Sample Category Title

EUR/USD

Current level - 1.1554

I favor a dip to 1.1490 area before completion of the consolidation pattern and rise through 1.1640.

USD/JPY

Current level - 111.40

The outlook is positive, for a break through 111.40, en route to 112.20 zone.

GBP/USD

Current level - 1.2829

Allow another slide towards 1.2750 before reversal and bounce back to 1.2930 area. Initial resistance lies at 1.2845.

GBPJPY has been outperforming today and seems to be ready to challenge the 143.00 psychological level again. In the short-term, the price has moved higher after the rebound on the one-year low of 139.88, achieved on August 15. However, the technical indicators seem to be flat in the positive territory. The RSI hovers below the 70 level, while MACD remains neutral below the trigger line.

If price action successfully surpasses 143.00, there is scope to test the 38.2% Fibonacci retracement level of the downleg from 149.30 to 139.88, around 143.50. Slightly above this level, the 143.75 barrier could act as a strong obstacle for the bulls, taken from the low on June 28. Rising above it would see prices re-testing the 50.0% Fibonacci mark of 144.60.

However, in the case of downside movement, the 20-simple moving average (SMA) could act as immediate support near 142.37 and a drop below it could drive the pair until the 23.6% Fibonacci of 142.10. In addition, the 141.75 hurdle could be hit if there are more downside pressures.

Overall, GBPJPY remains positive in the near term as it stands above the 20- and 40-SMAs, which recently posted a bullish crossover in the 4-hour chart and is in a strong position to retest the descending trend line – major resistance barrier that been standing since July 16.

EURGBP is rising for the third straight day and is currently trading close to the 10-month high of 0.9029 recorded earlier in the month.

Supporting the view for a bullish bias are the positively aligned Tenkan- and Kijun-sen lines. The easing Kijun-sen, though, may be hinting that upside momentum is weakening. The RSI, which continues to rise in bullish territory, also acts as a testament to the positive bias. Notice, though, that the indicator is not far below the 70 overbought level.

Immediate resistance to additional gains could be taking place around 0.9029, the aforementioned 10-month peak, with stronger advancing bringing into focus the 0.91 round figure.

On the way down, support may come around the 0.90 handle, with a downside violation turning the attention to the region around the current levels of the Tenkan- and Kijun-sen lines at 0.8961 and 0.8942 respectively – the area around these two encapsulates a couple of tops from previous months. Further below, the zone around the current level of the 50-day moving average at 0.8884 would be eyed, including the 0.89 mark.

The medium-term picture is positive: price action is confirming the signal given by the bullish cross recorded in early July when the 50-day MA moved above the 100-day one, with trading activity taking place above the two MA lines, as well as above the Ichimoku cloud.

Overall, both the short- and medium-term outlooks are looking bullish at the moment.

The British pound is starting to recover bullish momentum against the US dollar after the price fell towards the 1.2800 level on Thursday. GBPUSD buyers may start to target towards the 1.2910 level if they can break through the key 1.2850 resistance area. Traders now await Federal Reserve Chair Jerome Powell’s scheduled speech at Jackson Hole.

The GBPUSD pair is only bullish while trading above the 1.2850 level, key resistance is now found at the 1.2880 and 1.2910 levels.

If the GBPUSD pair continues to trade below the 1.2850 level, further losses towards the 1.2800 and 1.2775 levels remains possible.

The euro currency has moved marginally higher against the US dollar during the European trading session after German GDP data came in as expected. The EURUSD pair is currently trapped in a neutral triangle pattern, indicating that a directional breakout remains likely. It is also worth noting that a bearish head and shoulders pattern has formed across the lower time frames.

The EURUSD pair is only bullish while trading above the 1.1553 level, key resistance is now found at the 1.1588 and 1.1630 levels.

If the EURUSD pair falls below the 1.1553 level, key support is now found at the 1.1538 and 1.1500 levels.

Trump trouble boosts EUR/USD

Make no mistake: the Trump Administration is in crisis. Convictions of two Trump deputies and an indictment of campaign finance violations are real problems that carry jail terms. This is not hype, Special Prosecutor Robert Mueller is building a legal sledgehammer. Now he can file criminal charges against Trump. Democrats and anti-Trumpists smell blood. They are blocking the advancement of Supreme Court nominee Brett Kavanaugh. Their strategy is to win the November mid-term elections to gain control of the House and the Senate. Then, they will try to impeach Trump (although they are unlikely to win over 67 Senators to remove Trump from office. House Democratic Leader Nancy Pelosi’s final act will be to impeach Trump – falling on the sword as her political career ends.

Meanwhile, the US Federal Reserve shows no signs of speeding up rate hikes, further flattening US yield curves. In Europe, the economy should rebound a marginally in Q3. We should see EUR/USD grind higher into 2019.

