What happened in the US session?
FOMC member Austan Goolsbee delivered the welcoming remarks at a Fed Listens in Chicago following which Federal Reserve Governor Michelle Bowman joined him in a fireside chat about youth employment. Governor Bowman expressed her interest in the current deceleration in consumer spending in the US, which is a positive outcome as lower spending could potentially result in lower consumer inflation. The dollar index (DXY) hit a high of 103.70 overnight before settling around 103.50.
What does it mean for the Asia Session?
The DXY fell under 103.50 as Asia came online and could continue to slide lower for the initial part of the day. Meanwhile, the flash Composite PMI reading for Japan released this morning showed overall output growing quickly as solid service sector expansion pulls up sluggish manufacturing activity.
The Dollar Index (DXY)
Key news events today
Composite PMI (1:45 pm GMT)
What can we expect from DXY today?
Flash PMI data will be released today which should indicate the services sector lifting overall economic activity as manufacturing remains in the doldrums. The respective inflation measures will also provide insight into the level of prices for each sector, with demand for services remaining relatively strong. Stronger than expected PMI data could lift the DXY in the latter part of the day.
Technical:
The DXY chart currently displays a bullish momentum, supported by the price being above a major ascending trend line, suggesting the potential for further upward movement.
In this context, a short-term scenario could unfold where the price drops towards the 1st support level at 103.20 before rebounding from there and rising towards the 1st resistance at 103.72.
The 1st support at 103.20 holds significance as an overlap support and aligns with a 23.60% Fibonacci Retracement level. Similarly, the 2nd support at 102.82 is identified as an overlap support and coincides with a 50% Fibonacci Retracement level.
Conversely, the 1st resistance at 103.72 is notable due to its classification as a swing high resistance and its alignment with a 78.60% Fibonacci Retracement level. Additionally, the 2nd resistance at 104.37 is recognized as a multi-swing high resistance.
This analysis collectively points to the potential for a short-term drop to the 1st support before a bounce and subsequent rise towards the 1st resistance, aligned with the overall bullish momentum.
Next 24 Hours Bias
Medium Bearish
The Euro (EUR)
Key news events today
Composite PMI (8:00 am GMT)
What can we expect from EUR today?
Flash PMI data will be released today which is likely to show overall activity in the Eurozone contracting once more, signalling a shrinking economy. After stagnating in June, the Eurozone economy started the third quarter with the fastest contraction in business activity since November last year. The Euro fell sharply yesterday hitting a low of 1.0830 before finding support around 1.0850 – it could continue to retrace higher as the day progresses.
Technical:
The current momentum on the EUR/USD chart suggests a bullish trend.
Within this context, there’s a potential scenario in which the price experiences a bullish rebound upon reaching the 1st support level at 1.0835, potentially leading to an upward movement towards the 1st resistance at 1.0890.
The 1st support at 1.0835 gains significance due to its identification as a multi-swing low support. Furthermore, the presence of the 2nd support at 1.0795 aligns with a 61.80% Fibonacci Projection, adding to its relevance.
On the resistance side, the 1st resistance at 1.0890 is notable as a pullback resistance, with the added confluence of a 61.80% Fibonacci Retracement and a 23.60% Fibonacci Retracement. Similarly, the 2nd resistance at 1.0929 is recognized as an overlap resistance, coinciding with a 38.20% Fibonacci Retracement.
These factors collectively contribute to the potential for a bullish bounce from the 1st support and a subsequent movement towards the 1st resistance, reflecting the overall bullish momentum on the chart.
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
Composite PMI (8:30 am GMT)
What can we expect from GBP today?
Business volumes reduced in July after five months of growth and the flash PMI data for August is likely to show this overall slowdown in activity continuing to gain traction. Stronger-than-expected inflation data have supported the Pound recently as it manages to stay above 1.2700.
Technical
The current momentum of the GBP/USD chart indicates a bullish trend.
Within this momentum context, there’s a potential scenario where the price could continue its bullish movement towards the 1st resistance level.
The 1st support at 1.2709 is significant due to its identification as a multi-swing low support, and it aligns with a 50% Fibonacci Retracement. Additionally, the 2nd support at 1.2610 is noted as a swing low support, contributing to its importance.
On the resistance side, the 1st resistance at 1.2787 stands out as a swing high resistance, indicating a potential area where selling interest might arise. Similarly, the 2nd resistance at 1.2872 is recognized as a multi-swing high resistance.
These factors suggest the potential for a bullish continuation towards the 1st resistance level, in line with the overall bullish momentum observed on the chart.
Next 24 Hours Bias
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
Retail Sales (12:30 pm GMT)
What can we expect from CAD today?
Retail sales have been mixed for most parts of 2023 with readings for March and April declining on a monthly basis. The forecast for July’s print points to sales remaining flat and could signal that Canadian consumers are beginning to tighten their wallets. USDCAD has traded between 1.3500 and 1.3550 since mid-August – a range that is likely to be respected in the near-term.
Technical
The USD/CAD chart currently exhibits a neutral momentum, indicating a lack of clear directional bias. There is a potential for price to fluctuate between the 1st resistance and the 1st support levels.
The 1st support at 1.3502 is considered significant due to its identification as an overlap support that aligns with the 38.20% Fibonacci retracement level. Similarly, the 2nd support at 1.3445 is also identified as an overlap support that aligns with the 61.80% Fibonacci retracement level.
To the upside, the 1st resistance at 1.3568 is identified as an overlap resistance. Furthermore, the 2nd resistance at 1.3650 is identified as a multiple swing-high resistance.
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
Composite PMI (12:30 am GMT)
What can we expect from JPY today?
The flash Composite PMI reading for Japan released this morning showed overall output growing quickly as solid service sector expansion pulls up sluggish manufacturing activity. However, input prices increased at the fastest pace in four months which could be a real concern for the Bank of Japan moving forward, especially with core CPI increasing in the month of July in yesterday’s data release. The Japanese yen could strengthen in the short-term causing USDJPY to pull back further.
Technical:
The USD/JPY chart indicates a bearish momentum, signaling a prevailing downward trend.
In this context, there’s a potential scenario where the price could extend its bearish movement towards the 1st support level.
The significance of the 1st support at 144.93 lies in its identification as an overlap support, suggesting a potential area where the price might find temporary stabilization.
Furthermore, the 2nd support at 143.73 aligns with a pullback support and corresponds to a 50% Fibonacci Retracement, adding to its importance as a potential level where the price could bounce.
On the resistance side, the 1st resistance at 146.47 is noted as a multi-swing high resistance, potentially acting as an obstacle to upward price movement.
These factors contribute to the potential for a bearish continuation towards the 1st support level, aligning with the overall bearish momentum observed on the chart.
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Both headline and core retail sales fell more than their respective forecasts as slower consumer spending gains traction in New Zealand. From an inflation perspective, this signals a positive outcome from the effects of higher interest rates but could weaken an already fragile economy. The Kiwi has managed to find strong support above the 0.5900-level recently and is making a push towards 0.5990.
Technical
The NZD/USD chart currently displays a bearish momentum, indicating a prevalent downward trend. There is potential for price to undergo a bearish reaction upon reaching the 1st resistance level at 0.5954 and subsequently decline towards the 1st support level at 0.5896.
The 1st resistance at 0.5954 is identified as a pullback resistance that aligns with the 23.60% Fibonacci retracement level. The 2nd resistance at 0.5993 is identified as an overlap resistance that aligns with the 38.20% Fibonacci retracement level.
To the downside, 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 with the 161.80% Fibonacci extension level.
Next 24 Hours Bias
Medium Bullish
