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Bulls cracked former top of June 30 (145.06) on Monday and posted new 2023 high (145.22) but the price eased from headwinds on retest of key barrier and more significant threats of possible intervention.

Traders fear that Japanese authorities may intervene again, like they did last year when USDJPY breached 145 zone and briefly probed above 150, before the price was pushed sharply down by intervention.

Although Japan’s action was so far verbal, traders worry that authorities may decide to support yen at any time and started to adjust their positions not to be caught at the wrong foot.

Daily studies are firmly bullish and warn of further advance in case Japan opts to stay on hold with intervention, which would open way for extension towards psychological 150 barrier, with initial targets at 146.10, 147.00 and 148.05.

On the other hand, the pair may fall sharply if Japan intervenes and risk acceleration towards psychological 140 support.

Res: 145.06; 145.22; 146.10; 147.00.
Sup: 144.41; 143.37; 142.54; 141.51.

Bears are facing some headwinds on Monday but hold grip, following bearish signals from weekly close below Fibo support at 1.0955 (50% retracement of 1.0635/1.1275 upleg) and strong upside rejection on Thursday which left a daily candle with long upper shadow.

Near-term action was held again by 100DMA (1.0930), suggesting that bears may pause here, keeping the pair in extended sideways mode of past two weeks.

Daily studies still lack clear direction signals on conflicting indicators, as momentum is bearish, MA’s in mixed setup and falling stochastic is approaching oversold territory.

Sustained break below 1.0955 is needed to maintain downside pressure, but breach of 100DMA is required to signal bearish continuation for attack at pivotal supports at 1.0880 zone (Fibo 61.8%/top of thin daily cloud).

Daily Tenkan-sen (1.0988) marks initial resistance which should ideally cap upticks and guard upper pivots at 1.1031/52 (broken Fibo 38.2% / 20DMA / Thursday’s spike high) violation of which would revive bulls.

Res: 1.0988; 1.1005; 1.1031; 1.1052.
Sup: 1.0930; 1.0912; 1.0880; 1.0833.

Market Picture

During the week, the crypto market gained 0.7% and showed very low volatility over the last four days, with movements around the $1.17 trillion level. The Cryptocurrency Fear and Greed Index moved into neutral territory and is now in the middle – at 50.

It all feels like a summer lull as major market participants wait for signals of change or confirmation of critical trends in the “senior” markets.

Bitcoin managed to close last week with growth, and the bulls’ managed to support the price on its dips below 29K. Whether this is a temporary pause on the way down or a solid foundation to build further growth remains to be seen.

Recently, bitcoin has decoupled from the Nasdaq index, with which it previously had a very high correlation. Once, bitcoin’s similar resilience ended in an accelerated sell-off when the crypto market realised that the pressure on stocks was a trend and not a brief technical correction.

Perhaps the only exception would be a repeat of the string of banking problems, triggering a wave of demand for capital protection that cryptocurrencies could meet.

News Background

The US SEC has asked ARK Invest and 21Shares for new “comments, views and arguments” on their application for Bitcoin ETFs, which can be submitted within 21 days.

The SEC will likely approve several ETFs based on the first cryptocurrency at once, Matrixport believes. If the regulator delays a decision on the applications, a mid-September correction in BTC is possible.

Crypto exchange Bittrex agreed to pay a $24 million fine to settle SEC claims. The regulator accused the platform of failing to register and selling unregistered securities.

US institutional crypto platform Bakkt reported 25-fold year-over-year revenue growth in Q2 25-fold to $348 million, while trading volume plunged 51%.

According to Bloomberg Intelligence, launching the PayPal (PYUSD) stablecoin based on the Ethereum network could significantly impact the entire ecosystem of the second-most-capitalised cryptocurrency. ETH will have huge growth potential even if only a tiny percentage of PayPal’s customer base starts using the PYUSD stablecoin.

The launch of PYUSD will improve payment efficiency and customer service, but adoption of the asset is unlikely to be widespread, Bank of America said.

• Australian dollar extends losses
• Australia’s wage growth expected to rise
• Chinese Industrial Production projected to remain unchanged

The Australian dollar started the week by dropping 50 basis points but has recovered most of these losses. In the European session, AUD/USD is trading at 0.6488, down 0.12%.

It has been a rough ride lately for the Australian dollar. The currency fell 1.17% against the US dollar last week and has plunged 3.39% in the month of August.

Australian wage growth expected to remain high

Australia’s inflation rate remains elevated at 6%. The RBA has aggressively tightened rates, but high wage growth, courtesy of a tight labour market and high inflation, remains a key driver of inflationary pressures. Wage growth accelerated to 3.7% q/q in the first quarter, up from 3.3%, the highest level since the third quarter of 2012. The consensus for the second quarter stands at 3.7%. On a monthly basis, wage growth is expected to rise 0.9%, higher than the Q2 reading of 0.8%.

