What happened in the US session?
With practically an empty calendar during the US session, the dollar index (DXY) fell as low as 104.40 before consolidating around the 104-50-level. Despite demand for the US dollar waning yesterday, gold prices also pulled back to fall as low as $1,920/oz which highlighted the temporary breakdown in negative correlation between these two instruments for now.
What does it mean for the Asia Session?
With the DXY stabilizing around 104.50 overnight, it climbed as high as 104.65 at the beginning of the Asia session – it could continue to rise before resuming the downturn.
The Dollar Index (DXY)
Key news events today
NFIB Small Business Index (10:00 am GMT)
What can we expect from DXY today?
Although the NFIB Small Business Index increased marginally in July, small business owners continue to manage a challenging economic environment, forming a dismal view on future sales growth and business conditions. The estimate for August points to a slight fall for this index, reflecting the bleak outlook by small business owners. A much weaker than expected reading could act as a bearish catalyst for the DXY.
Next 24 Hours Bias
Weak Bearish
Tehnical
The current analysis of the DXY (US Dollar Index) chart indicates a prevailing bullish momentum. There is a prospect of a bullish rebound anticipated at the 1st support level at 104.41, which is characterized as an overlap support. Furthermore, the 2nd support level at 103.94 corresponds to an overlap support and conveniently aligns with the 50% Fibonacci Retracement level.
Conversely, on the resistance front, the 1st resistance at 105.09 signifies multi-swing high resistance, while the 2nd resistance at 105.61 is associated with the 161.80% Fibonacci Retracement. These levels are of particular interest as they are indicative of potential inflection points in the price movement
The Euro (EUR)
Key news events today
ZEW Economic Sentiment (9:00 am GMT)
What can we expect from EUR today?
Although still in negative territory, the ZEW Economic Sentiment for the Euro Area increased to -5.5 in August which was the highest reading in four months. With the Eurozone Composite PMI contracting for the third month in a row in August, it should come as no surprise that the estimate of -6.2 for September points to a deeper negative reading. A weaker than expected reading could be bearish for the Euro.
Next 24 Hours Bias
Weak Bearish
Technical
The EUR/USD chart currently demonstrates a bearish overall momentum, primarily attributed to its confinement within a bearish descending channel.
There’s a possibility of a bearish continuation in the near term, potentially leading the price to the 1st support level at 1.0689. This support level holds significance as it aligns with a swing low support. Additionally, the 2nd support at 1.0634, also corresponding to a swing low support, reinforces its potential role as a support zone.
On the resistance side, the 1st resistance at 1.0773 is noteworthy as it serves as overlap resistance and aligns with the 38.20% Fibonacci Retracement level. Furthermore, the 2nd resistance level at 1.0837 is significant as it represents overlap resistance and aligns with the 61.80% Fibonacci Retracement.
The Pound (GBP)
Key news events today
Claimant Count Change (6:00 am GMT)
Average Earnings Index (6:00 am GMT)
Unemployment Rate (6:00 am GMT)
What can we expect from GBP today?
The UK ‘s labour market data for the month of August will be released today which indicates a potential increase in the unemployment rate from 4.2% to 4.3% – the highest level since late-2021. However, the claimant count change points to just 17.1k people claiming unemployment benefits which would be quite a significant drop from July’s reading of 29k. An overall robust labour market report could function as a bullish catalyst for the Pound today.
Next 24 Hours Bias
Weak Bullish
Technical
The GBP/USD chart currently indicates a bearish overall momentum, suggesting a potential continuation of the bearish trend.
There’s a likelihood of a bearish continuation in the near term, potentially taking the price towards the 1st support level at 1.2448. This support level is significant as it aligns with an overlap support and the 127.20% Fibonacci Expansion.
Additionally, there’s another 1st support at 1.2372, marked as an overlap support, further reinforcing its potential as a support zone.
On the resistance side, the 1st resistance at 1.2533 is identified as an overlap resistance and aligns with the 61.80% Fibonacci Retracement level.
Furthermore, the 2nd resistance level at 1.2603 is marked as an overlap resistance. These resistance levels may act as barriers to any bullish movements.
he Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
Following the weakness in the US dollar yesterday, USD/CAD dropped as low as 1.3562 before consolidating around 1.3580. This currency pair could continue to slide lower today.
Central Bank Notes:
- The Bank of Canada held its target for the overnight rate at 5.0%.
- Canada’s economy was more substantial than expected in the second quarter of 2023, with GDP growth of 3.3%.
- The Bank expects CPI inflation to ease to around 3.0% in the summer, but concerns have increased about inflation staying above the 2.0% target.
Next 24 Hours Bias
Weak Bearish
Technical
The USD/CAD chart currently displays an overall bearish momentum, indicating a potential continuation of the bearish trend towards the 1st support level.
The 1st support level at 1.3562 is identified as an overlap support that aligns with the 61.80% Fibonacci retracement level. Additionally, the 2nd support level at 1.3502 is also marked as an overlap support, reinforcing its potential as a support zone.
