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Daily Pivots: (S1) 1.0820; (P) 1.0846; (R1) 1.0888; More...

EUR/USD's fall from 1.1274 resumed after brief consolidations and intraday bias is back on the downside. Further decline would be seen to 1.0609/34 cluster support next. On the upside, break of 1.0929 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

In the bigger picture, fall from 1.1274 medium term top is seen as a correction to up trend form 0.9534 (2022 low). Deeper decline would be seen to 1.0634 cluster support (38.2% retracement of 0.9534 to 1.1274 at 1.0609). Strong support could be seen there, at least on first attempt, to bring rebound. Yet, medium term outlook will be neutral for now, as long as 1.1274 resistance holds.

USD/JPY tests resistance

The Japanese yen retreated as the Tokyo area’s CPI fell short of expectations in August. The US dollar’s dip has come to a rest near July’s peak of 144.60, suggesting the bulls’ willingness to keep the uptrend intact in the medium-term. A close above 145.70 at the start of a previous bearish breakout is important in cutting short the selling momentum, and 145.40 from that supply area has turned into a fresh support. A break above the recent top of 146.50 would open the door to an extension to last October’s milestone at 150.00.

XAG/USD seeks support

Silver consolidates gains as traders await Fed Chair Powell's speech at the Jackson Hole Symposium. A jump above the support-turned-resistance of 23.50 has forced sellers to cover, stirring up volatility in the process. 24.40 might be the bears’ last stronghold and its breach could expose last month’s high of 25.20, which would be a step closer to resume the climb from March. In the meantime, the RSI’s overbought condition caused a retreat as intraday buyers took some chips off the table. 23.70 is the first level to expect support.

NAS 100 clears resistance

The Nasdaq 100 soared initially as Nvidia's solid revenue forecast boosted AI-related stocks. On the daily chart, a hammer pattern in the demand zone around 14700 suggests that the index might have reached its bottom. A pop above the tip of a previous swing high at 15260 has prompted more sellers to cover, clearing the path for a potential recovery to 15600. However, the bulls will need to reclaim the psychological level of 15000. As the RSI ventures into oversold territory, 14670 is a fresh level to contain the pullback.

Markets

Wednesday’s PMI-triggered correction didn’t went that far after all. In the run-up to Powell’s Jackson Hole address, it’s still all to play for when it comes to key technical levels. The US 2-yr yield closed above 5% following a daily gain of 5.3 bps. Longer tenors still added up to 3.3 bps in the US yesterday. Weekly jobless claims fell from 239k to 230k despite a surge in Hawaii with core durable goods orders exceeding forecasts. Fed speeches included Philly Fed Harker who repeated his view that the Fed has probably done enough and Boston Fed Collins who anticipates one more rate hike this year as the US economy has not yet slowed enough to put inflation on a sustainable trajectory downward. She added “I do think it’s extremely likely that we will need to hold for a substantial amount of time but exactly where the peak is, I would not signal right at this point.” Higher core yields weighed on risk sentiment as the Nvidia-driven tech rally fizzled out. Most European stock markets closed up to 0.8% lower, with the EuroStoxx 50’ s technical shooting star signal suggesting a new test of 4200 support is in the making. Losses in main US benchmarks varied between 1% and 1.8%. The dollar is ready for Powell’s speech, finally taking out 103.57 resistance in the trade-weighted index (DXY). The greenback extends its rally this morning, currently changing hands at 104.22 and immediately aiming for the May high at 104.70. EUR/USD lost 1.0834 support and dipped below the 200d moving average around 1.08. Next support is situated at 1.0635. In a broader context, smaller and less liquid currencies are all suffering in the run-up to today’s Jackson Hole speeches.

We expect a hawkish market reaction after Powell’s address tonight. He’ll put the tone on keeping rates at peak levels for an extended period of time. June dots and July FOMC Minutes clearly show a preference to hike policy rates one more time, which the Fed chair might flag. The neutral rate is another key topic. We stressed in June that silently, Fed governors were moving towards an increase of this theoretical rate. In December 2022, only 3 of them put it above 2.5% in the dot plot. This number increased to 4 in March and 7 (out of 18) in June. Higher real rate and a potential higher neutral rate have been the main driver of August market moves so far (core bond & stock sell-off with USD gains). Finally, a lot of (theoretical) debate is on raising the inflation target. Powell and co stressed that is absolutely not an option for the moment, which we agree to.

