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The New Zealand dollar has rebounded on Friday after a 1.4% slide over the past two days. NZD/USD is trading at 0.6017, up 0.70% in the European session at the time of writing.

Solid US numbers raises risk appetite

Exactly two weeks ago, a soft employment report out of the US panicked investors and caused a meltdown across global stock markets. The turmoil was brief as the stock markets have rallied. The fears that the US economy was hurtling towards a recession have eased this week, as US CPI was within expectations and US retail sales was much higher than the forecast.

US inflation dipped to 2.9% y/y in July, down a notch from 3% a month earlier which was also the market estimate. Retail sales jumped 1% m/m, bouncing back from -0.2% in June and breezing past the market estimate of 0.4%. As well, unemployment claims were lower than the market estimate for a second straight week.

The rout in the financial markets raised expectations for a half-point cut from the Fed to as high as 60%, but this has fallen to 30% since the retail sales report (a quarter-point has been priced in at 70%).
The volatility in the stock markets has been driven by the strength of the US numbers. This week’s positive data has not allayed investor fears completely and if upcoming key data is weaker than expected, we could see the financial markets react negatively.

The US dollar is showing weakness as the market turmoil has eased. Risk appetite has returned, which has given the New Zealand dollar a strong boost today.

NZD/USD Technical

• There is resistance at 0.6073 and 0.6146
• 0.5961 and 0.5888 are providing support

Eurozone goods exports fell -6.3% yoy to EUR 236.7B in June. Goods imports fall -8.6% yoy to EUR 214.3B. Trade balance showed a EUR 22.3B surplus. Intra-Eurozone trade fell -8.5% yoy to EUR 214.5B.

In seasonally adjusted term, goods exports fell -0.2% mom to EUR 236.2B. Goods imports fell -2.4% mom to EUR 218.7B. Trade surplus widened from EUR 12.4B in the prior month to EUR 17.5B, larger than expectation of EUR 14.5B. Intra-Eurozone trade rose 0.4% mom to EUR 210.7B.

Full Eurozone trade balance release here.

The British pound has extended its gains on Friday. GBP/USD is trading at 1.2887 in the European session, up 0.31% on the day at the time of writing. It has been a winning week for the pound, which has climbed 1%.

UK retail sales jump in July

There was more good news from the UK economy as retail sales rebounded in July by 0.5% m/m, after a revised decline of 0.9% in June and in line with the market estimate. Annually, GDP surged 1.4%, compared to -0.8% in June and matching the market estimate. The pound has moved higher in response to the positive retail sales data.

The bounce in retail sales reflects summer discounts and purchases related to the Euro 2024 and the Paris Olympics, such as apparel. As well, with inflation finally under control and running close to 2%, consumers are responding by opening up their wallets and purses. The positive retail sales report follows yesterday’s solid GDP release. The UK economy recorded rose 0.6% in Q2, a second straight quarter of growth.

The economy is showing some strength in the second quarter but that may not have much effect on the Bank of England’s rate path. The increase in growth may not be sustainable and BoE policy makers have said that they are more focused on inflation, particularly service inflation, which remains much higher than the BoE’s 2% target. The markets are expecting further cutting before the end of the year and have priced in a rate reduction at the November meeting.

GBP/USD Technical

• GBP/USD is testing resistance at 1.2884. Above, there is resistance at 1.2914
• 1.2841 and 1.2811 are the next support levels

Gold price started a fresh increase above the $2,432 resistance level. Crude oil prices are gaining bullish momentum and might even test $80.00.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a steady increase from the $2,400 zone against the US Dollar.
• A connecting bearish trend line is forming with resistance at $2,460 on the hourly chart of gold at FXOpen.
• Crude oil prices extended gains above the $75.70 and $76.40 resistance levels.
• There is a connecting bearish trend line forming with resistance at $77.10 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price found support near the $2,432 zone. The price formed a base and started a fresh increase above the $2,440 level.

There was a decent move above the 50-hour simple moving average and $2,450. The bulls pushed the price above the 50% Fib retracement level of the downward move from the $2,480 swing high to the $2,432 low.

The RSI is now near 50 and the price could aim for more gains. Immediate resistance is near the $2,460 level. There is also a connecting bearish trend line forming with resistance at $2,460.

The trend line is close to the 61.8% Fib retracement level of the downward move from the $2,480 swing high to the $2,432 low. The next major resistance is near the $2,480 level. An upside break above the $2,480 resistance could send Gold price toward $2,488.

Any more gains may perhaps set the pace for an increase toward the $2,500 level. Initial support on the downside is near the $2,432 zone. If there is a downside break below the $2,432 support, the price might decline further.

In the stated case, the price might drop toward the $2,415 support. The next major support sits at $2,400. Any more losses might send the price toward the $2,365 level.

Read analytical Gold price forecasts for 2024 and beyond.

Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price started a fresh upward move from $75.70 against the US Dollar. The price gained bullish momentum after it broke the $76.40 resistance.

The bulls pushed the price above the 23.6% Fib retracement level of the downward move from the $78.58 swing high to the $75.69 low. The price even climbed above the 50-hour simple moving average.

It tested the $77.10 resistance zone and a connecting bearish trend line. The trend line is close to the 50% Fib retracement level of the downward move from the $78.58 swing high to the $75.69 low. The RSI is now near the 50 level and the price could aim for more gains.

If the price climbs higher again, it could face resistance near $77.10. The next major resistance is near the $77.60 level. Any more gains might send the price toward the $78.55 level or even $80.00.

Conversely, the price might correct gains and test the $76.40 level. The next major support on the WTI crude oil chart is near the $75.70 zone, below which the price could test the $74.90 zone.

