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Trading in the forex market today saw a tempered tone, with most major currencies trading in a tight range due to a sparse economic calendar. An early uplift in market sentiment was observed, largely attributed to China's strategic moves aimed at boosting investor confidence. This positive wave continued into the early US trading hours, though its broader effects remained contained. Australian and New Zealand Dollars are emerging as today's outperformers, closely shadowed by Euro and Sterling. In contrast, Japanese Yen recorded the most significant dip, with Swiss Franc and Dollar also trailing behind.

Technically, while offshore Chinese Yuan's recovery in the past week appears to be losing momentum. 38.2% retracement of 7.1154 to 7.3491 at 7.2598 could provide a floor to USD/CNH's pull back. Break of 7.3165 would bring stronger rebound to retest 7.3491 high at least. Decisive break will resume larger rally to 7.3745 key resistance. Risk aversion in China and Asia could come back if the stronger bounce in USD/CNH is accompanied by poor PMI data from China later in the week.

In Europe, at the time of writing, FTSE is up 0.07%. DAX is up 0.76%. CAC is up 1.00%. Germany 10-year yield is down -0.010 at 2.551. Earlier in Asia, Nikkei rose 1.73%. Hong Kong HSI rose 0.97%. China Shanghai SSE rose 1.13%. Singapore Strait times rose 0.75%. Japan 10-year JGB yield rose 0.0076 to 0.668.

ECB's Holzmann advocates further rate hike, views economy as stagnating

ECB Governing Council member Robert Holzmann expressed concerns over the inflationary environment, stating, "We're not yet in the clear when it comes to inflation." He accentuated the need for continued rate increases, suggesting that barring unforeseen circumstances, there could be a compelling case to "push on with rate increases without taking a pause" come September.

Holzmann emphasized the advantages of achieving the peak rate swiftly, noting, "It's better to achieve a peak rate faster, which also means we can eventually start going lower earlier." He highlighted the challenges for markets in navigating a sporadic "stop-and-go rate path."

Furthermore, Holzmann acknowledged that the ECB has been "somewhat behind the curve" in its endeavors to combat inflation. When quizzed on the possibility of continued rate hikes beyond September, he remarked that once rates reach the 4% threshold, the matter would be up for discussion again.

On the topic of Eurozone's economic health, Holzmann offered a measured perspective. While conceding that the economy isn't performing at the anticipated level, he was quick to dismiss fears of an impending recession. He characterized the current economic landscape as one of stagnation, stating, "We're looking at a stagnating economy."

Japan's Cabinet Office upgrades export assessment amid stable economic outlook

In its latest monthly economic report, Japan Cabinet Office has lifted its assessment on exports for the first time since May. Exports, which previously displayed a "steady undertone," are now characterized as showing "movements of picking up recently."

Other key areas of the economy showed stable and positive trend. Private consumption and business investment are both on an "picking up". Corporate profits have seen moderate improvement. Employment situation shows movements of improvement. Consumer prices are rising.

Looking ahead, the report expects the Japanese economy to sustain its moderate recovery, driven by enhancements in employment and income situations. However, it does underscore potential threats. The slowing pace of foreign economies, especially due to global monetary tightening and uncertainties about China's economic direction, are identified as primary external risks to Japan's growth trajectory.

Australia retail sales rose 0.5% mom in Jul, but underlying growth subdued

Australia's retail sales turnover for July showed a 0.5% mom increase, reaching AUD 35.38B, surpassing anticipated 0.3% mom rise. When compared to figures from July 2022, turnover has risen by 2.1% yoy.

Commenting on the rebound, Ben Dorber, ABS head of retail statistics, noted, "The rise in July is a partial reversal of last month's sharp decline in turnover." He attributed the June dip to "weaker-than-usual end of financial year sales."

However, Dorber cautioned against interpreting July numbers as a sign of robust retail health. Elaborating on the sector's underlying momentum, he stated, "While there was a rise in July, underlying growth in retail turnover remained

Supporting this perspective, Dorber pointed out the lack of substantial movement in the trend terms: "In trend terms, retail turnover was unchanged in July and up only 1.9 per cent compared to July 2022, despite considerable price growth over the year."

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 145.89; (P) 146.26; (R1) 146.79; More...

Outlook in USD/JPY remains unchanged and intraday bias stays on the upside. Sustained break of 61.8% projection of 129.62 to 145.06 from 137.22 at 146.76 will pave the way to retest 151.93 high. For now, outlook will stays cautiously bullish as long as 144.52 support holds, in case of retreat.

In the bigger picture, overall price actions from 151.93 (2022 high) are views as a corrective pattern. Rise from 127.20 is seen as the second leg of the pattern and could still be in progress. But even in case of extended rise, strong resistance should be seen from 151.93 to limit upside. Meanwhile, break of 137.22 support should confirm the start of the third leg to 127.20 (2023 low) and below.