News and views

The Polish government yesterday approved the Budget draft for 2024. It now expects a budget deficit of 4.5% of GDP next year. That is substantially higher compared to the expected short-fall of 3.4% that was put forward in April when the country submitted its long-term financing plan to the European commission. In its budget projection, the government still expects economic growth of 3% in 2024 (from 0.9% this year). CPI inflation is seen at 6.6%. The proposal assumes a sharp rise in revenues from PLN 605bn to over PLN 680bn. On the spending side, the budget includes higher wages for public sector workers and it raises spending on social programs including child benefits and payments for pensioners. The government will also increase defense spending to an estimated 4.2% of GDP. Higher spending also should be seen in the light of the elections that will take place on October 15. A supportive fiscal policy might complicate the efforts of the National Bank of Poland to further reduce inflation (10.8% in July).

August inflation data for the Tokyo area published this morning mostly came out slightly softer than expected. The core inflation measure excluding fresh food eased from 3% to 2.8%. Headline inflation also decelerated from 3.2% to 2.9%. However, core inflation excluding both fresh food and energy remained at the multi-year peak of 4%. Utility prices were down 15% Y/Y due to government measures. At the same time, food prices were still 8.2% higher compared to the same month last year. Good prices rose 4% Y/Y. Services prices gained 2% Y/Y. For now, the BoJ still holds the line that it needs further confirmation that inflation returns to 2% in a sustained manner after it made ‘limited’ tweaks to its policy of Yield Curve control at the end of July policy meeting.

• Bearish elements have emerged at a key inflection/resistance level of 15,415.
• The leader of the AI boom, Nvidia has shaped a bullish exhaustion where its initial price actions’ exuberance dissipated ex-post Q2 earnings result release.
• 15,135 key short-term resistance to watch on the Nasdaq 100 to maintain bearish bias.

The price actions of the US Nas 100 Index (a proxy for the Nasdaq 100 futures) have indeed shaped the expected minor countertrend rebound sequence from the 18 August 2023 low of 14,553 and rallied by +5.6% to print an intraday high of 15,375 during yesterday’s 24 August European opening hour.

The upward spurt seen on Thursday, 24 August at the start of the Asian session has been primarily attributed to a strong upmove of +6% seen in the share price of Nvidia in the after-US hours trading session of Wednesday, 23 August right after the release of its stellar fiscal Q2 earnings result.

Interestingly, the exuberance of Nvidia that has triggered an initial positive feedback loop into the benchmark US stock indices dissipated as the US session got underway yesterday.

In addition, several key bearish technical elements emerged which suggests that the potential impulsive down moves of the short to medium-term bearish trend of the US Nas 100 Index has resumed.

Daily bearish Marubozu candlestick formed right a key inflection/resistance zone

Fig 1: US Nas 100 medium-term trend as of 25 Aug 2023 (Source: TradingView, click to enlarge chart)

Fig 2: Medium-term trend of Nvidia & SPDR S&P Semiconductor ETF as of 24 Aug 2023 (Source: TradingView, click to enlarge chart)

As seen in Figure 1, several bearish elements have been detected on the daily chart of the US Nas 100 Index. Firstly, its price actions have formed a firm bearish tone candlestick pattern called “Marubozu”, a long-body candle where its opening price and closing price were almost the same as its intraday high and intraday low respectively.

Secondly, the emergence of such a key bearish reversal candlestick pattern is being formed right at a key inflection zone where the 50-day moving average and the former swing low of 24 July 2023 confluence at a 15,415 resistance level adds credence to a potential future bearish movement in price actions of the Index.

Thirdly, the current conditions of the daily RSI oscillator suggest that medium-term downside momentum remains intact.

The price actions of Nvidia as seen in Fig 2 have also depicted similar bearish elements where it ended yesterday’s 24 August US session with a daily bearish “Marubozu” and reintegrated below a key resistance of 474.10 with a high-volume reading.

