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Daily Pivots: (S1) 1.3116; (P) 1.3174; (R1) 1.3276; More...

GBP/USD's rally is still in progress and intraday bias stays on the upside. Current up trend should target 100% projection of 1.2298 to 1.3043 from 1.2664 at 1.3409. On the downside, below 1.3075 minor support will turn intraday bias neutral and bring consolidations, before staging another rally.

In the bigger picture, up trend from 1.0351 (2022 low) is resuming. Next target is 38.2% projection of 1.0351 to 1.3141 from 1.2298 at 1.3364. For now, outlook will stay bullish as long as 1.2664 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8451; (P) 0.8497; (R1) 0.8522; More…..

USD/CHF's fall from 0.8747 is in progress and intraday bias stays on the downside for retesting 0.8431 support. Firm break there will resume whole decline from 0.9223 towards 0.8332 low. On the upside, above 0.8540 minor resistance will turn intraday bias neutral. But risk will stay on the downside as long as 0.8747 resistance holds, in case of recovery.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with fall from 0.9223 as the second leg. Strong support could be seen from 0.8332 to bring rebound. Yet, overall outlook will continue to stay bearish as long as 0.9243 resistance holds. Firm break of 0.8332, however, will resume larger down trend from 1.0146 (2022 high).

Daily Pivots: (S1) 143.37; (P) 144.93; (R1) 145.81; More...

Intraday bias in USD/JPY remains mildly on the downside as fall from 149.35 is in progress for retesting 141.67 low. Firm break there will resume the whole fall from 161.94 to 140.25 support next. On the upside, above 146.47 minor resistance will turn intraday bias neutral first. But, risk will stay on the downside as long as 149.35 resistance holds, in case of recovery.

In the bigger picture, fall from 161.94 medium term top is seen as correcting whole up trend from 102.58 (2021 low). Deeper decline could be seen to 38.2% retracement of 102.58 to 161.94 at 139.26, which is close to 140.25 support. In any case, risk will stay on the downside as long as 55 W EMA (now at 149.38) holds. Nevertheless, firm break of 55 W EMA will suggest that the range for medium term corrective pattern is already set.

Daily Pivots: (S1) 1.3465; (P) 1.3542; (R1) 1.3586; More...

USD/CAD's fall from 1.3946 continues today and intraday bias stays on the downside for 1.3477 support. Firm break there will target 1.3091/3176 support zone. On the upside, above 1.3570 support turned resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, current development suggests that corrective pattern from 1.3976 (2022 high) is extending with another falling leg. While deeper decline could be seen, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

Geopolitical events dominate market movements today amid a sparse economic calendar. Oil prices have surged following an announcement from Libya’s eastern government in Benghazi that oil production and exports would be halted. This move stems from a dispute with the internationally recognized western government in Tripoli over central bank leadership.

Additionally, markets are reacting to news of Israel launching a major airstrike campaign in Lebanon on Sunday. The operation, described by Israel as a preemptive measure against Hezbollah, has escalated tensions, with Hezbollah responding by launching hundreds of missiles at Israel in retaliation for the death of one of its senior commanders in July.

In the currency markets, Yen is currently leading as the strongest performer, although buying momentum remains subdued. Canadian Dollar is gaining strength as well, bolstered by rising oil prices, while Dollar follows, supported by strong durable goods orders data.

Conversely, New Zealand Dollar is the weakest, trailed by Australian Dollar. Euro is also under pressure after Germany’s Ifo institute warned of a deepening economic crisis. Sterling and the Swiss Franc are positioned in the middle of the performance chart.

Technically, WTI's strong rally today suggests that fall from 80.55 has completed at 72.57, after defending 71.42 support. Further rise is now expected as long as 76.20 support holds, towards 80.55 resistance next. Firm break there will raise the chance that whole consolidation from 87.84 has completed and target 84.72 resistance and above.

In Europe, at the time of writing, FTSE is up 0.48%. DAX is down -0.08%. CAC is up 0.25%. UK 10-year yield is flat at 3.916. Germany 10-year yield is up 0.018 at 2.251. Earlier in Asia, Nikkei fell -0.66%. Hong Kong HSI rose 1.06%. China Shanghai SSE rose 0.04%. Singapore Strait Times rose 0.24%. Japan 10-year JGB yield fell -0.0107 to 0.885.