Economic Indicators Update

• Australia retail sales rebounds with 0.5% gain
• Fed’s Powell keeps door open to further hikes

The Australian dollar started the week with gains but then retreated. In the European session, AUD/USD is trading at 0.6408, up 0.09%. Last week, the Australian dollar showed significant swings of around 1%.

Australia’s retail sales surprise on the upside

Australian retail sales rebounded in July with a respectable gain of 0.5% m/m.  This followed a dismal -0.8% reading in June and beat the consensus estimate of 0.3%. The welcome uptick was driven by the Women’s World Cup which was held in Australia and was a massive boost for Australia’s travel and retail sectors. Much of the tournament took place in August, which means that the August retail sales report should also receive a shot to the arm.

The August report showed that consumers still have an appetite for spending, but there are unmistakable signs that the economy is cooling. Inflation has been falling, wage growth in the second quarter was weaker than expected and unemployment rose to 3.7%. This all points to the Reserve Bank of Australia holding rates at the September 5^th meeting, and the future markets have priced a hold at around 90%.

The slowdown in China, which is Australia’s largest trading partner, could throw a monkey wrench into the central bank’s efforts to guide the economy to a soft landing. There is a always the concern that aggressive tightening, with the aim of curbing inflation, will choke economic growth and tip the economy into a recession. The Australian dollar is sensitive to Chinese releases and the recent batch of soft Chinese data has weighed on the struggling Australian dollar.

Powell sends cautious message

Fed Chair Powell didn’t provide much in the way of headline material in his speech at Jackson Hole on Friday. Powell reiterated that the battle to lower inflation to the 2% target “still has a long way to go”. As for rates, Powell was somewhat hawkish, saying that the Fed would “proceed carefully” with regard to raising rates or hold and wait for additional data. This was a deliberate omission of any mention of rate cuts, a signal that the Fed isn’t even thinking about lowering rates. The future markets responded by raising the odds of a rate hike in September to 21%, up from 14% a week ago.

AUD/USD Technical

• AUD/USD is testing resistance at 0.6424. Above, there is resistance at 0.6470
• There is support at 0.6360 and 0.6317

USDJPY keeps firm tone at the beginning of the week, as hawkish tones from Fed Chair Powell on Friday, offered additional support to dollar.

Faded threats of Japan’s intervention to support yen, expected on breach of 145 trigger, contributed to larger bulls, with fresh positive signal being generated on weekly close above 146.10 Fibo resistance (76.4% of 151.94/127.22 descend).

Sustained break higher would reinforce bullish structure and open way for extension towards psychological 150 barrier, which could be, according to the latest speculations, the new trigger for intervention.

Broken Fibo barrier and 10DMA (146.10/145.88) reverted to supports which should ideally keep the downside protected and guard lower pivots at 144.72/54 (20DMA / Aug 23 trough).

Res: 147.00; 148.00; 148.82; 150.00.
Sup: 146.27; 146.10; 145.88; 144.54.

In its latest monthly economic report, Japan Cabinet Office has lifted its assessment on exports for the first time since May. Exports, which previously displayed a "steady undertone," are now characterized as showing "movements of picking up recently."

Other key areas of the economy showed stable and positive trend. Private consumption and business investment are both on an "picking up". Corporate profits have seen moderate improvement. Employment situation shows movements of improvement. Consumer prices are rising.

Looking ahead, the report expects the Japanese economy to sustain its moderate recovery, driven by enhancements in employment and income situations. However, it does underscore potential threats. The slowing pace of foreign economies, especially due to global monetary tightening and uncertainties about China's economic direction, are identified as primary external risks to Japan's growth trajectory.

ECB Governing Council member Robert Holzmann expressed concerns over the inflationary environment, stating, "We're not yet in the clear when it comes to inflation." He accentuated the need for continued rate increases, suggesting that barring unforeseen circumstances, there could be a compelling case to "push on with rate increases without taking a pause" come September.

Holzmann emphasized the advantages of achieving the peak rate swiftly, noting, "It's better to achieve a peak rate faster, which also means we can eventually start going lower earlier." He highlighted the challenges for markets in navigating a sporadic "stop-and-go rate path."

Furthermore, Holzmann acknowledged that the ECB has been "somewhat behind the curve" in its endeavors to combat inflation. When quizzed on the possibility of continued rate hikes beyond September, he remarked that once rates reach the 4% threshold, the matter would be up for discussion again.

On the topic of Eurozone's economic health, Holzmann offered a measured perspective. While conceding that the economy isn't performing at the anticipated level, he was quick to dismiss fears of an impending recession. He characterized the current economic landscape as one of stagnation, stating, "We're looking at a stagnating economy."

