What happened in the US session?
For the second week in a row, unemployment claims printed lower than the forecast of 239k, coming in at 230k. These latest claims were also lower than the previous week’s figures of 240k. Following which, Federal Reserve Bank of Philadelphia President Patrick Harker’s interview on CNBC was also hawkish as he mentioned that the Federal Reserve must continue to deal with inflation and they will need to keep interest rates restrictive for a period of time. Both of these events functioned as a bullish catalyst for the US dollar causing the dollar index (DXY) to go above 104.00 overnight.
What does it mean for the Asia Session?
The DXY gapped higher this morning as it raced past 104.10. It appears that the dollar bulls are back in full force and is likely to pull the DXY higher while adding downward pressure to the other major currency pairs as well as gold prices.
The Dollar Index (DXY)
Key news events today
FOMC Member Harker Speaks (1:00 pm and 1:40 pm GMT)
UoM Consumer Sentiment Index (2:00 pm GMT)
Fed Chair Powell Speaks (2:05 pm GMT)
What can we expect from DXY today?
Following yesterday’s CNBC interview, Federal Reserve Bank of Philadelphia President Patrick Harker will be engaging in two more interviews today – the first conducted by Bloomberg TV followed by Yahoo Finance Live after. Once again, his comments and remarks could have an impact on the demand for the US dollar.
The final survey results for the Consumer Sentiment Index by the University of Michigan will be released today. Consumer confidence rebounded fairly strongly over the last couple of months and August’s findings should show sentiment remaining elevated.
Federal Reserve Chairman Jerome Powell will be speaking at the Jackson Hole Symposium later today. Although his focus will be on the theme “Structural Shifts in the Global Economy”, any comments or remarks by him on topics such as inflation and monetary policy are likely to have a profound impact on the demand for the greenback and thus drive the direction for the DXY.
- The federal funds rate target range will be 5.25% to 5.50%.
- The Committee is strongly committed to returning inflation to its 2.0% target.
- The Committee will adjust monetary policy if risks emerge that could hinder achieving its goals.
- Various factors will be considered, including labour market conditions, inflation pressures, inflation expectations, and international and financial developments.
- Next meeting runs from 19 to 20 September 2023.
Next 24 Hours Bias
Strong Bullish
Technical
The DXY, which stands for the U.S. Dollar Index, is currently displaying a bullish momentum. One of the prominent indicators supporting this momentum is the fact that the price is maintaining a position above a significant ascending trend line. Such a trend line usually signals a continuation of the upward movement, suggesting that further bullish momentum is likely in the coming sessions.
Additionally, another key bullish indicator is the position of the price above the Ichimoku cloud. When the price is above this cloud, it usually confirms the ongoing positive momentum, offering more confidence to the bullish bias.
Given these technical indicators, there’s a strong case for the price to potentially continue its bullish trajectory, moving towards the 1st resistance level.
Speaking of levels, the 1st support level to watch out for is at 103.30, which serves as a pullback support. Should there be any downward movement, this is a level where the price might find some cushion. Following closely is the 2nd support level at 103.58, which also acts as a pullback support.
On the upside, the 1st resistance level stands at 104.36. This level is significant because it marks a swing high resistance and coincides with the 161.80% Fibonacci Extension. Breaking past this could pave the way for the next challenge at the 2nd resistance level of 104.70. This resistance is not only a swing high resistance but also aligns with the 127.20% Fibonacci Extension.
The Euro (EUR)
Key news events today
German GDP (6:00 am GMT)
German ifo Business Climate (8:00 am GMT)
What can we expect from EUR today?
Germany, Europe’s industrial powerhouse, is all but certain to have fallen into a technical recession. The final GDP reading for the second quarter of 2023 is set to be released and will confirm the second consecutive quarter of negative growth.
Meanwhile, the ifo Business Climate for Germany also points to a fourth consecutive month of decline in August as key metrics such as new orders and capacity utilization both declined in the previous month. With Germany being assigned the tag ‘the sick man of Europe’ once more, this could add further downward pressure on the Euro especially after a surge in demand for the US dollar overnight.
Next 24 Hours Bias
Strong Bearish
Technical
The EUR/USD pair is exhibiting a bearish momentum. Several factors underscore this trend: the price movement within a descending channel and its positioning right below the bearish Ichimoku cloud. The latter often suggests a potential price reversal.
Given this downward momentum, the anticipation is for a bearish continuation towards the 1st support.
The 1st support is situated at 1.0741. It stands out due to its classification as an overlap support, combined with its association with the 161.80% Fibonacci Extension and 100% level, showcasing a Fibonacci confluence.
The 2nd support for the pair is at 1.0666, characterized as a swing low support, indicating a past level where price found support.
On the potential upside, the 1st resistance is pinpointed at 1.0837, described as an overlap resistance. Such resistances represent levels where past price action might have encountered barriers.
Further, the 2nd resistance is at 1.0923, another overlap resistance, hinting at a previous zone of contention for price movements.
Additionally, an intermediate resistance is observed at 1.0802, acting as a pullback resistance. This suggests a temporary halt or resistance point in case of any short-term upward retracements.
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
The Pound dived under 1.2600 overnight as demand for the US dollar picked up on the back of lower unemployment claims and a hawkish interview by Federal Reserve Bank of Philadelphia President Patrick Harker. This currency pair is expected to remain under pressure today.
