed considerably off the high. Cementing a close north of the latter this week seats resistance between $1.2033 and $1.1994, arranged by way of a 61.8% Fib, the 200-day simple moving average and a Quasimodo support-turned resistance. What’s interesting here is a break of $1.1909 highs likely trips buy-stops, fuelling $1.2033-1.1994 offers.

With regards to long-term trend, 2021 has been directionless, despite healthy gains in 2020.

As for momentum, the relative strength index (RSI) is on the verge of crossing swords with trendline resistance just ahead of overbought territory. Also of note is resistance plotted at 80.39. This shows momentum is perhaps gearing up to level off.

H4 timeframe:

$1.1907 resistance, a level holding back buyers since late June, called for attention Friday. The interesting feature, however, is the stops above this level, and clear zone of resistance at $1.1955-1.1933.

Buy-stops arranged above $1.1907 may be enough to fuel offers at $1.1955-1.1933, creating a short-term bearish phase back to at least $1.1907.

H1 timeframe:

Following Friday’s mammoth job’s miss, EUR/USD initially popped higher and challenged $1.19, which predictably served as resistance.

$1.19 is joined by a number of key technical levels, including a 100% Fib projection at $1.1904, a longer-term 38.2% Fib retracement at $1.1896 (taken from the $1.2266 May 25th high), a 1.618% Fib expansion at $1.1913, as well as channel resistance, extended from the high $1.1845.

Should sellers govern control early week, channel support, taken from the low $1.1735, is a key watch, an ascending base sharing chart space with a 100% Fib projection at $1.1860 and a 61.8% Fib retracement at $1.1863. South of here, demand—albeit not fresh—falls in at $1.1812-1.1824.

In terms of where we stand on the relative strength index (RSI), the indicator is establishing an oversold threshold between 40.00 and 50.00, which is common in rising markets. In effect, we’re now working with a range between the aforesaid values and overbought.

Observed levels:

Long term:

Recognising monthly flow testing support at $1.1857-1.1352, downside movement on the daily timeframe could be limited from late July tops at $1.1909.

Any upside attempts on the daily scale shines the technical spotlight on resistance between $1.2033 and 1.1994.

Short term:

Against the backdrop of longer-term action, the H1 chart, after defending $1.19 resistance, suggests a test of channel support at the $1.1860ish zone, which may align with a H1 RSI oversold signal around 40.00-50.00.

The above could send the unit higher from $1.1860, in line with the H4 technical projection: breaching $1.1907 resistance to tackle $1.1955-1.1933 offers.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Month to date, September is higher by 1.9 percent, consequently trimming a portion of the recent three-month decline.

Long-term areas to be mindful of are support at $0.6305-0.6872 and supply coming in at $0.8303-0.8082, along with trendline support-turned resistance, taken from the low $1.4776.

Trend studies (despite the trendline resistance [drawn from the high $1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

AUD/USD bulls remained on the offensive last week, rising through Quasimodo resistance at $0.7414. Note should a $0.7414 retest emerge this week, and the barrier develops support, addressing resistance between $0.7665 and $0.7590 is possible (made up of a 61.8% Fib retracement at $0.7665, a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7604 and another 61.8% Fib retracement at $0.7590).

Interestingly, the relative strength index (RSI) climbed above trend line resistance, taken from the high 80.12. This places overbought space in range.

H4 timeframe:

Under the influence of channel resistance, drawn from the high $0.7271, Friday concluded a touch off best levels. Earlier, however, commanded a bullish presence and formed a clear-cut decision point at $0.7393-0.7410 to drive through daily Quasimodo resistance at $0.7414 (now a serving support).

Dip-buyers are likely to show interest in $0.7393-0.7410 should a test form, aided by channel support, taken from the low $0.7107, and neighbouring daily support at $0.7414. A realistic upside objective resides at $0.7494: a Quasimodo resistance joined by a 1.618% Fib projection at $0.7497.