The US Nas 100 slipped back below the 20-day moving average

Fig 3: US Nas 100 minor short-term trend as of 25 Aug 2023 (Source: TradingView, click to enlarge chart)

The hourly chart of the US Nas 100 has indicated the potential continuation of the impulsive down move of its short-term downtrend phase as the minor countertrend rebound from the 18 August 2023 low is likely to be over.

Watch the 15,135 key short-term pivotal resistance (also the 20-day moving average) to maintain the bearish tone and a break below 14,580 exposes the next support at 14,300/250 (Fibonacci extension cluster & and a graphical support, refer to the daily chart in Fig 1).

On the other hand, a clearance above 15,135 negates the bearish tone to see a retest on the 15,415/460 medium-term resistance.

Market movers today

The main event today will be the US Fed's Jackson Hole Symposium where Powell will deliver his speech 16:05 CET. This is an opportunity the chairman has previously used to correct market views, for example last year. ECB president Largarde will speak at 21:00 CET.

In Germany, we get the August IFO business survey and it will be interesting to see if it confirms the gloomy picture painted by the PMIs yesterday. We also get revised GDP and other national accounts data for Q2, but that is mostly of historical interest since the indicators for July and August have been so negative.

The 60 second overview

Anxiety ahead of Jackson Hole: Bond yields moved back up again yesterday and equities moved lower ahead of key speeches at the Jackson Hole by Fed governor Jerome Powell and ECB President Lagarde later today. Markets are again pricing a more than 50% probability that the Fed and ECB will both hike again by November.

ECB's Nagel says much too early to consider rate hike pause: Bundesbank President Joachim Nagel said in an interview at the Jackson Hole that it is "much too early to think about a pause" saying that he would wait for additional data before making a decision. He pointed to still high inflation and strong labour market data. His more dovish colleague at the ECB, Portuguese Mario Centeno on the other hand urged officials to be cautious with the next policy move saying risks are materialising.

BRICS expansion: At the BRICS Summit in Johannesburg the group yesterday invited six new members into the club: Argentina, Saudi Arabia, Egypt, UAE, Iran and Ethiopia. The BRICS now represent close to half the world's population and more than 1/3 of global GDP and will likely become a stronger force representing the Global South. While it is a very diverse group their common interest is to create a stronger voice to what they see as a too Western-dominated world order with too little representation of the Global South in organisations such as the IMF, World Bank and the UN. They have also expressed a wish to create an alternative global financial infrastructure less reliant on the USD and SWIFT.

Equities: Global equities reversed yesterday after the optimism on Wednesday. Market more or less flipped around, the reason being renewed yield, inflation and central banks fear. A couple of solid macro data and a hawkish leaning Fed was enough to ruin the fragile inflation optimism built on Wednesday. Hence, Powell's speech this afternoon will be followed closely. Growth underperforming together with cyclicals while VIX ticking back north of 17. In US Dow -1.1%, S&P 500 -1.4%), Nasdaq -1.9% and Russell 2000 -1.3%. The negative sentiment drags on to Asia this morning with Japanese stocks being down almost 2%. US and European futures close to unchanged while waiting for the afternoon speech from Mr. Powell.

FI: The initial yield drop from the market open was gradually reversed through the day amid little significant news flow as we await Powell and Lagarde today at Jackson Hole. The yields in the 10y point were broadly unchanged on the day. After Wednesday's PMIs markets are pricing only 9bp at the ECB September meeting in three weeks' time.

FX: Risk sentiment remains shaky and equities dropped as for the first time the US money market sees an above 50% probability of a November hike. This translated into USD strength, with EUR/USD taking out new 3M lows below 1.08. As per usual, the sour risk sentiment hurt the NOK but surprisingly the SEK showed more resilience. Slightly lower-than-expected Japanese inflation over night adds to the upside in USD/JPY.

Credit: Though CDS indices opened sharply tighter, sentiment turned around during the afternoon, which led iTraxx Xover to widen 2.2bp and Main to close more or less unchanged. Primary market activity was muted, with the only new deals brought to the EUR market being in covered bond format.

