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

Intraday bias in USD/CAD remains on the downside for the moment. Fall from 1.3946 is in progress for 1.3477 support. Firm break there will target 1.3091/3176 support zone. On the upside, above 1.3617 resistance will turn intraday bias neutral first.

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.

Daily Pivots: (S1) 0.6731; (P) 0.6765; (R1) 0.6830; More...

Intraday bias in AUD/USD stays on the upside for the moment, with focus on focus on 0.6798 resistance. Firm break there will extend the rally from 0.6348 to 0.6870 resistance next, with prospecting of resuming whole rise from 0.6269. On the downside, below 0.6696 support turn bias to the downside for deeper pull back instead.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6798/6870 resistance zone will target 0.7156 resistance. In case of another fall, strong support should be seen from 0.6169/6361 to bring rebound.

Traders appear to be stepping back from last Friday's risk-on rally, showing more caution in the Asian session today. The mood in major indices is mixed; with Nikkei trading down by more than -1%, while HSI is showing gain of about 1%. This cautious sentiment is mirrored in the currency markets, where safe-haven currencies like Yen and Swiss Franc have gained slightly alongside Dollar. Risk-sensitive currencies like Aussie and Kiwi are losing some ground.

However, the movements are relatively muted, with no major technical levels being breached. This suggests that markets are merely in a phase of consolidation, indicating that markets are in a holding pattern, digesting recent moves and waiting for the next catalyst.

Today's economic calendar is relatively light, with Germany's Ifo Business Climate Index and US Durable Goods Orders being the primary data points to watch. With the UK on a bank holiday, trading might remain subdued for now. But things are expected to pick up as the week progresses, especially with upcoming inflation data from the US, Eurozone, Japan, and Australia.

Technically, EUR/CHF would be a focus today. While the rebound from 0.9209 was strong, it struggled to break through 55 D EMA (now at 0.9577). Decisive break of 0.9448 minor support will argue that this rebound has completed after reject by the 55 D EMA. That would keep the down trend from 0.9928 intact too, and could set the stage for retesting 0.9209 low next.

In Asia, at the time of writing, Nikkei is down -1.09%. Hong Kong HSI is up 1.00%. China Shanghai SSE is down -0.07%. Singapore Strait Times is up 0.01%. Japan 10-year JGB yield is down -0.0162 at 0.879.

Bitcoin to face 66k hurdle as risk-on rally gains traction

Bitcoin surged last Friday and stayed firm throughout the weekend. The cryptocurrency broke through an important near-term resistance level, fueled by broad risk-on sentiment following Fed Chair Jerome Powell's indication of upcoming monetary easing. It now stands at a critical juncture, where the next move will determine whether it has completed the medium-term consolidation that began in March.

Technically, the break of 62724 confirmed resumption of the rebound from 49008. The strong break of 55 D EMA is also a near term bullish sign. It's possible that the corrective pattern from 73812 has completed 49008, after hitting 50% retracement of 24896 to 73812 at 49354.

However, to solidify the bullish case, Bitcoin will have to overcome the first hurdle at 61.8% projection of 49008 to 62724 from 57812 at 66288. Rejection by this level will keep the rebound from 49008 as just another leg in the corrective pattern from 73812. On the other hand, firm break of 66288 could prompt upside acceleration to 100% projection at 71528, and build up momentum for eventual breakout from the five-month range.

Gold and Silver bounded in range, awaiting Dollar-driven breakout

Both Gold and Silver are currently still caught in near-term consolidations despite the rally late last week. Both metals have the potential to extend their recent gains, but a more pronounced decline in Dollar may be necessary to provide the needed momentum.

As for Gold, further rally is expected as long as 2470.72 support holds. Firm break of 2531.57 will resume the long term up trend and extend the record run. Next target is 61.8% projection of 1984.05 to 2449.83 from 2293.45 at 2581.30. However, break of 2470.72 will risk deeper pull back to 55 D EMA (now at 2412.87) first.

While Silver has been lagging Gold in its run, there is prospect of a catch up ahead. Corrective pattern from 32.50 has likely completed with three waves down to 26.44, after defending 26.12 resistance turned support. For now, further rise is in favor as long as 28.76 support holds. Break of 29.94 will target 31.73 resistance. Decisive break there will solidify this view and target 32.50 and above. However, break of 28.76 will dampen this immediate bullish case.