H1 timeframe:

Friday, on the back of a much lower-than-expected NFP print, welcomed upside, a move establishing a decision point at $0.7429-0.7438 that penetrated supply coming in from $0.7450-0.7436.

Quasimodo resistance at $0.7472 also made an entrance, which persuaded a $0.7429-0.7438 test.

With buyers and sellers likely to square off between $0.7472 and $0.7429-0.7438 early week, additional levels to be mindful of are $0.74 and $0.75.

The relative strength index (RSI), similar to EUR/USD, recently launched a consolidation between overbought and the 50.00ish range. This is common during lengthy moves higher. Consequently, it’s worth keeping a close eye on these barriers.

Observed levels:

Long term:

Observing daily price manoeuvre north of Quasimodo resistance at $0.7414 last week communicates a bullish vibe towards resistance between $0.7665 and $0.7590.

Short term:

With the bigger picture in mind, the H4 decision point at $0.7393-0.7410 offers a primary area of support this week. Not only joined closely by daily support at $0.7414, the H4 zone also works closely with H4 channel support.

Chart studies, therefore, suggest the H1 decision point at $0.7429-0.7438 echoes a precarious tone. This places $0.74 in the line of fire as a possible support this week, joined by the noted H4 supports underlined above.

Ultimately, though, any bullish scenario may take aim at $0.75ish, based on the H4 technical picture.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, September trades 0.3 percent in the red.

Daily timeframe:

Weighed by NFP-induced USD softness, USD/JPY ended Friday marginally off session lows.

Technical support is evident around the 61.8% Fib retracement at ¥109.07. More engaging, nonetheless, is the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41, reinforced by supply-turned demand at ¥107.58-106.85.

When it comes to trend, USD/JPY has been higher in 2021.

From the relative strength index (RSI), a range has been in process between 40.94 and 54.43 since early July. This tells traders that upside momentum is weak: average losses exceed average gains.

H4 timeframe:

Mid-week trading witnessed the unit cross swords with supply at ¥110.56-110.29 and subsequently explore lower levels.

Upside momentum, as demonstrated through the three blue arrows, has been diminishing since mid-August, which alerted traders to a possible bearish theme from the aforementioned supply. Continued interest to the downside this week faces Quasimodo support at ¥109.48, with a break uncovering two Quasimodo support levels at ¥108.88 and ¥108.83.

H1 timeframe:

Friday’s thinly bid market allowed short-term action to challenge an interesting Fibonacci cluster between ¥109.58 and ¥109.63.

On top of this, the relative strength index (RSI) registered an oversold signal, and price developed a reasonable decision point at ¥109.97-109.97, situated just south of $110 and the 100-period simple moving average at $109.97.

Voyaging beneath the noted Fib structure underlines the ¥109 figure as a possible downside objective.

Observed levels:

Long term:

Monthly price occupying area above descending resistance-turned support delivers a bullish tone, long term.

The 61.8% Fib retracement at ¥109.07 on the daily timeframe, therefore, could accommodate buyers this week, as may the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41.

Short term:

From a shorter-term perspective, H4 Quasimodo support at ¥109.48 is unlikely to provide much of a floor if tested. A more realistic downside target is two Quasimodo support levels at ¥108.88 and ¥108.83, as they align closely with the daily timeframe’s 61.8% Fib retracement at ¥109.07.

As a result of the above, the week may welcome a bearish theme, with H1 sellers possibly looking to take action south of the Fibonacci cluster between ¥109.58 and ¥109.63, targeting ¥109ish.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since February, GBP/USD has echoed an indecisive environment below $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, September trades 0.7 percent higher.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

The key technical move on the daily chart last week was price engulfing the 200-day simple moving average at $1.3808. This follows August 23rd recovery from Quasimodo support at $1.3609.

Overhead, resistance resides at $1.4003.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum is gaining traction, according to the relative strength index (RSI) crossing above the 50.00 centreline, a move that underlines average gains exceed average losses.

H4 timeframe:

We’re faced with a reasonably simple setting on the H4 scale early week.