US durable goods orders jump 9.9% mom in Aug

US durable goods orders surged 9.9% mom to USD 289.6B, well above expectation of 4.0% mom. Ex-transport orders fell -0.2% mom to USD 187.4B, below expectation of 0.0% mom. Ex-defense orders jumped 10.4% mom to USD 271.9B.

Transportation equipment drove the overall growth, up 34.8% mom to USD 102.2B.

German Ifo business climate falls to 86.6, Ifo warns of worsening economic crisis

In August, Germany’s Ifo Business Climate Index dropped from 87.0 to 86.6, slightly surpassing expectations of 86.5 but still signaling growing economic concerns. Current Assessment Index also dipped from 87.1 to 86.5, aligning with forecasts, while Expectations Index marginally beat predictions at 86.8, although still reflecting a decline from 87.0

Sector-wise, manufacturing sector saw a significant decline from -14.2 to -17.8. Services sector turned negative, falling from 0.8 to -1.3. Trade sector showed a minor improvement from -27.9 tox -27.4, while construction remained stagnant at -26.4.

Ifo President Clemens Fuest issued a stark warning, stating, "The German economy is increasingly falling into crisis."

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.3465; (P) 1.3542; (R1) 1.3586; More...

USD/CAD's fall from 1.3946 continues today and intraday bias stays on the downside for 1.3477 support. Firm break there will target 1.3091/3176 support zone. On the upside, above 1.3570 support turned resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, current development suggests that corrective pattern from 1.3976 (2022 high) is extending with another falling leg. While deeper decline could be seen, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

Economic Indicators Update

US durable goods orders surged 9.9% mom to USD 289.6B, well above expectation of 4.0% mom. Ex-transport orders fell -0.2% mom to USD 187.4B, below expectation of 0.0% mom. Ex-defense orders jumped 10.4% mom to USD 271.9B.

Transportation equipment drove the overall growth, up 34.8% mom to USD 102.2B.

Full US durable goods orders release here.

The Japanese yen has started the week with slight gains. In the European session, USD/JPY is trading at 144.15, down 0.16% on the day at the time of writing.

On Friday, the yen shot up 1.3%, as the US dollar was pummeled by the major currencies following Federal Chair Jerome Powell’s speech at the Jackson Hole Symposium.

Powell says Fed poised to cut rates

The markets eagerly awaited Jerome’s Powell’s speech at Jackson Hole and heard what they were looking for – an endorsement for a milestone rate cut. Powell said “the time has come for policy to adjust” but didn’t say when, noting that the timing and pace of rate cuts would depend on the economic outlook and the incoming data. Still, there’s little doubt that next month the Fed will deliver its first rate cut since March 2020, at the onset of the Covid pandemic. The market’s response to Powell’s remarks sent that US dollar sharply lower on Friday against the major currencies.

The markets have fully priced in a rate cut in September. Just one month ago, the odds of a 25-basis point cut stood at 88% and 12% for a cut of 50 bps, according to the CME’s FedWatch. Since then, the US economy has posted some weaker-than-expected data and the probability currently stands at 63.5% for a 25-bps cut vs. 36.5% for a 50 bps move.

The odds could move sharply once again after the US releases the employment report on Sept. 6, two weeks ahead of the Fed meeting. A weak jobs report could rattle investors and push the Fed to respond with a 50-bps cut.

In Japan, inflation will be in focus with the release of BoJ Core CPI for July. The index is expected to remain unchanged at 2.1%. Inflation has been moving higher in Japan, making the Bank of Japan an outlier among major central banks as it looks to normalize policy by raising interest rates.

USD/JPY Technical

• USD/JPY tested support at 143.37 earlier. Below, there is support at 142.49
• There is resistance at 144.93 and 145.81

Germany’s business climate

Germany’s business climate deteriorated in August but was better than expected. The Ifo business climate indicator fell from 87.0 to 86.6, the fourth consecutive month of decline, but better than the forecast of 86.0. Both the expectations and components of the current conditions fell.