If there is a downside break, the price might decline toward $74.20. Any more losses may perhaps open the doors for a move toward the $73.50 support zone.

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As the USD/JPY chart indicates, the rate has risen approximately 5.4% above the August 5 low.

On one hand, the yen's weakening against the U.S. dollar is partly driven by rumours that the Bank of Japan might intervene not to support the weak yen (as when the rate was above 160) but to weaken it further. "Intervention history shows that after yen-buying interventions, yen-selling interventions followed to curb excessive yen strength," Reuters reports, reflecting analysts' views.

On the other hand, the dollar strengthened yesterday as robust U.S. economic data all but dispelled fears of a recession.

Technical analysis of the USD/JPY chart shows:

→ Since the second half of July, price action has formed a broadening downward structure between two red lines.

→ The price has mostly moved within this structure, finding temporary support at levels marked by blue lines.

An interesting detail on the USD/JPY chart is that when the price broke upwards through the red line from an oversold zone (indicated by the first arrow), the 145.4 level near the breakout became a significant support.

A similar situation is now unfolding: the price is breaking through the red line (Red2) from below (indicated by the second arrow). By analogy, it's reasonable to expect the price to find support around the 147.93 level.

If the bulls gain confidence, they might attempt to challenge the psychological level of 150 yen per U.S. dollar.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

In focus today

Today we get UK retail sales data for July at 8.00 CET. According to polls from Reuters, analysts expect overall retail sales to grow by 0.5% m/m and retail sales excl. fuels to grow by 0.8% m/m.

In the US, the University of Michigan Consumer Sentiment survey is released at 16.00 CET. It is the preliminary release covering August, and analysts expect it to come in at 66.9 virtually unchanged from the 66.4 (revised) seen in July.

Fed's Goolsbee (voting member) speaks at 19.25 CET.

Economic and market news

What happened yesterday

In the US, retail sales data came in much stronger than analysts had expected, as growth for the headline stood at 1.0% m/m dwarfing the expected 0.3% m/m. Core retail sales also grew by more than expected as it stood at 0.4% m/m compared to consensus amongst analysts of 0.1% m/m. Combined with yet another low figure of initial jobless claims for the second week in a row, markets reacted promptly sending both 1-, 2- and 10-year Treasury yields up by more than 10bp in the aftermath.

Equity markets on the other hand reacted positively, appearing to shake off some of the recession-fears which caught on last week. As such, the S&P500 is now around only 2.5% off its all-time high.

As was widely expected, Norges Bank left their policy rate unchanged at 4.50%. Furthermore, Norges Bank gave no new signals on their monetary policy, which was also expected given how economic key figures had pointed slightly in both directions since the monetary policy meeting in June.

In the UK, GDP growth came in as expected by analysts with GDP unchanged m/m in June and 0.6% q/q in Q2.

What happened overnight

Markets in Asia have followed in the footsteps of yesterday's US session, and equities are in the green this morning led by Japan where the Nikkei 225 is up by around 3.1%.

Oil is giving some of its gains from yesterday back, as Brent is trading about 0.25% lower as of this morning at USD80.84/bbl.

Daily Pivots: (S1) 1.0942; (P) 1.0980; (R1) 1.1010; More.....

Intraday bias in EUR/USD remains neutral and more consolidations would be seen below 1.1046. But another rally is in favor as long as 1.0880 support holds. Firm break of 100% projection of 1.0665 to 1.0947 from 1.0776 at 1.1058 could prompt upside acceleration through 1.1138 resistance to 161.8% projection at 1.1232. However, considering bearish divergence condition in 4H MACD, break of 1.0880 will suggest near term reversal and turn bias to the downside for 1.0776 support and below.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's could still extend. Break of 1.1138 resistance will be the first signal that rise from 0.9534 (2022 low) is ready to resume through 1.1274 (2023 high). However, break of 1.0776 support will extend the correction with another falling leg back towards 1.0447 support.

Daily Pivots: (S1) 147.76; (P) 148.58; (R1) 150.09; More...

Immediate focus stays on 38.2% retracement of 161.94 to 141.67 at 149.41. Decisive break there will bring stronger rally to 61.8% retracement at 154.19, even as a corrective move. On the downside, break of 146.06 minor support will suggest rejection by 149.91, and turn intraday bias back to the downside for retesting 141.67 low instead.

In the bigger picture, fall from 161.94 medium term 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 149.77) holds. Nevertheless, firm break of 55 W EMA will suggest that the range for medium term corrective pattern is already set.

Daily Pivots: (S1) 1.2811; (P) 1.2841; (R1) 1.2884; More...

GBP/USD's rise from 1.2664 resumed after brief consolidations and intraday bias is back on the upside. As noted before, pullback from 1.3043 could have completed at 1.2664 already. Further rally should be seen to retest this resistance next. On the downside, however, break of 1.2798 support will turn bias back to the downside for 1.2664 support instead.

In the bigger picture, as long as 1.3141 resistance holds (2023 high), medium term corrective pattern from there could still extend with another falling leg. But even in that case, downside should be contained by 1.2036/2298 support zone. Meanwhile, decisive break of 1.3141 will confirm resumption of whole up trend from 1.0351 (2022 low)

Daily Pivots: (S1) 0.8666; (P) 0.8707; (R1) 0.8768; More….

Intraday bias in USD/CHF remains on the upside with focus on 38.2% retracement of 0.9223 to 0.8431 at 0.8734. Sustained break there will bring stronger rally to 61.8% retracement at 0.8920, even as a corrective move. On the downside, break of 0.8616 will turn bias back to the downside for retesting 0.8431 low.

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).