$1.3939-1.3887 resistance made an appearance heading into the close Friday, following an earlier advance that was sponsored on the back of a huge NFP miss.

The $1.3766-1.3799 decision point is now in range as a possible downside objective, a base underpinning the 200-day simple moving average on the daily at $1.3808.

H1 timeframe:

Situated a handful of pips beneath $1.39, Quasimodo resistance put in an appearance at $1.3890 a few hours ahead of the close on Friday. With that, a bout of profit taking emerged, and highlights a possible retest of $1.38 early week.

$1.38 has ‘whipsaw’ written all over it. Potentially heavy bids, therefore, might be attracted to the area marked in yellow between $1.3774 and $1.3787 in order to welcome sell-stops beneath $1.38.

Additional observations out of the relative strength index (RSI) show the indicator chalked up bearish divergence and is now within striking distance of the 50.00 centreline. A break beneath the latter helps confirm bearish intent.

Observed levels:

Long term:

The daily timeframe making its way above the 200-day simple moving average at $1.3808 is considered a bullish signal among many technical traders, and could encourage a bullish scene this week.

Short term:

The H4 decision point at $1.3766-1.3799 is well placed to receive sellers. In addition to this, the H1 timeframe’s $1.38 base is positioned nearby, which is calling for a whipsaw to the H1 area marked in yellow between $1.3774 and $1.3787.

The combination of a bullish cue on the daily timeframe, along with H4 and H1 timeframes working in somewhat harmony at the moment, signals buyers may be drawn to the $1.38ish range this week.

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The Weekly Wrap – A Particularly Busy Economic Calendar Left the Greenback in the Red

The Stats

It was a particularly busy week on the economic calendar, in the week ending 3rd September.

A total of 80 stats were monitored, which was up from 49 stats in the week prior.

Of the 81 stats, 34 came in ahead forecasts, with 41 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 34 of the stats reflected an upward trend from previous figures. Of the remaining 46 stats, 41 reflected a deterioration from previous.

For the Greenback, FED monetary policy and economic data delivered Dollar weakness. In the week ending 3rd September, the Dollar Spot Index fell by 0.70% to 92.035. In the previous week, the Dollar had fallen by 0.88% to 92.653.

Out of the U.S

Early in the week, consumer confidence figures delivered yet more bad news. In August, the CB Consumer Confidence Index fell from 129.1 to 113.8, as the Delta variant continued to spread.

ADP nonfarm employment change figures on Wednesday also failed to impress. Nonfarm payrolls increased by 374k in August following a modest 326k rise in July.

On Thursday, jobless claim figures were somewhat better, with claims falling from 354k to 340k in the week ending 27th September.

At the end of the week, however, it was official nonfarm payroll figures that were key.

Falling well short of a forecasted 665k increase, payrolls rose by just 243k in August. In July, payrolls had jumped by 1,053k.

In spite of the weak number, the unemployment rate fell from 5.4% to 5.2% to further muddy the waters on FED policy.

From the private sector, the numbers were mixed. The ISM Manufacturing PMI rose from 59.5 to 59.9, while the all-important Non-Manufacturing PMI fell from 64.1 to 61.7.

Out of the UK

Economic data was on the lighter side once more. Finalized private sector PMIs for August disappointed in the week.

The all-important services PMI fell from 59.6 to 55.0, which was down from a prelim 55.5. Of less significance was a fall in the manufacturing PMI from 60.4 to 60.3, which was up from a prelim 60.1.

In the week, the Pound rose by 0.78% to end the week at $1.3871. In the week prior, the Pound had risen by 1.04% to $1.3764.

The FTSE100 ended the week down by 0.14%, partially reversing a 0.85% loss gain the previous week.

Out of the Eurozone

Private sector PMIs for August, French GDP, German unemployment, and prelim August inflation figures were in focus.

While inflationary pressures picked up once more in August, private sector PMIs delivered mixed results in the week.