Nordic macro

In Sweden unemployment and PPI data is released today.

DXY:

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.

EUR/USD:

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.

EUR/JPY:

The EUR/JPY pair currently displays a bearish trend. With the prevailing downward momentum, there’s an expectation for a bearish continuation moving towards the 1st support.

The 1st support for the pair is positioned at 157.07, recognized primarily as a swing low support. This denotes a previous level where the price found significant support.

The 2nd support stands at 156.52. Its significance arises from its dual characteristic: it is identified as an overlap support, a level with historical price interactions, and aligns with Fibonacci extensions at both 161.80% and 127.20%. Such confluence often strengthens the validity of a support or resistance level.

On the potential upside, the 1st resistance is marked at 157.71. Acting as a pullback resistance, it also intersects with the 38.20% Fibonacci Retracement, suggesting it could be a potent barrier in case of any upward retracements.

Beyond this level, the 2nd resistance is located at 158.46. Like the previous resistance, it too is a pullback resistance but corresponds with the 61.80% Fibonacci Retracement, adding further weight to its potential as a significant resistance point.

EUR/GBP:

The EUR/GBP currency pair is currently exhibiting a bearish momentum. Given this prevailing downtrend, there’s a potential for a bearish reaction upon hitting the 1st resistance, following which the price might drop towards the 1st support.

The 1st support for the pair is set at 0.8557. This level is identified as a pullback support, suggesting it’s an area where the price could find a cushion or stabilization upon a retracement.

The 2nd support comes in slightly lower at 0.8525, and it too acts as a pullback support, indicating another probable zone of stability in case of further downward movement.

Interestingly, the 1st resistance level coincides with the 1st support, situated at 0.8557. It’s termed as an overlap resistance, highlighting its historical significance as a level where the price has shown previous interactions. This resistance is further emphasized due to its alignment with the 50% Fibonacci Retracement, which can act as a pivotal barrier for price actions.

The 2nd resistance is marked at 0.8615. It is identified as a pullback resistance, indicating a potential halt or slowdown in price upon an upward movement.

GBP/USD:

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.

GBP/JPY:

The GBP/JPY pair currently indicates a bearish momentum. However, there’s an expectation for some short-term bullish activity. This involves a potential bullish bounce off the 1st support, leading the price towards the 1st resistance. After reaching this point, there’s anticipation that the price could retract, falling back to the 1st support level.

The 1st support for the pair is anchored at 183.25. This level stands out as an overlap support, signifying its historical relevance where price has previously encountered support. Additionally, this support level is underscored by the 161.80% Fibonacci Extension, making it a potent level to watch.

A bit lower, the 2nd support is situated at 181.82. Similar to the previous one, this is also recognized as an overlap support, which is derived from past price interactions, reinforcing its significance.

On the potential upside, the 1st resistance is marked at 184.79. Acting as a pullback resistance, this level also intersects with the 38.20% Fibonacci Retracement. This indicates that in the event of an upward movement, this could be a strong point of contention for the price.

Further up, the 2nd resistance is located at 186.62. This level is characterized as a multi-swing high resistance, suggesting that it has been a significant barrier during multiple price swings in the past.

USD/CHF:

The USD/CHF pair currently showcases a bullish trend. Given this upward momentum, there’s a potential for a bullish continuation towards the specified resistances.

The 1st support for the pair lies at 0.8826, recognized as a pullback support. This indicates that should there be any minor retracements or downward movement, this level might act as a cushion.

Following this, the 2nd support is positioned at 0.8758. Its significance is accentuated by its history as a multi-swing low support, making it a potential region where the price could find substantial support.

On the upward trajectory, the 1st resistance is pinpointed at 0.8911. This level serves as an overlap resistance, suggesting that past price action has interacted with this level, potentially making it a challenging point for the price to surpass.

Above this, the 2nd resistance stands at 0.9003. Its importance stems from its designation as a multi-swing high resistance, marking it as a notable hurdle for any continued bullish moves.

USD/JPY:

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.

USD/CAD:

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.

AUD/USD:

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.

NZD/USD

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.

