What happened in the US session?
Yesterday, the US session had a sparse calendar, with the dollar index (DXY) changing course from its low at 103.20 to briefly climb beyond 103.50. Nevertheless, following mid-day in the US Eastern time zone, the DXY retraced from this point, decreasing toward 103.30.
What does it mean for the Asia Session?
As Asia entered the trading scene, the DXY sustained its decline, reaching a nadir at 103.20. Simultaneously, Japan is set to unveil its core Consumer Price Index (CPI) for July around mid-day in the Asian session. Predictions indicate that the annualized figure could dip to 2.9%. If the outcome turns out to be more subdued, it could provide the Bank of Japan with added motivation to uphold their extremely accommodative monetary approach, potentially exerting additional downward influence on the Japanese yen.
The Dollar Index (DXY)
Key news events today
FOMC Member Goolsbee Speaks (6:30 pm GMT)
FOMC Member Bowman Speaks (6:32 pm GMT)
FOMC Member Goolsbee Speaks (7:30 pm GMT)
What can we expect from DXY today?
Austan Goolsbee, a member of the Federal Open Market Committee (FOMC), is scheduled to provide the opening statements at a Fed Listens event in Chicago. Joining him will be Michelle Bowman, a Governor of the Federal Reserve. Subsequently, Goolsbee will engage in a discussion about youth employment in a relaxed setting. Should either of them express more hawkish viewpoints, it’s probable that any advances in the DXY’s value will pick up pace.
Technical:
The current depiction of the DXY chart highlights a bearish momentum, indicating a prevalent downward trajectory. Given this momentum, a plausible scenario emerges wherein the price could potentially experience a bearish breakout from the initial support level situated at 103.20, potentially triggering a descent towards the secondary support level at 102.79.
The initial support at 103.20 is recognized as a support level marked by convergence, coinciding with the 23.60% Fibonacci retracement level. Correspondingly, the secondary support at 102.79 is similarly identified as a support level characterized by convergence, aligning with the 50.00% Fibonacci retracement level.
On the upside, the first resistance level at 103.57 is identified as a resistance level characterized by convergence. Furthermore, the second resistance at 103.87 is also identified as another resistance level marked by convergence.
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
After finding support at around 1.0850 last Friday, the Euro rebounded above 1.0900 overnight and could remain above this level should weakness for the US dollar persists.
Technical:
The EUR/USD chart is currently exhibiting a bullish momentum, there is a potential scenario where the price might experience a bullish continuation towards the 1st resistance at 1.0918.
This 1st resistance at 1.0918 is identified as an overlap resistance. Furthermore, the 2nd resistance at 1.0956 is also identified as an overlap resistance that aligns with the 50.00% Fibonacci retracement level.
To the downside, the intermediate support at 1.0855 is identified as a swing-low support while the 1st support at 1.0835 gains importance due to its identification as a multiple swing-low support.
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
The Pound is buoyed by stronger than expected inflation data that was released last week. It currently trades above the 1.2750-level and could remain elevated today.
Technical:
The GBP/USD chart currently displays a bullish momentum, indicating a prevalent upward trend. There is a potential scenario where price could experience a bullish continuation towards the 1st resistance at 1.2790.
This 1st resistance at 1.2790 is identified as an overlap resistance that aligns with the 61.80% Fibonacci projection level. In addition, the 2nd resistance at 1.2873 is identified as a pullback resistance that aligns with the 100.00% Fibonacci projection level.
To the downside, the 1st support at 1.2709 is identified as a multiple swing-low support that aligns with the 50.00% Fibonacci
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
With demand for the US dollar falling overnight, USDCAD tumbled as low as 1.3500 before rebounding strongly to recover all the initial losses. Despite the weakness in the US dollar this morning, USDCAD is pushing towards 1.3560.
Technical:
The USD/CAD chart currently shows a weak bullish momentum with low confidence, indicating a potential upward trend. The momentum is based on the factor that the price is positioned above the bullish Ichimoku cloud, suggesting a potential for upward movement.