According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August. The core annual rate of inflation picked up from 0.7% to 1.6%.

French GDP numbers for the 2nd quarter were also upbeat, with the French economy expanding by 1.1% in Q2.  In the previous quarter, the French economy had stagnated.

While Germany’s unemployment rate fell from 5.6% to 5.5% in July, retail sales slid by 5.1%, reversing a 4.5% increase from June. French consumer spending was also woeful, falling by 2.2%. In June, consumer spending had risen by just 0.3%.

Private sector PMIs were weaker but not weak enough to cause a stir.

The Eurozone’s composite PMI fell from 60.2 to 59.0, which was down from a prelim 59.5. In August, the Eurozone’s services PMI fell from 59.8 to 59.0, with the manufacturing PMI declining from 62.8 to 61.4.

For the week, the EUR rose by 0.83% to $1.1795. In the week prior, the EUR had fallen by 0.84% to $1.1698.

The CAC40 rose by 0.12%, while the DAX30 and the EuroStoxx600 ended the week with losses of 0.45% and 0.09% respectively.

For the Loonie

GDP and trade data were the key stats of the week.

In the 2nd quarter, the Canadian economy contracted by 0.3%, quarter-on-quarter. The economy had expanded by 0.3% in the previous quarter.

On an annualized basis, the economy contracted by 1.1% after having expanded by 5.5% in the quarter prior.

Trade figures were also weak, with the trade surplus narrowing from C$2.56bn to C$0.78bn.

While the stats were disappointing, crude oil prices held relatively steady following the previous week’s rebound, to deliver support.

In the week ending 3rd September, the Loonie rose by 0.76% to C$1.2524. In the week prior, the Loonie had rallied by 1.57% to C$1.2620.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar rallied by 2.02% to $0.7460, with the Kiwi Dollar ending the week up by 2.10% to $0.7158.

For the Aussie Dollar

Company gross operating profits were upbeat for the 2nd quarter, surging by 7.1%. In the previous quarter, profits had fallen by 0.3%.

Private sector credit rose by 0.7% off the back of a 0.9% increase in June.

Also positive were GDP numbers for the 2nd quarter. Year-on-year, the economy grew by 9.6% compared with 1.1% in the previous quarter. Quarter-on-quarter, the economy expanded by 0.7% after having expanded by 1.8% in the quarter prior.

Trade data on Thursday were upbeat, with the trade surplus widening from A$10.496bn to A$12.117bn.

Retail sales figures were negative, however. In July, retail sales fell by 2.7%, which was in line with prelim figures. Lockdown measures weighed, with sales having fallen by 1.8% in June.

For the Kiwi Dollar

It was a relatively quiet week, with business confidence in focus.

In August, the ANZ Business Confidence Index slid from -3.8 to -14.2. While negative for the Kiwi, the markets were in forgiving mood, however. Expectations of a rebound in confidence limited the damage.

For the Japanese Yen

It was a relatively busy week, with the numbers skewed to the positive.

Retail sales rose by 2.4% in July, which followed a more modest 0.1% increase in June.

Capital spending was also on the rise. In the 2nd quarter, capital spending rose by 5.3%, year-on-year, partially reversing a 7.8% slide from the previous quarter.

Industrial production fell by a relatively modest 1.5%, however, partially reversing a 6.5% jump from June.

Service sector PMI numbers also disappointed in August, falling from 47.4 to 42.9.

The Japanese Yen rose by 0.12% to ¥109.71 against the U.S Dollar. In the week prior, the Yen had fallen by 0.05% to ¥109.84.

Out of China

Private sector PMIs were key stats in the week and were skewed to the negative.

Both the NBS and the Markit Caixin figures disappointed.

According to the NBS, the manufacturing PMI fell from 50.4 to 50.1, with the non-manufacturing PMI falling from 53.3 to 47.5.

Of greater significance, however, was a fall in the Caixin Manufacturing PMI from 50.3 to 49.2.