Weak bounce in Yen despite higher inflation

Japanese inflation numbers continue to disappoint, rendering the Bank of Japan’s 2% inflation target by 2021 less likely. July’s nominal consumer prices increased by 0.90% (prior: 0.70%) amid increasing fresh food and fuel prices, but core figures suggest a flattening of the measure, both given at +0.80% (ex. food) and +0.30% (ex. food and energy): almost unchanged since the beginning of the year (+/- 0.2 range bound). The likelihood of the BoJ adjusting its inflation forecast downward is becoming certain.

The recent decision to allow a wider fluctuation of its 10-year government bond yield will cause further yen appreciation, which is expected to reduce inflation. Government’s decision to reduce mobile wireless fees by 40%, a business contributing 0.90% of core CPI expansion, could subdue consumption. Following the announcement on Tuesday, KDDI, NTT Docomo, Rakuten and Softbank lost -5.22%, -4%, -3.59% and -1.63% respectively. Currently trading at 111.39, USD/JPY is expected to bounce back, heading along 111.50 in the short-term.

WTI oil price continues to trend higher on Friday after bulls took a breather previous day, when the action was shaped in Hanging Man but negative impact was offset by fresh strength.

No significant results from US/China trade talks provided fresh support to oil prices, as concerns about lower demand on escalation of trade tensions faded.

Fresh bulls are supported by strengthening momentum and daily MA’s (10,20,30) now in bullish setup, while slow stochastic continues to head north, deep in overbought territory, giving so far no signs of reversal.

Strong barriers at $68.60/77 (Fibo 38.2% of $75.34/$64.43 / converged 100/55SMA’s) is under pressure, with sustained break higher to generate fresh bullish signal for extension towards psychological $70 barrier and $70.42 (30 July lower top).

On the downside, 30SMA marks initial support at $67.78, while 20SMA which contained Thursday’s consolidation, turned sideways (currently at $67.42) and is expected keep the downside protected.

Res: 68.60, 68.77, 69.35, 69.89
Sup: 67.78, 67.42, 67.00, 66.53

There is a lower level of market volatility at the end of the week, with investors on stand-by mode before Federal Reserve Chair Jerome Powell speaks at Jackson Hole later today.

Traders are probably on the edge of their seats wondering whether Powell will respond at all to the criticism from U.S. President Trump towards US interest rate policy earlier in the week, but the most market-friendly way to respond to such comments would be to ignore them. The Federal Reserve does remain set on raising U.S. interest rates again next month, and there is no reason for the Fed to deter from this path. I personally doubt that he would acknowledge the comments made by President Trump during Jackson Hole.

Powell might be able to create some volatility for traders if he highlights the potential impact of ongoing trade tensions to the global economy. There are indications that the global economic outlook is slowing when compared to this time last year, and the latest FOMC Minutes released this week did create a picture that Federal Reserve policymakers are concerned about the prolonged trade tensions. If Powell suggests that these concerns over trade tensions could also weaken the US economic outlook, this would represent a risk for the Dollar.

Elsewhere, a threat for financial market volatility would be if Jerome Powell takes an unexpected turn towards offering monetary guidance on what the outlook for 2019 could bring. The market is already pretty much set-on for the Federal Reserve to raise US interest rates next month with the door also remaining open for a potential US interest rate increase before the year concludes.But there isn’t much guidance on what to expect next year. It might be a little premature at this stage to speculate, but if Powell suggested that 2019 would bring a less active approach towards raising US interest rates this would beseen as a negative for the US Dollar.

Given lack of fundamentals, the EUR/USD exchange rate showed no changes to its price level on Thursday. The pair was restricted by the monthly S1 from above, while support was set by the 100-hour SMA and the weekly S2 at 1.1582 and 1.1540, respectively. This slight movement down sent the pair testing the junior channel early this morning.

Technical indicators on the 4H chart demonstrate that the pair is more likely to edge lower today, but traders still need to wait for a confirmation—a southern breakout from the 1.1540 territory—to see a decline. Today's downside target is the 200-hour SMA and the monthly S2 circa 1.1470.

In case this expected breakout south does not occur, the rate should target the upper junior channel line and the monthly PP at the 1.1650 level.

Following no changes to its price level on Wednesday, the Pound began weakening slightly against its American counterpart during the following day. It fell below the 55– and 100-hour SMAs and stopped solely at the 1.28 level early this morning.

This has left the rate between the 100– and 200-hour SMAs in a narrow 1.2785/1.2850 range. The Sterling should fluctuate in between those lines during the first part of the day. Even if a breakout occurs to the upside, it is not expected that large gains are apparent today due to the 55-hour SMA being nearby at 1.2872.

Meanwhile, there is slightly greater downside potential, with the next support level being the monthly S2 and the weekly PP at 1.2750. Technical indicators flash bearish signals in this session.