DJ30:

The DJ30 (often referred to as the Dow Jones Industrial Average) is demonstrating a bearish trend as per the given data. In the short-term, the market may react bearishly when it touches the 1st resistance, pushing prices to descend towards the 1st support.

The 1st support is identified at 34048.51. This particular level is characterized as an overlap support. Overlap supports are typically derived from previous areas where the price has found stability or a halt in its decline.

Further down, the 2nd support rests at 33643.29. This is recognized as a multi-swing low support, indicating that during several price actions in the past, this level has consistently acted as a strong foundation, preventing further price declines.

In terms of upward barriers, the 1st resistance is pegged at 34270.21. This level is marked as an overlap resistance, suggesting its historical significance in preventing an upward price movement.

Moving further up, the 2nd resistance is noted at 34616.41. Similarly, it’s highlighted as an overlap resistance, emphasizing its potential role in capping any significant bullish price actions.

GER30:

The GER30 (often known as the DAX 30) is exhibiting a bearish momentum based on the provided data. There’s an anticipation for a bearish continuation, which means the index might further decline towards its 1st support level in the near term.

The 1st support for GER30 is pinpointed at 15490.21. This support level has been identified as a multi-swing low support. Such supports are derived from multiple past instances where the price halted its downward movement and even reversed, signaling its crucial role in preventing further declines.

A bit deeper, the 2nd support stands at 15270.67. It’s recognized as a swing low support. Furthermore, it aligns with the 100% Fibonacci Projection, adding more weight to its importance as a potential floor for price declines.

On the potential upward trajectory, the 1st resistance is observed at 15805.69. This resistance point is seen as a multi-swing high resistance, which means it has acted as a ceiling in several past price movements. Additionally, it’s highlighted by the 38.20% Fibonacci Retracement, which indicates a possible retracement level from a previous price movement.

Moving higher, the 2nd resistance is marked at 16002.42. It’s identified as an overlap resistance. This kind of resistance is derived from areas where the price previously encountered hurdles. Further reinforcing its importance is the 50% Fibonacci Retracement, which can act as a key level of interest for traders.

US500

The overall momentum of the US500 (S&P 500) chart is currently bearish, indicating a prevailing trend of downward movement. In this context, there is a possibility that the price could continue its bearish trajectory, with potential levels of support and resistance highlighted for consideration.

The 1st support level at 4334.4 is identified as a point where the price might find some stabilization. This support level is significant due to its association with an overlap support, suggesting that historical price action has demonstrated strength around this level.

Additionally, the 2nd support at 4297.2 holds importance, as it coincides with an overlap support and the 127.20% Fibonacci Extension. The presence of the Fibonacci Extension further reinforces the potential significance of this support level.

On the resistance side, the 1st resistance level at 4456.3 is recognized as an area where the price may encounter obstacles. This resistance level is characterized by an overlap resistance, indicating that historical price action has shown resistance around this level.

Furthermore, the 2nd resistance at 4525.1 is noted as another potential barrier for upward movement. This resistance level is categorized as an overlap resistance, further emphasizing its potential significance.

BTC/USD:

The BTC/USD chart is currently demonstrating a neutral trend. It is anticipated that the price might fluctuate between the 1st resistance and 1st support levels.

The 1st support level at 25,412 is identified as a pullback support, suggesting it’s a key point at which price could find support once more.

To the upside, the 1st resistance at 26,731 is identified as a pullback resistance while the 2nd resistance at 27,324 is also identified as a pullback resistance that aligns with the 38.20% Fibonacci retracement level.

ETH/USD:

The ETH/USD chart is currently exhibiting a neutral trend and price is projected to fluctuate between the 1st resistance and 1st support levels.

The 1st support level at 1,620.76 is identified as a multiple swing-low support while the 2nd support at 1,542.56 is identified as a swing low support. This indicates it is another historically significant level where price has found support in the past.

To the upside, the 1st resistance at 1,699.68 is identified as an overlap resistance while the 2nd resistance at 1,773.16 is also identified as an overlap resistance that aligns with the 50.00% Fibonacci retracement level.