According to the Markit Caixin survey, things were not much better for the services sector. The Caixin Services PMI slid from 54.9 to 46.7 in August.

In the week ending 3rd September, the Chinese Yuan rose by 0.25% to CNY6.4560. In the week prior, the Yuan had ended the week up by 0.45% to CNY6.4720.

The CSI300 and the Hang Seng ended the week up by 0.33% and by 1.94% respectively.

Global Stock Benchmark at New High, Dollar Slips

Labor Department data that showed wages increasing more than expected in August raised inflation fears and led longer-dated Treasury yields to jump, while gold advanced to a more than a 2-1/2-month high as the dollar eased.

MSCI’s all-country world index, which is heavily weighted to big U.S. tech, notched a new record as Apple Inc, Amazon.com Inc, Google parent Alphabet Inc and Facebook Inc advanced. The tech gains also helped the Nasdaq set a fresh closing high.

The Dow Industrials and S&P 500 fell as slower U.S. jobs growth raised questions about the pace of the recovery. But a Fed taper announcement is off the table in September, said Lee Ferridge, North American head of multi-asset strategy at State Street Global Markets.

“Support from the Fed for these markets is going to persist. Taper starts later rather than sooner. That’s positive for equities, that’s positive for risk,” he said.

“As long as the Fed is printing, then that means that the equity markets are supported by the whole QE liquidity argument,” Ferridge said.

U.S. employers created the fewest jobs in seven months in August as the Delta variant hurt the leisure and hospitality sector, but a 0.6% increase in wages showed underlying strength in the economy, the jobs report showed.

Nonfarm payrolls increased by 235,000 in August, well short of the 728,000 forecast by economists in a Reuters poll. But the unemployment rate fell to 5.2% from 5.4% in July.

MSCI’s ACWI, which is 60% U.S. equities, rose 0.11% to 746.46, while the Nasdaq gained 0.21%.

The S&P 500 index edged 0.03% lower and the Dow Jones Industrials fell 0.2%. The broad STOXX Europe 600 index of pan-regional stocks closed down 0.56%.

Euro zone business activity, meanwhile, remained strong last month, IHS Markit’s survey showed, suggesting the bloc’s economy could be back to pre-COVID-19 levels by year-end despite fears about the Delta variant.

The European Central Bank meets next week amid callsfrom several hawkish members to slow its pandemic-era asset purchase program. A Reuters poll sees the bank announcing acut to its asset purchases, given a recent spike in inflation.

Yields on the benchmark 10-year Treasury note rose 3 basis points to 1.324% as the U.S. labor report showed a jump in hourly earnings, a potential sign of future inflation.

The dollar index dropped to a low of 91.941, its lowest level since Aug. 4, and was last down 0.09% at 92.1320.

The euro traded flat at 1.1875. Markets are starting to react to the potential for more sustained euro zone inflation and reduced stimulus from the ECB.

The yen slid 0.19% to 109.72.

JAPAN JUMPS, CHINA EASES

Japanese shares jumped after officials said Prime Minister Yoshihide Suga would step down, setting the stage for a new premier after a one-year tenure marred by an unpopular COVID-19 response and rapidly dwindling public support.

Japan’s TOPIX stock index rose to a 30-year high and was last up 1.61%, with the Nikkei gaining 2%. Asian shares are still off their peaks from earlier in the year however, and lagging those elsewhere.

Meanwhile, Chinese blue chips were down 0.5% and Hong Kong was off 0.72% after activity in China’s services sector slumped into sharp contraction in August, a private survey showed on Friday, hurt by restrictions imposed to curb the Delta variant.

Oil prices slipped on the U.S. labor report showing a patchy recovery from the pandemic, but losses were capped by concerns U.S. crude supply would continue to be limited in the wake of Hurricane Ida, which cut offshore U.S. production.

Brent crude futures fell 42 cents to settle at $72.61 a barrel. U.S. crude slid 70 cents to settle at $69.29 a barrel.