Next 24 Hours Bias
Strong Bearish
Technical
The overall momentum of the GBP/USD chart is bearish, indicating a trend of downward movement. This bearish momentum is supported by the fact that the price is currently positioned in a manner that suggests the potential for further declines.
In the given scenario, there is a possibility that the price could continue its bearish movement, targeting the 1st support level at 1.2541. This support level is notable for its association with a pullback support, as well as the presence of the 161.80% Fibonacci Extension and the 100% Fibonacci Projection. The convergence of these Fibonacci levels further strengthens the significance of this support.
For additional potential support, the 2nd support level at 1.2468 is identified. This level is characterized as a pullback support, which may contribute to a potential bounce in the price.
On the resistance side, the 1st resistance at 1.2619 is recognized as a point of interest. This resistance level is attributed to pullback resistance, suggesting potential hurdles for any upward movement.
Furthermore, the 2nd resistance at 1.2787 holds importance as it aligns with multi-swing high resistance, indicating a historically strong level of resistance.
he Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
Following the surge in demand for the US dollar, USD/CAD reversed strongly from yesterday’s low of 1.3510 to bounce as high as 1.3590. Lower unemployment claims and a hawkish interview by Federal Reserve Bank of Philadelphia President Patrick Harker functioned as a bullish catalyst overnight. This currency pair is expected to remain elevated today.
Next 24 Hours Bias
Strong Bullish
Technical
The USD/CAD chart is currently demonstrating a bullish momentum. One of the salient indicators reinforcing this trend is the potential for the price to not only approach but to break through the 1st resistance and then make its way towards the 2nd resistance.
The 1st resistance at 1.3593 is identified as a swing-high resistance while the 2nd resistance at 1.3650 is identified as a multiple swing-high resistance that aligns close to the 161.80% Fibonacci extension level, acting as a potential formidable upside barrier.
The 1st support level at 1.3502 is identified as an overlap support that aligns with the 23.60% Fibonacci retracement level. Furthermore, the 2nd support at 1.3387 is also identified as another overlap support that aligns with the 50.00% Fibonacci retracement level.
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The Aussie tumbled to a low of 0.6410 overnight but has found support around this level this morning. Downward pressures are likely to remain as demand for the US dollar picked up on the back of lower unemployment claims and a hawkish interview by Federal Reserve Bank of Philadelphia President Patrick Harker.
Next 24 Hours Bias
Medium Bearish
Technical
The AUD/USD chart is currently displaying a bearish trend, primarily driven by its position below the bearish Ichimoku cloud. This positioning usually indicates a potential for further downside movement.
The 1st support level at 0.6387 is identified as an overlap support. The 2nd support level at 0.6339 is identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 61.80% projection and the 127.20% extension levels, bolstering the significance of this support level.
To the upside, the 1st resistance level at 0.6458 is identified as an overlap resistance. Furthermore, the 2nd resistance level at 0.6508 is also identified as an overlap resistance that aligns with a confluence of Fibonacci levels i.e. the 38.20% and 61.80% retracement levels, suggesting that this level could act as a significant resistance.
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The Kiwi tumbled to a low of 0.5920 overnight but has found support around this level this morning. Downward pressures are likely to remain as demand for the US dollar picked up on the back of lower unemployment claims and a hawkish interview by Federal Reserve Bank of Philadelphia President Patrick Harker.
Next 24 Hours Bias
Medium Bearish
Technical
The NZD/USD chart currently demonstrates a bearish momentum. A significant factor underscoring this trend is its position below the bearish Ichimoku cloud, often indicative of further potential downside. There is potential for price to continue its downward trajectory towards the 1st support level.
The 1st support level at 0.5910 is identified as a multiple swing-low support. The 2nd support level at 0.5840 is identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 61.80% projection and the 161.80% extension levels.
To the upside, the 1st resistance at 0.5954 is identified as an overlap resistance. Furthermore, the 2nd resistance at 0.5993 is also identified as an overlap resistance that aligns with the 23.60% Fibonacci retracement level.
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The Tokyo core CPI printed at 2.8% YoY for the month of August – a reading which was lower than the estimate of 2.9% as well as the previous month’s reading of 3.0%. With key inflation metrics in Japan such as this Tokyo core CPI showing signs of retreat, it gives the Bank of Japan further impetus to maintain its ultra-dovish monetary policy stance. With demand for the US dollar surging overnight, USD/JPY raced past 146.00 with ease and is likely to remain elevated today.
Next 24 Hours Bias
Strong Bullish
Technical
The USD/JPY is displaying a bullish momentum at present. Given this positive trend, there’s an anticipation for a continued upward move towards the identified resistance levels.
The 1st support for the pair is found at 144.85 and is characterized as a pullback support. This means in the event of any short-term retracements, this level could offer a significant point of stability.
The 2nd support comes in at 143.73 and is deemed an overlap support. Overlap supports often have historical significance where the price has interacted multiple times, providing a sturdy base for potential rebounds.
On the bullish front, the 1st resistance is set at 146.40, acting as a pullback resistance. This could be a point where the price might face some resistance, given the pullback characteristics.
Above this level, the 2nd resistance stands tall at 146.91. This resistance is especially notable due to its alignment with the 127.20% Fibonacci Extension, which often serves as crucial pivot points in the market.
