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The markets are relatively steady in Asian session today, as focus turns to ECB rate hike. Dollar has been paring some gains overnight as risk aversion receded mildly. Both Euro and Swiss Franc are generally firming up. On the other hand, There is little sign of life for Yen, as it's staying pressured across the board. Sterling is also not too far away, while commodity currencies are mixed, with Canadian on the upper hand.

Technically, in addition to Euro pairs, GBP/USD is one to watch today too, as it's now pressing pandemic low at 1.1409. Selloff is slowing for now. Indeed, considering bullish convergence condition in 4 hour MACD, break of 1.1608 minor resistance will suggest short term bottoming, after defending the key support. In that case, a sustainable rebound should follow as traders cover their short position and take profits. On the other hand, firm break of 1.1409 would trigger downside re-acceleration.

In Asia, at the time of writing, Nikkei is up 2.34%. Hong Kong HSI is down -0.49%. China Shanghai SSE is up 0.15%. Singapore Strait Times is up 0.82%. Japan 10-year JGB yield is up 0.001 at 0.248. Overnight, DOW rose 1.40%. S&P 500 rose 1.83%. NASDAQ rose 2.14%. 10-year yield dropped -0.075 to 3.265.

Fed Brainard: Monetary policy will need to be restrictive for some time

Fed Vice Chair Lael Brainard said yesterday that "monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down" to 2% target. She added Fed will need "several months of low monthly inflation readings to be confident that inflation is moving back down to 2%."

"Our resolve is firm," Brainard said. "If history is any guide, it is important to avoid the risk of pulling back too soon," and easing interest rates before inflation is under control.

Boston Fed President Susan Collins said, "It's really premature right now to be too specific about exactly what the right policy move will be in September... I will reiterate that we need to do more, we've not yet seen significant declines in prices, and that's what we're going to be looking for."

RBA Lowe: Case for slower tightening becomes stronger as rate rises

RBA Governor Philip Lowe reiterated in a speech that "further increases in interest rates will be required over the months ahead". But policy is "not on a pre-sent path" due to uncertainties. Also, "all else equal, the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises."

Lowe also highlighted three sources of uncertainty to the economy. The first is the "global economic environment", including the US, Europe and China. He said, "some slowing in the global economy will help bring inflation down, but a sharp slowing would make the job of delivering a soft landing here in Australia much harder."

The second source is "how inflation expectations and the inflation psychology in Australia adjust to the period of high inflation". The third is "how households respond to higher interest rates".

ECB to hike 75bps? A Look at EUR/CHF

ECB is expected to deliver another rate hike today. A 75bps is not fully priced in, but that's the more likely outcome after recent chorus of hawkish rhetorics. The markets would be eager to know more about two things going forward, the terminal rate of the current tightening cycle, and the pace to get there. But it's unlikely for President Christine Lagarde to reveal much on the two questions. Nevertheless, Lagarde might indicate a discussion on ending the reinvestment phase of the APP, which could be a hawkish sign.

Here are some previews on ECB:

• ECB Interest Rate Rise: Supersize or Jumbo?
• How Much Will the ECB Hike?
• Could the ECB Rate Decision Come to the Euro's Rescue?

Regarding market reactions, the next move in EUR/CHF is worth some attention. On the bearish side, break of 0.9696 minor support will signal completion of the rebound from 0.9550, and the readiness for down trend resumption through this low. In case of another rebound, sustained break of 38.2% retracement of 1.0512 to 0.9550 at 0.9917 is needed to confirm a bullish turn. Otherwise, Euro's rally elsewhere could be somewhat capped.

On the data front

UK RICS house price balance dropped from 62 to 53 in August, below expectation of 61. Japan Q2 GDP growth was finalized at 0.9% qoq while GDP deflator was finalized at -0.3% yoy. Japan current account deficit came in at JPY -0.63T. Australia trade surplus narrowed from AUD 17.67B to AUD 8.37B in July, versus expectation of AUD 14.50B.

Looking ahead, Swiss unemployment rate, France trade balance will be released in European session. US will release jobless claims.

EUR/USD Daily Outlook

Daily Pivots: (S1) 0.9918; (P) 0.9965; (R1) 1.0053; More...

EUR/USD recovers notably, but stays below 1.0078 resistance. Intraday bias remains neutral and further decline is expected. Decisive break of 61.8% projection of 1.0773 to 0.9951 from 1.0368 at 0.9860 should prompt downside acceleration to 100% projection at 0.9546. On the upside, however, firm break of 1.0078 will indicate short term bottoming, and turn bias back to the upside for 1.0368 resistance instead.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, outlook will stay bearish as long as 1.0368 resistance holds, even in case of strong rebound.