Key inflation figures from US and Eurozone loom ahead of September rate cuts

Inflation data will remain the focal point for the markets this week. In the US, PCE inflation report is set to take the spotlight. This report is anticipated to strengthen the case for a rate cut by Fed in September, a move that Fed Chair Jerome Powell has already hinted at. However, with another round of NFP and CPI data due before the next FOMC meeting, the exact size of the initial rate cut remains uncertain. Despite this, Fed officials appear to leans towards cautious, measured approach. So, barring any shocks, a 25 bps is the more probable outcome. Alongside inflation, the markets will also be watching data on durable goods orders, GDP revisions, and personal income and spending.

Eurozone’s CPI flash estimate is expected to be a pivotal piece of data that could seal the deal for a rate cut by ECB in September. This would mark the second cut in the current cycle. Meanwhile, Eurozone's economic outlook is clouded by concerns over Germany slipping back into a recession. The Ifo business climate index and GfK consumer sentiment survey, thus, will be closely watched for signs of deteriorating confidence in Europe’s largest economy.

In Japan, Tokyo CPI report, often seen as a precursor to national inflation trends, will be a key focus. It may be too early to determine if BoJ will hike rates again this year. Upcoming data on industrial production and retail sales will be crucial. These figures could provide insight into whether rebound of Japan's industrial sector is gaining momentum in the second half of the year and whether earlier wage increases are translating into higher consumer spending sustainably.

Meanwhile, in Australia, the monthly CPI is expected to show a notable slowdown. However, unless the data reveals significant downside surprises, RBA is likely to hold off on cutting rates this year. Retail sales data from Australia will also be monitored for further clues about consumption trends.

Here are some highlights for the week:

• Monday: Germany Ifo business climate; US durable goods orders.
• Tuesday: Japan corporate service prices; Germany GDP final; US house price index, consumer confidence.
• Wednesday: Australia monthly CPI; Germany Gfk consumer sentiment; Swiss UBS economic expectations; Eurozone M3 money supply.
• Thursday: New Zealand ANZ business confidence; Japan consumer confidence; Germany CPI flash; US GDP revision, jobless claims, goods trade balance, pending home sales.
• Friday: Japan Tokyo CPI, unemployment rate, industrial production, retail sales, housing starts; Australia retail sales; Germany import prices, unemployment; French consumer spending; Swiss KOF economic barometer; UK M4 money supply, mortgage approvals; Eurozone CPI flash unemployment rate; Canada GDP; US personal income and spending; PCE inflation, Chicago PMI.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6731; (P) 0.6765; (R1) 0.6830; More...

Intraday bias in AUD/USD stays on the upside for the moment, with focus on focus on 0.6798 resistance. Firm break there will extend the rally from 0.6348 to 0.6870 resistance next, with prospecting of resuming whole rise from 0.6269. On the downside, below 0.6696 support turn bias to the downside for deeper pull back instead.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6798/6870 resistance zone will target 0.7156 resistance. In case of another fall, strong support should be seen from 0.6169/6361 to bring rebound.

Economic Indicators Update

Key Highlights

• USD/JPY struggled to continue higher above the 150.00 resistance zone.
• A major bearish trend line is forming with resistance at 145.60 on the 4-hour chart.
• Oil prices are consolidating losses near the $75.00 level.
• EUR/USD is showing bullish signs above the 1.1120 level.

USD/JPY Technical Analysis

The US Dollar started a recovery wave above 147.00 against the Japanese Yen. However, USD/JPY failed to continue higher above 149.40 and started a fresh decline.

Looking at the 4-hour chart, the pair topped near 149.39 and recently started a fresh decline. There was a move below the 146.80 and 146.50 support levels. There was a move below the 50% Fib retracement of the upward move from the 141.68 swing low to the 149.39 high.

Immediate support is near the 143.50 level. It is near the 76.4% Fib retracement of the upward move from the 141.68 swing low to the 149.39 high.

The first major support is near the 142.50 level. A downside break below the 142.50 level could set the pace for a larger decline. The next major support is near the 141.50 level. Any more losses might send the pair toward the 140.00 support level.