Gold advanced more than 1% to its highest in 2-1/2 months as weak U.S. jobs growth drove the dollar lower and cast doubts on the Fed’s tapering timeline.

U.S. gold futures settled 1.2% higher at $1,833.70 an ounce.

(Reporting by Herbert Lash in New York, additional reporting by Huw Jones in London, Alun John in Hong Kong and Kevin Buckland in Tokyo; Editing by Andrea Ricci and Rosalba O’Brien)

Dollar Softens for Fourth Straight Day After U.S. Payrolls Miss

Nonfarm payrolls increased by 235,000 in August, well short of the 728,000 forecast by economists in a Reuters poll, while the unemployment rate dipped to 5.2% from 5.4% in the prior month.

The dollar index dropped to a low of 91.941, its lowest level since Aug. 4, and was last down 0.231% at 92.014. The index is down about 0.7% on the week.

The dollar has been subdued on uncertainty over the path of Fed policy. Fed Chair Jerome Powell said last Friday that while tapering of its stimulus could begin this year if job growth continues, the central bank was in no hurry to do so.

Rising COVID-19 cases in recent weeks have brought on concerns the economic recovery could stall. The jobs data will likely keep the Fed on hold.

“It adds more concern or focus on the October number, because now we want to see if there is a trend,” said JB Mackenzie, managing director for futures and forex at TD Ameritrade in Chicago.

“(The Fed) is trying to telegraph that if the economy continues to heat up and they need to take action, they will, and that transparency is important to the markets and that is one of the main reasons you continue to see not a huge reaction to the downside here because the market feels as though they have been given that clear direction.”

Mackenzie said the 92 level was an important support level for the greenback after having bounced back from that level in early August.

Separately, data from the Institute for Supply Management showed activity in the services sector grew at a moderate pace in August, with signs that rising prices and supply constraints were beginning to ease.

The euro strengthened against the greenback following the report, touching a high of 1.1909 to match its best level since July 30.

The single currency has been supported by data earlier this week that showed regional inflation at a decade high and hawkish comments from European Central Bank officials ahead of a policy meeting on Sept. 9.

The euro was last up 0.15% to $1.1891.

The Japanese yen strengthened 0.29% versus the greenback to 109.62 per dollar, gaining ground after the jobs data, but showed little reaction to Prime Minister Yoshihide Suga’s decision to step down at the end of the month.

In cryptocurrencies, Bitcoin last rose 2.2% to $50,358.39 while ethereum last rose 4.48% to $3,956.04 after rising as high as $4,025 to top the $4,000 mark for the first time since May 15.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Chuck Mikolajczak; Editing by Emelia Sithole-Matarise and Steve Orlofsky)

USD/JPY Weekly Price Forecast – US Dollar Gives Up Gains for The Week

The US dollar has rallied initially during the course of the week but gave back the gains to show a less than impressive candlestick. Keep in mind that this pair has been hovering around the ¥110 level for a while now, and simply seems as if it has nowhere to go. The 50 week EMA is trying to cross above the 200 week EMA, but the so-called “golden cross” is not as impressive on the weekly charts as far as what people pay attention to.

USD/JPY Video 06.09.21

When you look at this chart, you can see that we have nowhere to be at the moment, and I do not know if that changes anytime soon. We do see an influx of volume here and the next couple of weeks, as holiday season will finally be over. If we can break down below the ¥109 level, perhaps we could drop towards ¥107.50 next. On the other hand, breaking above the ¥110.75 level opens up a move towards the ¥112 level, an area that has been extraordinarily difficult to deal with for quite some time.

You should keep in mind that this pair is somewhat sensitive to risk appetite as the Japanese yen is considered to be the “ultimate risk off currency”, and therefore if we see a sudden selloff in the markets, it could send this pair much lower. Nonetheless, I think that longer-term traders are probably going to have to wait for an impulsive candlestick to put any real money to work. It just does not look as if this is setting up for a bigger move quite yet.

For a look at all of today’s economic events, check out our economic calendar.