Last week, the dollar gave up some ground at the end of the week, but it’s the strongest currency among major currencies. A good performance in equities and bouncing government bond yields put a cap on the US Dollar’s demand. The main topics were the spread of the Delta variant and its potential effects on the economic recovery, and US policymakers speeding up tapering talks.
The FOMC Minutes from the July Federal Reserve meeting released, indicating a readiness to start reducing asset purchases before the end of the year. The Eurozone Consumer Price Index for July came in at 2.2% on a yearly basis, meeting the flash estimate of 2.2%. The Eurozone GDP grew 2% (q-o-q) in Q2. On a yearly basis, GDP rebounded 13.6%.
This week economic data will be slower due to the last summer holidays in August. The major news announcements will be:
Monday, the EU members. The UK and the US will report their Flash Manufacturing and Services PMIs.
On Tuesday the US new home sales will be released.
Early Wednesday, the New Zealand’s Trade Balance will be released. Later, the EU’s German ifo Business Climate and the US monthly Core Durable Goods Orders figures will be announced.
Thursday the Jackson Hole Symposium will take place, and market participants are eagerly waiting for Federal Reserve Chair Jerome Powell’s words on the matter. Also, the US preliminary quarterly GDP will be released and Unemployment Claims.
On Friday the Jackson Hole Symposium will continue but also the US monthly Core PCE Price Index will be released.
Major Currencies Performance and Signals
EUR/USD
The EURUSD pair started the week gloomy and eroded a part of previous positive move amid the emergence of strong buying of the US dollar.
Against the backdrop of the spread of the highly contagious Delta variant of the virus, disappointing Chinese macro data and political tensions in Afghanistan weighed on investors’ sentiment that also led to weakening of the euro. The EURUSD pair is expected to trade with a neutral to bearish bias.
FORECAST: NEUTRAL
Resistance: 1.1750, 1.1800, 1.1850,
Support: 1.1700, 1.1650, 1.1600
GBP/USD
The GBPUSD pair has been drifting lower as the safe-haven US dollar finds reasons to rise. Pound bulls were likely impressed by the UK’s low Unemployment Rate of 4.7% in June, but less delighted with the meagre decrease in jobless claims in July. The GBPUSD pair is expected to trade with a neutral to bearish bias.
FORECAST: NEUTRAL
Resistance: 1.3700, 1.3750, 1.3800
Support: 1.3650, 1.3600, 1.3550
AUD/USD
The Australian dollar broke down significantly during last week, dropping over 3%. The pair is expected to correct this week a bit but still with a bearish momentum.
FORECAST: NEUTRAL
Resistance: 0.7200, 0.7250, 0.7300,
Support: 0.7150, 0.7100, 0.7050
USD/JPY
The USDJPY pair printed mild gains on the first day of the fresh trading week. The US Dollar Index remained near 93.50 amid rising US Treasury yields. The yen struggles amid the rising coronavirus Delta variant and downbeat economic data. We remain bearish this week.
FORECAST: SELL
Resistance: 110.00, 110.50, 111.00
Support: 109.50, 109.00, 108.50
USD/CAD
The USDCAD pair has risen to an eight-month high on fears of a worldwide economic downturn. WTI Oil is down 8.8% this week and 17.2% low from its high of $74.68 in July. At the Jackson Hole meeting, the Federal Reserve may hint a taper. We expect the pair to continue the bullish momentum.
FORECAST: BUY
Resistance: 1.2800, 1.2850, 1.2900
Support: 1.2750, 1.2700, 1.2650
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