On the upside, the pair could face resistance near the 144.80 level. The first key resistance sits near the 145.60 level. A clear move above the 145.60 level could set the pace for a move toward the 147.00 level.

Looking at EUR/USD, the pair rallied above the 1.1120 level and now seems to be consolidating gains for more upsides.

Economic Releases

• US Durable Goods Orders for July 2024 – Forecast +4% versus -6.7% previous.

Both Gold and Silver are currently still caught in near-term consolidations despite the rally late last week. Both metals have the potential to extend their recent gains, but a more pronounced decline in Dollar may be necessary to provide the needed momentum.

As for Gold, further rally is expected as long as 2470.72 support holds. Firm break of 2531.57 will resume the long term up trend and extend the record run. Next target is 61.8% projection of 1984.05 to 2449.83 from 2293.45 at 2581.30. However, break of 2470.72 will risk deeper pull back to 55 D EMA (now at 2412.87) first.

While Silver has been lagging Gold in its run, there is prospect of a catch up ahead. Corrective pattern from 32.50 has likely completed with three waves down to 26.44, after defending 26.12 resistance turned support. For now, further rise is in favor as long as 28.76 support holds. Break of 29.94 will target 31.73 resistance. Decisive break there will solidify this view and target 32.50 and above. However, break of 28.76 will dampen this immediate bullish case.

Bitcoin surged last Friday and stayed firm throughout the weekend. The cryptocurrency broke through an important near-term resistance level, fueled by broad risk-on sentiment following Fed Chair Jerome Powell's indication of upcoming monetary easing. It now stands at a critical juncture, where the next move will determine whether it has completed the medium-term consolidation that began in March.

Technically, the break of 62724 confirmed resumption of the rebound from 49008. The strong break of 55 D EMA is also a near term bullish sign. It's possible that the corrective pattern from 73812 has completed 49008, after hitting 50% retracement of 24896 to 73812 at 49354.

However, to solidify the bullish case, Bitcoin will have to overcome the first hurdle at 61.8% projection of 49008 to 62724 from 57812 at 66288. Rejection by this level will keep the rebound from 49008 as just another leg in the corrective pattern from 73812. On the other hand, firm break of 66288 could prompt upside acceleration to 100% projection at 71528, and build up momentum for eventual breakout from the five-month range.

• Gold reversed from key support level 2475.00
• Likely to rise to resistance level 2535.00

Gold just reversed up from the key support level 2475.00 (former strong resistance which stopped the previous impulse waves (i) and i) coinciding with the 38.2% Fibonacci correction of the previous sharp upward impulse from the start of August.

The upward reversal from the support level 2475.00 started the sub-impulse wave v of the higher impulse waves 3 and (3).

Given the clear daily uptrend, Gold can then be expected to rise to the next resistance level 2535.00 (top of the previous impulse wave iii).

• AUDUSD approached key resistance level 0.6795
• Likely to rise to resistance level 0.6865

AUDUSD currency pair just approached the key resistance level 0.6795 (which stopped the previous minor correction 2 at the start of July) standing above the upper daily Bollinger Band.

The subsequent price behavior near the resistance level 0.6795 will affect how this currency pair will move in the coming trading sessions.

If the pair closes above the resistance level 0.6795, AUDUSD can then be expected to rise to the next resistance level 0.6865 (former multi-month high from December). Alternatively, AUDUSD can correct down to 0.6700.

Fed Chair Jerome Powell's highly anticipated speech at Jackson Hole didn't disappoint market participants, as he clearly signaled that the time for easing monetary policy has arrived. This declaration provided a notable boost to US stock markets on Friday, with major indexes ending the week on a positive note. Meanwhile, Dollar tumbled across the board, finishing as the worst-performing currency.

Dollar's decline seemed more driven by the surge in risk-on sentiment rather than a significant change in expectations for Fed rate cuts, as market pricing for future cuts remained largely unchanged compared to the previous week. While the conditions are now ripe for further depreciation of the greenback, much will hinge on the evolution of risk sentiment, particularly as major stock indexes approach their record highs.