There is a possibility that the price could continue its bullish trajectory towards the 1st resistance level at 1.3568. This level is recognized as an overlap resistance that aligns close to the 61.80% Fibonacci projection level. Furthermore, the 2nd resistance at 1.3650 is a multiple swing-high that aligns with the 78.60% Fibonacci projection level
The 1st support at 1.3502 is identified as an overlap support that aligns with the 38.20% Fibonacci retracement level. Additionally, the 2nd support at 1.3445 is also identified as an overlap support that aligns with the 61.80% Fibonacci retracement level.
The Australian Dollar (AUD)
Key news events today
Composite PMI (11:00 pm GMT)
What can we expect from AUD today?
The flash Composite PMI will be released at the end of the day to give insights into the state of the manufacturing and services sectors for the month of August. The services sectors contracted for the first time in four months in July and the forecast points to a second consecutive month of contraction. Combined with manufacturing activity which has been depressed for the past five months, overall activity in Australia is likely to shrink once more and put pressure on the Aussie dollar.
Technical:
The AUD/USD chart is currently displaying a bearish momentum, indicating a potential downward trend as price is positioned below the bearish Ichimoku cloud, indicating a likelihood of continued downward movement. However, there is a potential for a bearish reaction off the 1st resistance level.
The 1st resistance level at 0.6458 is identified as a pullback resistance that aligns with the 38.20% Fibonacci retracement level. There is also an intermediate resistance at 0.6419 that is identified as a pullback resistance. Furthermore, the 2nd resistance at 0.6508 is identified as an overlap resistance that aligns with the 61.80% Fibonacci retracement level.
To the downside, the 1st support level at 0.6364 is identified as a swing-low support. Furthermore, the 2nd support at 0.6296 is identified as a support level that aligns with the 61.80% Fibonacci projection level.
The Kiwi Dollar (NZD)
Key news events today
Retail Sales (10:45 pm GMT)
What can we expect from NZD today?
Retail sales have been falling over the last two quarters and the latest estimate points to a third consecutive decline. However, this expected decline is the shallowest with sales expected to fall by just 0.2% QoQ versus a drop of 1.4% in the previous quarter. Weaker than expected sales figures are likely to add further pressure on the Kiwi.
Technical:
The NZD/USD chart currently displays a bearish momentum, indicating a prevailing downward trend as price is positioned below the bearish Ichimoku cloud, indicating a likelihood of continued downward movement. However, there is a potential for a bearish reaction off the 1st resistance level.
The 1st resistance level at 0.5954 is identified as a pullback resistance that aligns with the 23.60% Fibonacci retracement level. Furthermore, the 2nd resistance at 0.5993 is identified as an overlap resistance that aligns with the 38.20% Fibonacci retracement level.
The 1st support at 0.5896 is identified as a swing-low support. Additionally, the 2nd support at 0.5840 is identified as a pullback support that aligns close to the 161.80% Fibonacci extension level.
The Japanese Yen (JPY)
Key news events today
Core CPI (5:00 am GMT)
What can we expect from JPY today?
Japan’s core CPI for the month of July will be released during mid-day of the Asia session where the forecast points to the annualised reading falling to 2.9%. A ‘softer’ print is likely to give the Bank of Japan further impetus to maintain their ultra-dovish monetary policy stance which in turn could put further downward pressure on the Japanese yen.
Technical:
The current chart momentum indicates a neutral trend in the market, with neither strong bullish nor bearish indications. There is a potential scenario for price to fluctuate between the 1st resistance and the 1st support levels.
The 1st support at 144.94 is identified as an overlap support that aligns with the 100.00% Fibonacci projection level. Similarly, the 2nd support at 143.73 is also identified as an overlap support.
To the upside, the 1st resistance at 146.47 is identified as a multiple swing-high resistance while the 2nd resistance at 147.27 is identified as a resistance level that aligns with the 127.20% Fibonacci extension level.