GBP/USD is struggling to recover above 1.2665. USD/CAD is holding gains above 1.3560 and might start another increase.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound started a fresh decline from the 1.2720 resistance zone.
• There is a major bearish trend line forming with resistance near 1.2620 on the hourly chart of GBP/USD at FXOpen.
• USD/CAD is correcting gains from the 1.3640 resistance zone.
• There is a key bullish trend line forming with support near 1.3585 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.2720 zone. The British Pound traded below the 1.2665 support to move into further a bearish zone against the US Dollar, as mentioned in the previous analysis.

The pair even traded below 1.2620 and the 50-hour simple moving average. Finally, the bulls appeared near the 1.2550 level. A low was formed near 1.2547 and the pair is now consolidating losses. There was a minor recovery above the 23.6% Fib retracement level of the downward move from the 1.2732 swing high to the 1.2547 low.

Immediate resistance on the upside is near a major bearish trend line at 1.2620 and the 50-hour simple moving average. The first major resistance on the GBP/USD chart is near the 61.8% Fib retracement level of the downward move from the 1.2732 swing high to the 1.2547 low at 1.2665.

A close above the 1.2665 resistance might spark bullish moves. The next major resistance is near the 1.2720 level. Any more gains could lead the pair toward the 1.2800 resistance in the near term.

Initial support sits near 1.2550. The next major support sits at 1.2510 or 1.2500, below which there is a risk of another sharp decline. In the stated case, the pair could drop toward 1.2420.

USD/CAD Technical Analysis

On the hourly chart of USD/CAD at FXOpen, the pair formed a strong support base above the 1.3510 level. The US Dollar started a fresh increase above the 1.3560 resistance against the Canadian Dollar.

The pair cleared the 50-hour simple moving average to set the tone for a sustained upward move. Finally, the bears appeared near the 1.3640 zone.

A high was formed near 1.3639 and the pair recently corrected lower. It declined below the 23.6% Fib retracement level of the upward move from the 1.3507 swing low to the 1.3639 high. It is now trading above the 50-hour simple moving average.

There is also a key bullish trend line forming with support near 1.3585. If the pair stays above the trend line, it could start another increase.

Initial resistance sits at 1.3610. A clear upside break above 1.3610 could start another steady increase. The next major resistance is the 1.3640 level. A close above the 1.3640 level might send the pair toward the 1.3720 level. Any more gains could open the doors for a test of the 1.3800 level.

Conversely, the pair could continue to move down. Initial support is near the 1.3585 level and connecting bullish trend line on the same USD/CAD chart. The next major support is near the 61.8% Fib retracement level of the upward move from the 1.3507 swing low to the 1.3639 high at 1.3560.

A downside break below the 1.3560 level could push the pair further lower. The next major support is near the 1.3510 support zone, below which the pair might visit 1.3450.

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.

AUD/USD declined below the 0.6450 and 0.6430 support levels. NZD/USD is also moving lower and might trade below the 0.5900 zone.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar started a fresh decline from well above the 0.6480 level against the US Dollar.
• There was a break below a key bullish trend line with support near 0.6430 on the hourly chart of AUD/USD at FXOpen.
• NZD/USD declined heavily from the 0.5985 resistance zone.
• There was a break below a major bullish trend line with support near 0.5945 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair struggled to clear the 0.6500 zone. The Aussie Dollar started a fresh decline below the 0.6450 support against the US Dollar.

There was a break below a key bullish trend line with support near 0.6430. The pair even settled below 0.6430 and the 50-hour simple moving average. The pair is now showing bearish signs and trading near the last swing low at 0.6410.

On the downside, initial support is near the 1.236 Fib extension level of the upward move from the 0.6411 swing low to the 0.6490 high at 0.6390. If there is a downside break below 0.6390, the pair could extend its decline.

The next support could be the 1.618 Fib extension level of the upward move from the 0.6411 swing low to the 0.6490 high at 0.6365. Any more losses might send the pair toward the 0.6320 support.

On the upside, an immediate resistance is near 0.6430. The next major resistance is near the 50-hour simple moving average at 0.6450, above which the price could rise toward 0.6490. Any more gains might send the pair toward 0.6550.

A close above the 0.6550 level could start another steady increase in the near term. The next major resistance on the AUD/USD chart could be 0.6620.

NZD/USD Technical Analysis

On the hourly chart of NZD/USD on FXOpen, the pair also followed a similar pattern and declined from the 0.5985 zone. The New Zealand Dollar gained bearish momentum and traded below 0.5950 against the US Dollar.

