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AUDUSD is holding within a narrow range on Friday, as price action reduces speed ahead of today’s key event -speech of Fed Chair Powell at Jackson Hole symposium, which is expected to give more hints about the central bank’s steps in the near future on interest rates.

Near-term structure remains weak following Wednesday’s strong rally (up 0.93% for the day) and subsequent drop on Thursday (down 0.91%) which fully reversed recovery, but still holding above 0.6400 support (psychological / Fibo 76.4% of 0.6170/0.7157 rally) which recently contained several attacks and acts as solid support.

Technical studies on daily chart are in bearish mode and add to overall negative picture, however firm break of 0.6400 zone is required to generate bearish signal and open way for fresh acceleration lower.

The Aussie dollar would come under increased pressure on hawkish comments from Powell, but may receive fresh support if comments sound to markets as less hawkish than expected or dovish.

Res: 0.6488; 0.6500; 0.6567;0.6592.
Sup: 0.6400; 0.6364; 0.6272; 0.6170.

The dollar index keeps firm tone and hit the highest since early July in early Friday’s trading, in extension of Thursday’s 0.63% advance (the biggest one day gains since July 27).

The greenback resisted some softer tones from Fed policymakers on Thursday and kept its strong bullish stance against the major world counterparts, on expectations that Fed Chair Powell will reiterate the central bank’s view on keeping high interest rates for extended period.

Recent solid US economic data signal that the economy is relatively resilient and labor sector remains tight that leaves space for keeping high borrowing cost for some time to push still elevated inflation towards the central bank’s target at 2%, without serious negative impact to the economy.

However, traders remain cautious as any softer tones from Powell, which should not be dovish but less hawkish than expected, may sour the sentiment and increase pressure on dollar.

Bulls eye key short-term barrier at 104.59 (May 31 peak) violation of which would unmask next pivotal level at 105.13 (Fibo 38.2% of 114.72/99.20 fall).

Initial support lays at 103.60 (rising 5DMA) followed by 10DMA (103.40), which should ideally keep the downside protected and guard lower pivot at 102.93 (200DMA), loss of which will be bearish.

Res: 104.24; 104.59; 105.13; 105.40.
Sup: 103.60; 103.40; 103.18; 102.93.

The Euro dips further on Friday and on track for the sixth consecutive weekly loss.
Weak risk sentiment and growing expectations that the Fed and ECB would raise their interest rates again in November, add pressure on the single currency, as markets await today’s speeches of Fed Chair Powell and ECB President Lagarde at the Jackson Hole, to get more clues about the future steps of major central banks.

Additional pressure on Euro came from German GDP data which showed that the economy stagnated in the second quarter after a winter recession and contribute to gloomy outlook, with weaker than expected country’s business morale (Ifo report) in August, further souring the sentiment.

Bears broke below 200DMA (1.0802) and Fibo support at 1.0786 (76.4% of 1.0635/1.1275) with close below these levels to confirm fresh bearish signal and increase risk of test of 1.0700 (psychological) and 1.0635 (May 31 low) in extension.

Daily studies remain bearish and support the action, with upticks to be capped by falling 10DMA (1.0862) to keep larger bears in play.

Res: 1.0802; 1.0839; 1.0862; 1.0879.
Sup: 1.0733; 1.0700; 1.0667; 1.0635.

Germany's economic outlook has dimmed yet again, as indicated by the Ifo Business Climate Index which registered its fourth consecutive monthly drop. In August, the index tumbled from 87.4 to 85.7. The downward trajectory was visible across both Current Situation Index, which slid from 91.4 to 89.0, and Expectations Index, which descended from 83.6 to 82.6.

A sectoral breakdown of the data highlighted broad-based concerns. Manufacturing saw a decline from -13.9 to -16.6. Meanwhile, Services sector took a more significant hit, plummeting from a modest 1.0 to a concerning -4.2. Trade and Construction sectors also continued their downward spiral, recording readings of -25.5 and -29.3 respectively, from their previous standings of -23.7 and -24.6.

Ifo's commentary on the data was stark. They noted, "Assessments of the current situation fell to their lowest level since August 2020." The institution also flagged a growing pessimism among companies regarding the forthcoming months, adding, "The German economy is not out of the woods yet."

