What happened in the US session?
Despite Federal Reserve Governor Christopher Waller indicating his support for a pause in rate hikes at the September FOMC meeting in an interview with CNBC, the dollar index (DXY) and US treasury bond yields climbed higher touching 104.90 and 4.30% respectively overnight.
What does it mean for the Asia Session?
The DXY is now in its eight consecutive week of strong gains and is likely to continue its ascent. Meanwhile, Australia’s GDP figures for the second quarter of 2023 will be released this morning with market expectations of a 0.4% YoY growth. The Australian economy grew 0.2% YoY in the first quarter which marked the sixth consecutive period of growth but it was the softest pace in this period. The Aussie dollar trades around 0.6370 this morning and a miss in GDP figures could add further downward pressure.
The Dollar Index (DXY)
Key news events today
ISM Services PMI (2:00 pm GMT)
What can we expect from DXY today?
ISM Services PMI have been expanding for the past seven months and August’s estimate of 52.5 points to another month of growth, albeit at a slightly slower rate. Price pressures increased in the month of July and another stronger than expected reading for this category could function as a bullish catalyst for the DXY.
Technical
The DXY chart is currently characterized by a bullish overall momentum, indicating the potential for an upward trend in price movement.
There’s the possibility of a bullish continuation towards the 1st resistance level at 105.29, which is considered a significant level due to its alignment with a swing high resistance and the presence of the 161.80% Fibonacci Extension.
Support levels include the 1st support at 104.53, which is seen as a pullback support, and the 2nd support at 103.94, recognized as an overlap support.
Additionally, the 2nd resistance at 105.86 is marked as a swing high resistance, suggesting a potential area of resistance should the price continue its bullish movement.
The Euro (EUR)
Key news events today
Retail Sales (9:00 am GMT)
What can we expect from EUR today?
Monthly retail sales in the Eurozone have been mixed in 2023 as three of the past six readings have shown sales falling. July’s estimate points to a second consecutive month of decline – a weaker than expected reading could cause the Euro to weaken further.
Technical
The EUR/USD chart currently exhibits a bearish momentum, characterized by its position within a descending channel.
There’s potential for a bearish continuation towards the 1st support level at 1.0667. This support is significant due to its alignment with a swing low support, the presence of the 161.80% Fibonacci Extension, and the -61.8% Fibonacci Expansion, indicating a strong Fibonacci confluence.
On the resistance side, the 1st resistance at 1.0741 is identified as a pullback resistance, while the 2nd resistance at 1.0773 also acts as a pullback resistance. These levels could potentially serve as barriers to any bullish movement.
The Pound (GBP)
Key news events today
BoE Monetary Policy Report Hearings (1:15 pm GMT)
What can we expect from GBP today?
Bank of England Governor Andrew Bailey and several MPC members will testify on inflation and the economic outlook before Parliament’s Treasury Committee during today’s hearings. A hawkish outlook by Governor Bailey and his fellow MPC members could provide some lift for the Pound during this hearing.
Technical
The GBP/USD chart currently maintains a bearish momentum, with price positioned below a significant descending trend line, indicating a potential for continued bearish movement.
There’s a likelihood of a bearish reaction at the 1st resistance level, potentially leading to a decline towards the 1st support.
The 1st support at 1.2535 is identified as a multi-swing low support and aligns with the 78.60% Fibonacci Projection and the 161.80% Fibonacci Extension, signifying a strong Fibonacci confluence, thereby adding to its significance as a potential support level.
Another 1st support at 1.2504 is marked as an overlap support, indicating historical instances of price finding support around this level.
Looking at resistance levels, the 1st resistance at 1.2579 is designated as an overlap resistance, while the 2nd resistance at 1.2643 also functions as an overlap resistance. These levels could act as barriers to any bullish movements.
The Canadian Dollar (CAD)
Key news events today
BoC Overnight Rate Statement (2:00 pm GMT)
What can we expect from CAD today?
The Bank of Canada (BoC) is expected to keep its overnight rate on hold at 5.00% at today’s monetary policy meeting following two consecutive hikes of 25 bps each. Although inflation edged higher in July – rising to 3.3% YoY from 2.8% YoY in June – the BoC could still adopt a ‘wait-and-see’ approach as they assess the impact of higher interest rates on the economy and labour market.
Technical
The USD/CAD chart currently demonstrates an overall bullish momentum, indicating an upward trend in its price movement. In this scenario, there is potential for a short-term drop towards the intermediate support level.
The intermediate support level at 1.3633 which is identified as a pullback support that aligns with the 23.60% Fibonacci retracement level. Further below, the 1st support level at 1.3575 is identified as an overlap support that aligns with the 50.00% Fibonacci retracement level.
To the upside, the 1st resistance level at 1.3667 is identified as a swing-high resistance that aligns with the 127.20% Fibonacci extension level. Additionally, the 2nd resistance level at 1.3744 is marked as an overlap resistance that aligns with the 161.80% Fibonacci extension level.
The Australian Dollar (AUD)
Key news events today
GDP (1:30 am GMT)
What can we expect from AUD today?
Australia’s GDP figures for the second quarter of 2023 will be released this morning with market expectations of a 0.4% YoY growth. The Australian economy grew 0.2% YoY in the first quarter which marked the sixth consecutive period of growth but it was the softest pace in this period. The Aussie dollar trades around 0.6370 this morning and a miss in GDP figures could add further downward pressure
Technical
The AUD/USD chart currently exhibits an overall bearish momentum, indicating a potential downward trend in its price movement. In this scenario, there’s a likelihood of a bearish reaction occurring off the 1st resistance level at 0.6386, potentially leading to a decline towards the 1st support level.
The 1st support level at 0.6338 is identified as an overlap support that aligns with the 127.20% Fibonacci projection level. Additionally, the 2nd support level at 0.6277 is identified as a pullback support that coincides with the 161.80% Fibonacci projection level.
To the upside, the 1st resistance level at 0.6386 is marked as an overlap resistance. Similarly, the 2nd resistance level at 0.6441 is also identified as an overlap resistance, further emphasizing its potential significance as a level where price could face resistance.
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
For the second day in a row the Kiwi is one of the weakest performing currencies this morning as it slides towards 0.5860. Further down pressures could be expected for this currency today.
Technical
The NZD/USD chart currently indicates an overall bearish momentum, suggesting a downward trend in its price movement. In this scenario, there is potential for a bearish reaction emerging from the 1st resistance level at 0.5889, leading to a possible decline towards the 1st support level.
The 1st support level at 0.5862 is identified as an overlap support that aligns with the 127.20% Fibonacci extension level. Similarly, the 2nd support level at 0.5801 is also identified as an overlap support that coincides with the 161.80% Fibonacci extension level.
To the upside, the 1st resistance level at 0.5889 is marked as an overlap resistance while the 2nd resistance level at 0.5930 is also identified as an overlap resistance, further emphasizing its potential significance as a level where price could face resistance.
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
With demand for the US dollar remaining strong thus far, USD/JPY hit 147.80 overnight but this currency pair is pulling back this morning.
Technical
The USD/JPY chart currently exhibits a bullish overall momentum, indicating a potential upward trend in price movement.
There’s a possibility of a bullish continuation towards the 1st resistance level at 148.76.
The 1st support at 146.50 is identified as a pullback support, while the 2nd support at 144.82 is considered an overlap support. These support levels may provide a foundation for potential price increases.
The 1st resistance at 148.76 is marked as a swing high resistance and is also aligned with the 161.80% Fibonacci Extension, further enhancing its significance as a potential barrier to bullish movement. An intermediate support level at 147.24 is also noted.