WTI/USD:

The WTI (West Texas Intermediate) chart is currently displaying a bearish momentum. One significant factor contributing to this trend is the price positioning below the bearish Ichimoku cloud, often suggesting potential further downside. There is potential for price to make a continued downward movement towards the identified support levels.

The 1st support level at 78.10 is identified as a multiple swing-low support that coincides with a confluence of Fibonacci levels i.e. the 61.80% retracement and the 127.20% extension levels, offering a stronger foundation as a potential support zone.

In addition, the 2nd support level at 76.90 is identified as an overlap support that also aligns with a confluence of Fibonacci levels i.e. the 161.80% extension and the 78.60% projection levels.

To the upside, the 1st resistance at 80.24 is identified as an overlap resistance characteristic that aligns with the 61.80% Fibonacci retracement level. Furthermore, the 2nd resistance level at 81.43 is also identified as an overlap resistance.

XAU/USD (GOLD):

The XAUUSD, which represents the Gold spot price in US Dollars, currently indicates a bullish trend. Given this upward momentum, there’s a strong possibility of a bullish continuation towards the specified resistance levels.

The 1st support for XAUUSD lies at 1912.79. This level is significant due to its classification as an overlap support, coupled with its alignment with the 23.60% Fibonacci Retracement. Overlap supports often represent levels where the price has shown historical interactions, and in conjunction with a Fibonacci level, its significance is further enhanced.

The 2nd support is pegged at 1901.84. This level stands out not only as a multi-swing low support but also coincides with the 50% Fibonacci Retracement, adding to its importance as a potential stabilization point in case of a pullback.

On the upside, the 1st resistance is set at 1931.07. This level acts as an overlap resistance and also shows a Fibonacci confluence, specifically with the 61.80% and 38.20% Fibonacci Retracements. Such confluences often act as robust barriers or pivot points in the market, suggesting a potential area of contention for the upward price movement.

Further ahead, the 2nd resistance is positioned at 1944.27, which also serves as an overlap resistance, indicating another potential challenge for the bullish momentum.

Daily Pivots: (S1) 1.2551; (P) 1.2640; (R1) 1.2689; More...

GBP/USD's fall from 1.3141 resumed and intraday bias is back on the downside. Next target is 61.8% projection of 1.3141 to 1.2618 from 1.2799 at 1.2476. Firm break there could prompt downside acceleration to 100% projection at 1.2276. On the upside, break of 1.2799 resistance is needed to confirm completion of the decline. Otherwise, near term outlook will stay bearish in case of recovery.

In the bigger picture, for now, fall from 1.3141 medium term top is seen as a correction to up trend from 1.0351 (2022 low). Deeper decline would be seen to 38.2% retracement of 1.0351 to 1.3141 at 1.2075. Strong support would be seen there to bring rebound on first attempt. But outlook will be neutral at best as long as 1.3141 resistance holds, and consolidation from there is set to extend, until further development.

A shift in market sentiment rattled investors as the optimism spurred by Nvidia was short-lived. DOW experienced its most severe daily slump since March overnight, while S&P 500 and NASDAQ posted their largest one-day drops since early August. This change in market dynamics played into the hands of Dollar, which surged, hitting weekly highs against major European currencies due to heightened risk aversion.

Attention is now pivoting to Jackson Hole Symposium, where Fed Chair Jerome Powell's introductory remarks are eagerly anticipated. While no explicit insights are expected concerning Fed's upcoming September meeting, stakeholders are keen on gauging how Powell will straddle discussions about diverging trends in easing prices and wages, versus strong consumer spending and services inflation. Following Powell's address, the financial community will be tuning into ECB President Christine Lagarde's luncheon address, as well as the panel discussion that features luminaries like BoE Deputy Governor Ben Broadbent and BoJ Governor Kazuo Ueda.

Technically, Dollar displayed notable strength in breaking firmly through 1.0801 temporary low in EUR/USD and 1.2613 temporary low in GBP/USD. Now, focuses will be on 146.55 temporary top in USD/JPY, 1.3602 temporary top in USD/CAD, and 0.6363 support in AUD/USD. Decisive break of there level will confirm the underlying bullish momentum in the greenback.