There was a break below a major bullish trend line with support near 0.5945 and the 50-hour simple moving average. The pair settled below the 61.8% Fib retracement level of the upward move from the 0.5896 swing low to the 0.5985 high.

The current price action suggests a high chance of more losses below the 76.4% Fib retracement level of the upward move from the 0.5896 swing low to the 0.5985 high.

On the downside, immediate support on the NZD/USD chart is near the 0.5900 level. The next major support is near the 0.5865 zone. If there is a downside break below 0.5865, the pair could extend its decline toward the 0.5840 level. The next key support is near 0.5800.

Immediate resistance on the upside is near 0.5930. If there is a move above 0.5930, the pair could rise toward the 50-hour simple moving average at 0.5945. Any more gains might open the doors for a move toward the 0.5985 resistance zone in the coming days.

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.

The Euro was slightly higher on Monday morning, underpinned by fresh risk appetite but gains were so far limited.

Steady downtrend in past six weeks may take a breather for a partial profit-taking as studies are oversold, though prevailing tone is still bearish and helped by downbeat recent EU economic data and hawkish Fed.

Friday’s failure to close below pivotal supports at 1.0802/1.0786 (200DMA / Fibo 76.4% of 1.0635/1.1275) and daily Doji candle, could be seen as initial signal that larger bears are running out of steam.

However, such scenario requires more action to be verified, with initial signal expected on close above 10DMA (1.0853) and broken Fibo 61.8% (1.0879) and lift above 100DMA (1.0926) to generate reversal signal.

Otherwise, limited upticks are likely to provide better selling opportunities for renewed attack at 1.0802/1.0786 pivots, clear break of which would reinforce bearish stance and risk acceleration towards 1.0700 (psychological) and 1.0635 (May 31 low).

Res: 1.0841; 1.0853; 1.0879; 1.0908.
Sup: 1.0786; 1.0766; 1.0700; 1.0667.

The dollar index eased from new highest in almost three months in early Monday, as traders collected some profits and fresh risk appetite also weighed on dollar.

The Fed Chair Powell’s speech in Jackson Hole symposium was mainly in line with expectations, signaling that the US central bank keeps overall hawkish stance on interest rates.

In his remarks, Powell signaled that the Fed left the door open for possible further rate hikes, as inflation is still high, although with significant progress in easing price pressures, while the economy remains surprisingly strong despite high borrowing cost.

However, Powell said that the next steps of the central bank will be data dependent and economic conditions will strongly influence future decisions whether to raise interest rates or to hold the policy unchanged.

Markets widely expect the Fed to stay on hold in September, with rising bets for another 25 basis points hike in November’s policy meeting.

The fact that the central bank is likely to keep rates elevated for longer, with further increases not ruled out, is positive for greenback, which advanced for six straight weeks since mid-July.

The price came close to key resistances at 104.59/74 (May 31 peak / 55WMA), where larger bulls are expected to take a breather and consolidate.

Overbought daily studies contribute to such scenario, with limited dips to be ideally contained by rising 10DMA / broken Fibo 76.4% at 103.51/32 zone and keep larger bulls intact.

Only acceleration through 200DMA (102.92) would weaken near-term structure and risk deeper pullback.

Traders shift their focus on a series of important US economic data due this week, with releases of Q2 GDP, core PCE, consumer spending and labor report, to give further details about the situation in the US economy.

Res: 104.37; 104.59; 104.74; 105.40.
Sup: 103.91; 103.51; 103.32; 102.92.

Market Picture

Despite a mid-week spike in volatility, the cryptocurrency market remained virtually unchanged from the previous week’s capitalisation level, hovering around $1.050 trillion (-1% in 7 days). Bitcoin’s decline was a negligible 0.7%, while altcoins suffered losses of around 2%.

The technical picture for Bitcoin remains bearish on weekly timeframes, as the price is below its 200-week average and outside of its ascending channel. The most likely short-term outlook is for a decline to the $23.9-24.6K region, with the lower boundary being the 50-week average and the upper one being the pivot area from last August.

According to Santiment, large investors continue to accumulate positions. The number of wallets with balances between 10 and 10,000 BTC totalled 156,600, and these accounts have accumulated $308.6 million since the 17th of August.

News Background

Bitcoin and other cryptocurrencies could fall in the short term, although the decline will be limited, JPMorgan warned. The bank said the liquidation of long positions is nearing completion rather than being in its early stages.

Tether has updated its report on the state of reserves providing liquidity to the USDT. The data shows assets exceed $86.1 billion, and liabilities exceed $82.8 billion.

Mastercard and Visa refuse to issue cryptocurrency payment cards for Binance amid the exchange’s regulatory troubles. In March, the CFTC filed a civil lawsuit against Binance. In June, the SEC filed 13 charges against the exchange.