Economic Indicators Update

GMT	Ccy	Events	Actual	Forecast	Previous	Revised
23:01	GBP	RICS Housing Price Balance Aug	53%	61%	63%	62%
23:50	JPY	Bank Lending Y/Y Aug	1.90%	1.90%	1.80%	1.70%
23:50	JPY	GDP Q/Q Q2 F	0.90%	0.70%	0.50%
23:50	JPY	GDP Deflator Y/Y Q2 F	-0.30%	-0.40%	-0.40%
23:50	JPY	Current Account (JPY) Jul	-0.63T	0.02T	0.84T
01:30	AUD	Trade Balance (AUD) Jul	8.73B	14.50B	17.67B
05:00	JPY	Eco Watchers Survey: Current Aug	45.5	44	43.8
05:45	CHF	Unemployment Rate Aug	2.10%	2.20%	2.20%
06:45	EUR	France Trade Balance (EUR) Jul		-12.2B	-13.1B
12:15	EUR	ECB Main Refinancing Rate		1.25%	0.50%
12:30	USD	Initial Jobless Claims (Sep 2)		243K	232K
12:45	EUR	ECB Press Conference
14:30	USD	Natural Gas Storage		55B	61B
15:00	USD	Crude Oil Inventories		-2.0M	-3.3M

ECB is expected to deliver another rate hike today. A 75bps is not fully priced in, but that's the more likely outcome after recent chorus of hawkish rhetorics. The markets would be eager to know more about two things going forward, the terminal rate of the current tightening cycle, and the pace to get there. But it's unlikely for President Christine Lagarde to reveal much on the two questions. Nevertheless, Lagarde might indicate a discussion on ending the reinvestment phase of the APP, which could be a hawkish sign.

Here are some previews on ECB:

• ECB Interest Rate Rise: Supersize or Jumbo?
• How Much Will the ECB Hike?
• Could the ECB Rate Decision Come to the Euro's Rescue?

Regarding market reactions, the next move in EUR/CHF is worth some attention. On the bearish side, break of 0.9696 minor support will signal completion of the rebound from 0.9550, and the readiness for down trend resumption through this low. In case of another rebound, sustained break of 38.2% retracement of 1.0512 to 0.9550 at 0.9917 is needed to confirm a bullish turn. Otherwise, Euro's rally elsewhere could be somewhat capped.

RBA Governor Philip Lowe reiterated in a speech that "further increases in interest rates will be required over the months ahead". But policy is "not on a pre-sent path" due to uncertainties. Also, "all else equal, the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises."

Lowe also highlighted three sources of uncertainty to the economy. The first is the "global economic environment", including the US, Europe and China. He said, "some slowing in the global economy will help bring inflation down, but a sharp slowing would make the job of delivering a soft landing here in Australia much harder."

The second source is "how inflation expectations and the inflation psychology in Australia adjust to the period of high inflation". The third is "how households respond to higher interest rates".

Full speech here.

Fed Vice Chair Lael Brainard said yesterday that "monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down" to 2% target. She added Fed will need "several months of low monthly inflation readings to be confident that inflation is moving back down to 2%."

"Our resolve is firm," Brainard said. "If history is any guide, it is important to avoid the risk of pulling back too soon," and easing interest rates before inflation is under control.

Boston Fed President Susan Collins said, "It's really premature right now to be too specific about exactly what the right policy move will be in September... I will reiterate that we need to do more, we've not yet seen significant declines in prices, and that's what we're going to be looking for."

USD/JPY:

On the H4 chart, price has confirmed a bullish momentum breaking the previous high. We are bullish bias- Price has tested the first resistance and pulled back slightly. If bullish momentum continues, it should bring price to 144.906 where the 161.8% extension sits. Alternatively, if price reverses, it might pull back to test the first support at 141.652 where the 23.6% retracement sits then the second support at 139.349 where the 38.2% retracement and overlapping support sits

Areas of consideration:

• H4 time frame, 1st resistance at 144.906
• H4 time frame, 1st support at 141.652

DXY:

On the H4, prices have broken the range and are moving in an ascending trend, we are bullish bias. Price has pulled back slightly but if bullish momentum continues, it should bring price up to 110.582 where the 100% projection sits and subsequently the second resistance at 111.045 where the 138.2% fibonacci extension sits. Alternatively, price might pull back to test the first support at 109.258 where the 23.6% retracement and previous swing high sits and subsequently the second support at 108.106 where the 61.8% projection sits