In Asia, at the time of writing, Nikkei is down -1.97%. Hong Kong HSI is down -1.12%. China Shanghai SSE is down -0.45%. Singapore Strait Times is up 0.04%. Japan 10-year JGB yield is down -0.0284 at 0.649. Overnight, DOW dropped -1.08%. S&P 500 dropped -1.35%. NASDAQ dropped -1.87%. 10-year yield rose 0.037 to 4.235.

Fed Collins: Be patient and not get ahead of data

Boston Fed President, Susan Collins, offered a cautionary stance on the current monetary policy trajectory in her latest remarks. Addressing the possibility of further rate hikes, Collins noted yesterday, "We may be near, we could even be at a place where we would hold" and not lift rates further.

While not ruling out the possibility of future hikes, Collins emphasized a measured approach, stating, "But certainly additional increments are possible, and we need to look holistically and be really patient right now and not try to get ahead of what the data will tell us as it unfolds."

On the topic of inflation, Collins expressed her confidence in the Federal Reserve's capabilities, saying she is "hopeful Fed can bring inflation back to 2% in a reasonable amount of time."

However, she cautioned against making premature judgments about potential rate cuts, remarking it's "premature to send a clear signal about the timing of rate cuts."

Fed Harker: We've probably done enough

Philadelphia Fed President, Patrick Harker, shared his insights on the current stance of Fed's monetary policy. Addressing the topic of monetary tightening, Harker said yesterday, "Right now, I think that we've probably done enough because we have two things going on."

Elaborating further, Harker mentioned the twin pillars that have influenced his perspective: "The Fed funds rate increases — they are at a restrictive level, so let's keep them there for a while. And also we are continuing to shrink our balance sheet that is also removing accommodation."

Looking to the future, Harker emphasized a data-driven approach, noting, "I see us staying steady throughout the rest of this year, next year is data driven." When prompted about the potential timing of a rate cut, he candidly stated, "Can't predict when Fed will cut rates."

ECB's Nagel: Too early to think about a pause

ECB Governing Council member Joachim Nagel, in remarks made yesterday, reinforced his stance on the ongoing monetary tightening efforts of the central bank. Addressing speculations around a potential pause, he firmly stated, "It's for me much too early to think about a pause," emphasizing the significant gap between the current inflation rate and ECB's target.

Nagel pointed out the glaring disparity between the present inflation situation and ECB's benchmark, saying, "We shouldn't forget inflation is still around 5%. So this is much too high. Our target is 2%. So there's some way to go."

Despite the overarching concern regarding a slowdown in economic activity in Eurozone, Nagel highlighted the persistence of core inflation and characterized the labor market as being "really pretty good."

Dismissing prevalent narratives surrounding Germany's economic health, he countered, "I hear a lot of talk about Germany, the sick man of Europe. This is definitely not the case." Concluding on an optimistic note, Nagel added, "I'm still pretty optimistic that we will have a soft landing."

ECB's Vujcic: Whether we are in a restrictive-enough territory remains to be seen

ECB Governing Council member Boris Vujcic acknowledged the restrictive nature of the ECB's present stance. However, he tempered this by highlighting the uncertainty that remains, suggesting that the real test of the bank's approach lies ahead.

"Whether we are in a restrictive-enough territory remains to be seen. And this is something that you will only see from the inflation data that will come in the next prints," he emphasized.

Despite indications of a cooling economic activity, Vujcic pointed out that this deceleration is not as evident in the current inflation rates. The upcoming months, according to him, will be crucial in discerning the direction of services inflation and in understanding "whether we will feel the consequences of the slowdown in the labor market."

While ECB expects to reach its 2% inflation target in 2025, Vujcic said that "by spring next year, we will have a clearer picture of whether we are firmly on the path toward achieving that or we will have to do more."

ECB's Centeno: Downside risks have materialized

ECB Governing Council member Mario Centeno, indicated yesterday that the transmission of ECB's policy is "up and running" and pointed out the rapidity with which inflation has decelerated, noting its descent has outpaced its ascent.

However, he urged prudence, stating, "We have to be cautious this time around because downside risks that we identified in June in our forecast have materialized." This marks a shift from the pattern observed throughout the pandemic recovery, where, as Centeno highlighted, "usually we have been surprised on the upside."