A strong wage price index reading will make the Reserve Bank of Australia’s fight against inflation that much more difficult. The RBA expects inflation to fall slowly, with a forecast of 3.25% by the end of next year and falling to the 2%-3% target only in late 2025.

The RBA will release the minutes of the August meeting on Tuesday. Market expectations were split ahead of the meeting as to whether the RBA would pause for a second straight month or hold rates at 4.10%. In the end, policy makers went for a pause but added that further tightening could be required, depending on the data. Tuesday’s minutes may provide some insights into the decision to pause. RBA Governor Lowe said on Friday that the central bank was leaving the door open for further tightening but only expected to make “small adjustments to calibrate policy”.

China’s economic slowdown could spell trouble for Australia’s economy and the ailing Australian dollar. China’s exports and imports are down and the country is experiencing deflation. We’ll get a look at Chinese Industrial Production on Tuesday, with a consensus estimate of 4.4% for July, unchanged from June.

AUD/USD Technical

• There is resistance at 0.6607 and 0.6700
• 0.6475 and 0.6382 are providing support

Daily Pivots: (S1) 183.55; (P) 183.89; (R1) 184.38; More...

Intraday bias in GBP/JPY remains on the upside at this point. Sustained break of 183.99 will confirm larger up trend resumption. Next target is 61.8% projection of 158.24 to 183.99 from 176.29 at 192.20. For now, near term outlook will stay bullish as long as 180.41 support holds, in case of retreat.

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) 158.45; (P) 158.84; (R1) 159.08; More....

Intraday bias in EUR/JPY remains neutral at this point. Downside of retreat should be contained above 155.51 support to bring another rally. On the upside, break of 159.20 will resume larger up trend, and target 61.8% projection of 139.05 to 157.99 from 151.39 at 163.09 next.

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) 0.8605; (P) 0.8637; (R1) 0.8656; More...

Intraday bias in EUR/GBP stays neutral for the moment. On the downside, below 0.8543 will target a test on 0.8502 low. Decisive break there will resume larger decline from 0.8977. On the upside firm break of 0.8717 resistance will suggest larger reversal and target 0.8874 resistance next.

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). Firm break of 0.8717 support turned resistance will argue that it has completed with three waves down to 0.8502. Further break of 0.8977 will bring retest of 0.9267 high. Nevertheless, rejection by 0.8717, followed by break of 0.8502 will resume the decline towards 0.8201 (2022 low).

Daily Pivots: (S1) 1.6823; (P) 1.6853; (R1) 1.6885; More...

Intraday bias in EUR/AUD stays on the upside for the moment. Current rise is part of the up trend from 1.4281. Next target is 1.7377 projection level next. On the downside, below 1.6708 minor support will turn bias neutral and bring consolidations again first.

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) 0.9575; (P) 0.9612; (R1) 0.9631; More...

Intraday bias in EUR/CHF remains neutral for the moment. On the upside, break of 0.9647 will resume the rebound from 0.9520. Further sustained break of 0.9670 will be the first sign of bullish reversal and target 0.9840 resistance for confirmation. On the downside, break of 0.9520 will resume the whole fall from 1.0095 towards 0.9407 low.

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 0.9840 resistance holds, in case of strong rebound.

EURUSD has been trading sideways for the past two weeks after experiencing a downside correction from its 17-month high of 1.1275. However, the technical picture is slowly tilting towards the bearish side as the price has fallen beneath both the 50-day simple moving average (SMA) and the ascending trendline that connects its higher lows since September 2022.

The momentum indicators currently suggest that bearish forces are intensifying. Specifically, the MACD is softening below both zero and its red signal line at its lowest level since June 14, while the RSI is descending below its 50-neutral threshold.

Should we see a clear close below the trendline, the recent support of 1.0911 could act as the first line of defense. Violating this territory, the price may face the July low of 1.0834 ahead of the May bottom at 1.0633. Even lower, the 1.0515 hurdle could provide downside protection.

On the flipside, if the recent range breaks to the upside, the February high of 1.1032 might prove to be the first barricade for the bulls to conquer. A jump above that zone may open the door for 1.1094, which held strong three times in April. Should that hurdle also fail to provide resistance, the spotlight could turn to the 17-month peak of 1.1275.

In brief, EURUSD seems to be stuck in a tight range, but a decisive break below the fortified region that includes the upwards sloping trendline and the 50-day SMA could trigger a strong selloff. Can the bulls fight back?