Overall in the currency markets, Canadian Dollar ended as the second-worst performer, but by a distant to the greenback, as weighed down by inflation data that solidified expectations for another rate cut from BoC in the near future. Euro also struggled, becoming the third weakest currency, as weak Eurozone PMI data highlighted underlying fragilities in the region's economy.

On the flip side, New Zealand Dollar stood out as the strongest currency of the week, rebounding from its recent losses. Japanese Yen followed as the second strongest, supported by the determined hawkish tone from BoJ. Swiss franc also showed notable strength, while British Pound and Australian Dollar ended the week with in middle positions.

Dollar's Slide: Is Medium-Term Downtrend Back on as Fed Confirms Cuts are Coming?

Investors seemed pretty satisfied with Fed's communications last week, including insights from the July FOMC minutes and Chair Jerome Powell's speech at the Jackson Hole Symposium. While the messages delivered were largely in line with market expectations and didn't offer any groundbreaking revelations, the reassurance that monetary easing is coming was enough to keep investors content.

FOMC minutes revealed that a "vast majority" of participants viewed a rate cut at the upcoming meeting as likely appropriate, provided the economic data continues to align with expectations. Powell echoed this sentiment, declaring that "the time has come for policy to adjust." However, he refrained from specifying the exact timing or pace of future rate cuts, leaving the markets to speculate.

It's important to note that with the lack of new revelations, market pricing remains largely unchanged from the prior week. For the September meeting, a 25bps cut is fully priced in, with 24% chance of a more aggressive 50bps reduction.

Looking further ahead, by the end of the year, markets are fully pricing in a total of 75bps in rate cuts, with a 65% probability that the total reduction could reach or exceed 100bps.

This outlook has weighed heavily on Dollar, which has tumbled broadly against its peers. The prospect of Fed matching or even surpassing other major central banks in terms of monetary easing this year is putting downward pressure on the greenback. ECB, for instance, is expected to cut rates again in September and possibly once more in December, making a total of 75 basis points in cuts, including the June adjustment. These meetings will also feature updated economic forecasts from the ECB.

Meanwhile, BoE remains a wildcard, with uncertainty surrounding whether it will cut rates in September. A more likely scenario is a single cut in November when new forecasts are released. Including the August reduction, BoE could cut just 50bps this year.

Dollar index's fall from 106.13 continued last week and the strong break of medium term trend line support (as seen in the W chart) argues that down trend from 114.77 might be ready to resume (2022 high).

Near term outlook will stay bearish as long as 103.67 resistance holds. Firm break of 100.61 support will solidify this bearish case. Further break of 99.57 (2023 low) will target 61.8% projection of 114.77 to 99.57 from 106.13 at 96.73, or even further too long term channel support at around 94.61 (M chart) before forming a bottom.

The bearish sentiment surrounding Dollar is also supported by the outlook for 10-year US Treasury yield. Fall from 4.737 is seen as the third leg of the corrective pattern from 4.997. Further decline is expected as long as 4.022 resistance holds, to 100% projection of 4.997 to 3.785 from 4.737 at 3.525.

Indeed, considering that 10-year yield is now correcting whole up trend from 0.398 (2020 low), there is risk of even deeper decline to 3.253 cluster support (38.2% retracement of 0.398 to 4.997 at 3.240) before completing the correction.

However, risk sentiment remains a critical wild card that could shift these developments. While major stock indexes ended higher last week, they remain capped below the record highs set in July. There is skepticism about whether the current momentum can extend or even surpass these records.

Powell's emphasis on supporting the labor market, particularly in the event of significant deterioration, suggests that upcoming job data could have complex impacts on market sentiment.

Strong job data could reduce the urgency for aggressive rate cuts, while weaker data might reignite recession fears but also push the Fed toward faster easing. This raises the question of whether positive economic news will be interpreted as truly positive or whether it might trigger concerns about Fed's next move.

This creates a complex dynamic where good news could be seen as bad news, and vice versa, depending on how markets interpret the data.

Technically, further rally is in favor in DOW as long as 40584.47 support holds. Firm break of 41376.00 would confirm resumption of long term up trend. Nevertheless, break of 40584.47 will indicate initial rejection by 41376.00, and bring deeper pull back to 55 D EMA (now at 39843.95) at least.