Centeno also hinted at the uncertainty ahead, observing, "There's plenty of data still to be made available until the September decision." He further emphasized the significance of the upcoming forecast, mentioning, "We have a new forecast. That forecast will tell us precisely how we see this transmission of our decisions into inflation and the economy."

On the data front

Japan Tokyo CPI core slowed from 3.0% yoy to 2.8% yoy in August, below expectation of 2.9% yoy. Corporate services price index rose 1.7% yoy in July, above expectation of 1.2% yoy.

Looking ahead, Germany GDP final will be released in European session. Ifo business climate will also be published too.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2551; (P) 1.2640; (R1) 1.2689; More...

GBP/USD's fall from 1.3141 resumed and intraday bias is back on the downside. Next target is 61.8% projection of 1.3141 to 1.2618 from 1.2799 at 1.2476. Firm break there could prompt downside acceleration to 100% projection at 1.2276. On the upside, break of 1.2799 resistance is needed to confirm completion of the decline. Otherwise, near term outlook will stay bearish in case of recovery.

In the bigger picture, for now, fall from 1.3141 medium term top is seen as a correction to up trend from 1.0351 (2022 low). Deeper decline would be seen to 38.2% retracement of 1.0351 to 1.3141 at 1.2075. Strong support would be seen there to bring rebound on first attempt. But outlook will be neutral at best as long as 1.3141 resistance holds, and consolidation from there is set to extend, until further development.

Economic Indicators Update

GMT	Ccy	Events	Actual	Forecast	Previous	Revised
23:30	JPY	Tokyo CPI Y/Y Aug	2.90%	3.00%	3.20%
23:30	JPY	Tokyo CPI ex Fresh Food Y/Y Aug	2.80%	2.90%	3.00%
23:30	JPY	Tokyo CPI ex Food Energy Y/Y Aug	4.00%		4.00%
23:50	JPY	Corporate Service Price Index Y/Y Jul	1.70%	1.20%	1.20%	1.40%
06:00	EUR	Germany GDP Q/Q Q2 F		0.00%	0.00%
08:00	EUR	Germany IFO Business Climate Aug		86.6	87.3
08:00	EUR	Germany IFO Current Assessment Aug		89.8	91.3
08:00	EUR	Germany IFO Expectations Aug		83.8	83.5
14:00	USD	Michigan Consumer Sentiment Index Aug F		71.2	71.2

ECB Governing Council member Boris Vujcic acknowledged the restrictive nature of the ECB's present stance. However, he tempered this by highlighting the uncertainty that remains, suggesting that the real test of the bank's approach lies ahead.

"Whether we are in a restrictive-enough territory remains to be seen. And this is something that you will only see from the inflation data that will come in the next prints," he emphasized.

Despite indications of a cooling economic activity, Vujcic pointed out that this deceleration is not as evident in the current inflation rates. The upcoming months, according to him, will be crucial in discerning the direction of services inflation and in understanding "whether we will feel the consequences of the slowdown in the labor market."

While ECB expects to reach its 2% inflation target in 2025, Vujcic said that "by spring next year, we will have a clearer picture of whether we are firmly on the path toward achieving that or we will have to do more."

ECB Governing Council member Joachim Nagel, in remarks made yesterday, reinforced his stance on the ongoing monetary tightening efforts of the central bank. Addressing speculations around a potential pause, he firmly stated, "It's for me much too early to think about a pause," emphasizing the significant gap between the current inflation rate and ECB's target.

Nagel pointed out the glaring disparity between the present inflation situation and ECB's benchmark, saying, "We shouldn't forget inflation is still around 5%. So this is much too high. Our target is 2%. So there's some way to go."

Despite the overarching concern regarding a slowdown in economic activity in Eurozone, Nagel highlighted the persistence of core inflation and characterized the labor market as being "really pretty good."

Dismissing prevalent narratives surrounding Germany's economic health, he countered, "I hear a lot of talk about Germany, the sick man of Europe. This is definitely not the case." Concluding on an optimistic note, Nagel added, "I'm still pretty optimistic that we will have a soft landing."