This is potentially negative news for the single currency, pointing to a deterioration in the macro-economy. However, markets have little doubt that the ECB will cut rates in September, so the short-term reaction has been limited. It is also worth remembering that the ECB does not target the labour market like the Fed but focuses solely on inflation. A slowdown in industry and services tends to keep prices in check, but this can be a rather long and indirect process. From this perspective, more attention will be paid to Thursday’s preliminary inflation estimate for August.

Nonetheless, any weakness in the macroeconomic data could trigger active profit-taking in the EURUSD, which climbed to 1.1120 at the start of Monday’s trading, a 13-month high.

EURUSD Technical Analysis

Last week, the EURUSD made an important technical breakout, trading above its 200-week moving average by more than 1%. Four years ago, this breakout was followed by a four-week rally in the pair, which lasted for almost six months and totalled more than 9%. A similar magnitude of growth was seen in 2017.

In the current environment, this suggests upside potential above 1.20, mainly due to a weaker dollar, while weakness in the economy and government finances remains the single currency’s Achilles’ heel.

EURUSD presents enticing opportunities for all traders—keep watching!

The EURUSD pair, often referred to by traders as the "Fiber," is the most traded currency pair in the Forex market. It reflects the Euro's relative strength against the US Dollar, two of the world's most significant currencies. The US Dollar's value is heavily influenced by economic indicators such as GDP growth, employment data, and Federal Reserve monetary policy decisions. On the other hand, the Euro is impacted by economic developments across the Eurozone, particularly Germany and France, as well as by the European Central Bank's policy actions.

US gross domestic product (GDP) QoQ, Aug 29, 14:30 (GMT+2)

The US economy is currently displaying resilience with solid growth, though concerns about inflation and a potential slowdown persist. The upcoming US GDP report is forecasted to show a steady growth rate of 2.8% for the quarter. If the actual GDP exceeds this forecast, indicating stronger-than-expected economic expansion, it could lead to a significant appreciation of the US Dollar. A stronger Dollar would likely push the EURUSD pair lower. Conversely, if the GDP figure comes below expectations, suggesting that the US economy is slowing down, the Dollar could weaken. In this scenario, the EURUSD pair might rise as the market anticipates a more dovish stance from the Federal Reserve.

Last time, US GDP came in below expectations, which led to a noticeable rise in EURUSD during the day!

Eurozone consumer price index (CPI) YoY, Aug 30, 11:00 (GMT+2)

The Eurozone CPI is forecasted to remain at 2.6%, reflecting stable regional inflation. If the CPI comes in higher than expected, it would signal rising inflationary pressures within the Eurozone. This could lead to speculation that the European Central Bank will keep monetary policy at current levels. This move would likely strengthen the Euro, driving the EURUSD pair higher. On the other hand, if the CPI is lower than forecasted, it could indicate that inflationary pressures are weaker than anticipated. This might prompt the ECB to maintain or even loosen its accommodative monetary policies, weakening the Euro, and, as a result, the EURUSD pair could decline.

In the Daily timeframe, EURUSD, in a long-term bullish trend, reached a critical resistance level, testing the upper Bollinger line. Despite the solid bullish sentiment, a divergence has formed on the MFI, and the %R indicates overbought.

• If the price breaks above 1.1150 resistance, the target will be 1.1250, which is last year's high;
• A rebound from resistance will drop EURUSD to support at 1.1010;

• Gold rises above short-term SMAs
• Stochastics turn down
• MACD and RSI still have positive momentum

Gold prices are rallying higher, with the prospect of reaching the record high of 2,531 again. More advances may find resistance at the next round numbers of 2,600 and 2,700.

However, the technical signals are mixed. The stochastic oscillator is heading south from the overbought region; however, the RSI is ticking higher, approaching the 70 level. Moreover, the MACD oscillator is holding above its trigger and zero lines. The 20- and 50-day simple moving averages (SMAs) are pointing higher, while the current market price is standing well above the 200-day SMA.

In the negative scenario, a drop beneath the previous high could lead the market towards the 20-day SMA at 2,460, ahead of the 2,432 support. Even lower, the 50-day SMA at 2,406, which coincides with the short-term uptrend line, may halt downside actions.

All in all, the yellow metal has had a strong bullish tendency in the long- and short-term timeframes, and only a decisive close below the 200-day SMA could change the current outlook.