Further rise is expected in NASDAQ as long as 55 D EMA (now at 17351.12) holds, for retesting 18671.06 high. However, decisive break of 55 D EMA will argue that the corrective pattern from 18671.06 has already started the third leg, and target 15708.53 support again.

Yen Resilient with BoJ's Commitment to Easing Adjustments,

Japanese Yen ended as one of the top performers last week, as its recent pullback lost steam. The currency found some support from BoJ Governor Kazuo Ueda, who, during a special parliamentary session, reaffirmed the commitment to reduce monetary easing if economic and price trends align with their forecasts. Despite recent market volatility, Ueda made it clear that there is "no change to our basic stance to adjust the degree of monetary easing."

Supporting Ueda's position, IMF Chief Economist Pierre-Olivier Gourinchas emphasized that Japan’s inflation is now above 2%, and expectations are aligning with or even slightly exceeding BoJ's target. Gourinchas noted that Japan’s gradual shift away from its ultra-loose monetary policy is a "good development for Japan". He suggested there is “scope for further normalizations of monetary policy” with potential for gradual increases in policy rates going forward.

While New Zealand was on paper the best performer last week, it just outperformed Yen slightly. For now, further rise is in favor as NZD/JPY as long as 87.99 minor support holds, towards 55 D EMA (now at 91.44). However, considering bearish divergence condition in 4H MACD, break of 87.99 will argue that the rebound from 83.02 is over, and bring retest of this low.

CHF/JPY has failed to break through 172.18 resistance and 38.2% retracement of 180.05 to 166.79 at 171.85 for the second time. Break of 168.34 support will argue that fall from 180.05 is ready to resume through 166.79, as a correction to up trend from 137.40.

EUR/GBP Accelerates Down as PMIs Highlight Contrasting Economic Outlook

EUR/GBP accelerates down as PMI highlights contrasting economic strength Sterling outshined Euro last week, supported by stronger PMI data that highlighted solid expansion across both the UK manufacturing and services sectors in August. The UK economy demonstrated a combination of stronger growth and improved job creation. While the decline in inflation pressure as indicated in the PMI report might provide BoE with an opportunity to consider another rate cut, the robustness of the underlying economy also allows the central bank some leeway to hold off on such a move for the next meeting. This is particularly relevant given the tight divide within the MPC between hawks and doves.

In contrast, Eurozone’s economic picture is showing signs of strain as seen in their PMIs. While French services sector received a temporary boost from the Olympic Games, this appears to be an outlier rather than a sign of sustained strength. The broader Eurozone fundamentals remain shaky, with Germany’s economic troubles at the forefront. The country’s manufacturing sector continues to struggle, and these difficulties are beginning to spill over into the services sector. The increased likelihood of Germany experiencing a second consecutive quarter of negative growth raises the specter of a renewed recession in Europe’s largest economy.

EUR/GBP's downside acceleration last week suggests that rebound from 0.8382 has completed at 0.8624 Rejection by 0.8643 resistance keeps the medium term down trend intact. Also, the break below both 55 D and 55 W EMA are also bearish signal. Retest of 0.8382 low should be seen next. The question now is whether EUR/GBP would accelerate downward through 0.8382 to resume the larger down trend from 0.9267 (2022 high).

EUR/USD Weekly Outlook

EUR/USD's rally continued last week and the strong break of 1.1138 resistance argues that larger up trend may be resuming. Initial bias is on the upside this week for t 161.8% projection of 1.0665 to 1.0947 from 1.0776 at 1.1232, and then 1.1274 high. On the downside, below 1.1097 minor support will turn intraday bias neutral and bring consolidations first.

In the bigger picture, break of 1.1138 resistance indicates that corrective pattern from 1.1274 has completed at 1.0665 already. Decisive break of 1.1274 (2023 high) will confirm whole up trend from 0.9534 (2022 low). Next target will be 61.8% projection of 0.9534 to 1.1274 from 1.0665 at 1.1740. This will now be the favored case as long as 1.0947 resistance turned support holds.

In the long term picture, a long term bottom is in place at 0.9534 (2022 low). The strong break of 55 M EMA (now at 1.1018) is taken as the first sign of bullish trend reversal. But still, firm break of 1.2348 structural resistance is needed to confirm. Otherwise, price actions from 0.9534 could still develop into a consolidation pattern.