Full German Ifo release here.

Daily Pivots: (S1) 183.31; (P) 184.04; (R1) 184.46; More...

Intraday bias in GBP/JPY stays mildly on the downside for the moment. Fall from 186.75 short term top is in progress for 55 D EMA (now at 181.16). For now, risk will remain on the downside as long as 186.75 resistance holds, in case of recovery.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 195.86 (2015 high). This will now remain the favored case as long as 176.29 support holds, even in case of deeper pull back.

Daily Pivots: (S1) 157.17; (P) 157.61; (R1) 158.11; More....

Intraday bias in EUR/JPY stays mildly on the downside at this point. Current decline from 159.47 short term top should extend to (now at 155.76) first. For now, risk will stay mildly on the downside as long as 159.47 holds, in case of recovery.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 100% projection of 124.37 to 148.38 from 139.05 at 163.06. Sustained break there will pave the way to retest long term resistance at 169.96. This will now remain the favored case as long as 151.39 support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.8551; (P) 0.8567; (R1) 0.8595; More...

Intraday bias in EUR/GBP is now mildly on the upside with break of 0.8564 minor resistance. Stronger rebound could be seen but near term outlook will stay bearish as long as 0.8667 resistance holds. Break of 0.8419 support will resume larger fall from 0.8977.

In the bigger picture, the down trend from 0.9267 (2022 high) is seen as part of the long term range pattern from 0.9499 (2020 high). Further decline is in favor as long as 0.8667 resistance holds. Break of 0.8502 will resume the fall towards 0.8201 (2022 low).

Daily Pivots: (S1) 1.6782; (P) 1.6819; (R1) 1.6882; More...

Intraday bias in EUR/AUD stays neutral at this point. Outlook also stays bullish with 1.6737 support intact. Break of 1.7062 will resume larger rise from 1.481 to 1.7377 projection level next. However, firm break of 1.6737 will bring deeper pull back to 1.6601 resistance turned support instead.

In the bigger picture, the rise from 1.4281 (2022 low) is in progress. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. For now, outlook will stay bullish as long as 1.5846 support holds, even in case of another pull back.

Daily Pivots: (S1) 0.9534; (P) 0.9550; (R1) 0.9578; More...

Intraday bias in EUR/CHF is turned neutral with current recovery. But further decline is expected as long as 0.9599 resistance holds. Break of 0.9513 will resume the whole fall from 1.0095 to 61.8% projection of 0.9840 to 0.9520 from 0.9646 at 0.9448.

In the bigger picture, medium term outlook is staying bearish as the pair is capped well below falling 55 W EMA (now at 0.9849). Down trend from 1.2004 (2018 high) is in favor to continue. Sustained break of 0.9407 will target 61.8% projection of 1.1149 to 0.9407 from 1.0095 at 0.9018. For now, this will remain the favored case as long as 0.9670 support turned resistance holds, in case of strong rebound.

USDCAD had been stuck in a steep uptrend after finding its feet at the 10-month low of 1.3091 in mid-July. Moreover, the pair has sliced through important technical zones such as both the 50- and 200-day simple moving averages (SMAs), while posting consecutive fresh two-month highs in the last few daily sessions.

The momentum indicators currently suggest that the recent rally could be overstretched. Specifically, the MACD is strengthening above zero and its red signal line at its highest level since March, while the RSI is hovering within its 70-overbought territory.

Should the bulls attempt to push the price higher, immediate resistance could be found at the April peak of 1.3666. Breaking above that region, the pair might ascend towards the 1.3700 psychological mark, which held strong in December 2022. Further advances could then cease at the 2023 high of 1.3860 registered in March.

Alternatively, if the recent rally fizzles out, the price may retrace lower to test the recent support of 1.3496. A violation of that territory could open the door for the May resistance of 1.3385, which could now serve as support. Failing to halt there, the pair could extend its retreat towards the April bottom of 1.3300 ahead of the February low of 1.3262.

In brief, USDCAD has been staging a strong recovery, which accelerated after the pair pierced through the ascending trendline that connects its higher lows from November 2022 until early May. However, traders should not rule out a correction as the price has approached overbought conditions.