To the upside, the 1st resistance level at 1.3638 is identified as an overlap resistance that aligns with the 61.80% Fibonacci retracement level. Furthermore, the 2nd resistance level at 1.3694 is identified as a swing-high resistance that aligns with the 61.80% Fibonacci projection level.
The Australian Dollar (AUD)
Key news events today
NAB Business Confidence (1:30 am GMT)
What can we expect from AUD today?
The NAB Business Confidence increased to 2 in July 2023 as business conditions stayed resilient while leading indicators strengthened slightly. With the Composite PMI edging lower in August to mark a second consecutive month of contraction, the NAB Business Confidence could dip in August.
Central Bank Notes:
- The RBA kept the cash rate target unchanged at 4.10% for the third consecutive meeting.
- Inflation in Australia has passed its peak and is trending lower but needs to return to the target range.
- Further tightening of monetary policy may be necessary.
- Next meeting on 3 October 2023.
Next 24 Hours Bias
Weak Bullish
Technical
The AUD/USD chart currently exhibits an overall bullish momentum, suggesting a potential upward trend in price movement. There is a possibility of a bullish continuation towards the 1st resistance level.
The 1st resistance level at 0.6441 is identified as an overlap resistance that aligns with the 50.00% Fibonacci retracement level. Furthermore, the 2nd resistance level at 0.6508 is marked as an overlap resistance, indicating its significance as a potential barrier to further bullish movements.
To the downside, the 1st support level at 0.6386 is identified as an overlap support that aligns with the 61.80% Fibonacci retracement level. Additionally, the 2nd support level at 0.6338 is marked as a pullback support that aligns with the 61.80% Fibonacci projection level, reinforcing its potential role as a support level.
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The Kiwi hit 0.5935 before consolidating around the 0.5920 region overnight. With weakness for the US dollar remaining intact for now, the Kiwi could remain elevated today.
Central Bank Notes:
- The Monetary Policy Committee kept the OCR unchanged at 5.50% for the third meeting in a row.
- The Committee believes that interest rates at a restrictive level for some time will bring inflation back within the 1% to 3% target range while supporting maximum sustainable employment.
- Headline inflation and inflation expectations have declined but the core reading remains too high.
- Next meeting is on 4 October 2023.
Next 24 Hours Bias
Weak Bullish
Technical
The NZD/USD chart currently indicates an overall bullish momentum, suggesting a potential upward trend in price movement. There is a possibility of a bullish continuation towards the 1st resistance level.
The 1st resistance level at 0.5930 is identified as an overlap resistance that aligns with the 50.00% Fibonacci retracement level. Furthermore, the 2nd resistance level at 0.5992 is marked as an overlap resistance, reinforcing its potential role as a barrier to further bullish movements.
To the downside, the 1st support level at 0.5891 is identified as an overlap support that aligns with the 61.80% Fibonacci retracement level. Additionally, the 2nd support level at 0.5862 is marked as a pullback support, reinforcing its potential role as a support level.
The Japanese Yen (JPY)
Key news events today
PPI (11:50 pm GMT)
What can we expect from JPY today?
The Producer Price Index (PPI), which measures wholesale inflation, has been trending lower over the past seven months with July’s reading easing to 3.6% YoY. The estimate of 3.3% for August points to another month of slower inflation for the wholesale sector which leaves the Bank of Japan in no hurry to raise their key policy rate from -0.1%. After Bank of Japan’s Governor Kazuo Ueda’s surprise hawkish comments yesterday, USD/JPY tumbled as low as 145.90 before retracing as high as 146.95 during the US session.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2.0%.
- The Bank of Japan decided on the following measures:
- Yield curve control: Negative interest rate of -0.1% on policy-rate balances and purchase of Japanese government bonds to keep 10-year JGB yields around +0.5%.
- Inflation is expected to decelerate temporarily but is projected to accelerate moderately later, supported by improvements in the output gap and inflation expectations.
- Japan’s economy is expected to recover gradually.
- Next meeting is on 22 September 2023.
Next 24 Hours Bias
Weak Bullish
Technical
The USD/JPY chart currently indicates a bearish overall momentum, suggesting a potential downward trend in price movement.
In the short term, there’s a possibility of a price rise towards the 1st resistance level at 147.78 before potentially reversing and moving lower towards the 1st support.
The 1st support level at 146.15 is identified as a significant level for potential price rebounds, characterized as a swing low support and aligning with the 61.80% Fibonacci Projection.
Additionally, the 2nd support at 144.59 is considered another critical support level, marked as a multi-swing low support and aligning with the 100% Fibonacci Projection.
On the resistance side, the 1st resistance at 147.78 represents a multi-swing high resistance, while the 2nd resistance at 148.76 is characterized as a swing high resistance. These levels may act as barriers to any substantial bullish movements.