Areas of consideration:

• H4 time frame, 1st resistance at 110.582
• H4 time frame, 1st support at 109.258

EUR/USD:

On the H4, price has broken the range and is moving in a descending trend – we are bearish bias. Price has pulled back slightly but if bearish momentum continues, it should test the intermediate support at 0.9868 then the first support at 0.9802 where the 61.8% projection sits. Alternatively if price rebounds, it might test the first resistance at 1.0118 where the 50% retracement and 61.8% projection sits and then the second resistance at 1.02745 where the 78.6% retracement and 100% projection sits.

Areas of consideration :

• H4 1st resistance at 1.0118
• H4 1st support at 0.9868

GBP/USD:

On the H4, prices seem to still be in a bearish momentum and respecting the ichimoku cloud. Prices have rebounded slightly but if bearish momentum continues it should move toward the first support at 1.1437 levels where the 161.8% extension sits. Alternatively, if it fails to break this level, it might look to test the first resistance at 1.1613 where the previous swing high sits subsequently the second resistance at 1.1760 level where the 61.8% projection and 38.2% retracement sits

Areas of consideration:

• H4 1st resistance at 1.163
• H4 1st support at 1.1437

USD/CHF:

On the H4, prices have rejected the 0.9859 levels and we are currently bearish bias. Price has bounced off the first resistance at 0.9859 where the previous swing high sits. If price do not break the first resistance, it could pull back to test the first support around the 0.9742 levels where the 23.6% retracement and swing low sits, subsequently the second support at 0.9626 where the 50% fibonacci retracement,78.6% projection and previous swing low sits

Areas of consideration

• H4 1st support at 0.9742
• H4 1st resistance at 0.9859

XAU/USD (GOLD):

On the H4, with prices below ichimoku cloud and descending trendline, we have a bearish bias. The 1st support level could be at 1689.529, which is in line with the previous swing low and 100% fibonacci projection. If this support level is broken, the 2nd support level is at 1680.546, where the previous significant swing low and 61.8% fibonacci projection are. Alternatively, the price may continue the pullback trend and break the descending trendline. The key resistance level could be at 1730.482 area, which is in line with the overlap resistance, 50 % and 38% fibonacci retracement, as well as 100% fibonacci projection.

Areas of consideration:

• H4 time frame, 1st support at 1689.529
• H4 time frame, 2nd support at 1680.546

AUD/USD:

On the H4, with the price moving below the ichimoku cloud and moving within the descending channel, we have a bearish bias that the price may drop to the 1st support at 0.66844, which is in line with the swing low. If the price can break this support level, the 2nd support level could be at 0.66325, where the 78.6% fibonacci projection is. Alternatively, the price may rise to the 1st resistance 0.67770, where the 23.6% fibonacci retracement and overlap resistance are.

Areas of consideration

• H4 1st support at 0.66844
• H4 2nd support at 0.66325

NZD/USD:

On the H4, with price moving within the descending channel and below ichimoku indicators, we have a bearish bias that the price may drop to the 1st support at 0.60031, which is in line with the 61.8% and 78.6% fibonacci projection. If the price can break the 1st support, the next support could be at 0.59472, where the 127.2% fibonacci extension and 100% fibonacci projection are. Alternatively, the price may rise to test the 1st resistance at 0.60780 again, where the overlap resistance is. If the price can break the 1st resistance, the 2nd resistance level could be at 0.61264, which is in line with the 50% fibonacci retracement and overlap resistance.

Areas of consideration:

• H4 time frame, 1st support at 0.60031
• H4 time frame, 2nd support at 0.59472

USD/CAD:

On the H4, with the price moving within the ascending channel, above ichimoku cloud, we have a bullish bias that the price may rise from the 1st resistance at 1.31922, where the swing high is to the 2nd resistance at 1.32236, where the significant swing high and 100% fibonacci projection are. Alternatively, the price may drop to the 1st support at 1.30988, where the 23.6% fibonacci retracement and previous swing lows are.

Areas of consideration:

• H4 time frame, 1st resistance at 1.31922
• H4 time frame, 2nd resistance at 1.32236

OIL:

On the H4, with price below ichimoku cloud and below the descending trendline, we have a bearish bias that the price may drop to the 1st support at 88.332, where the 78.6% fibonacci projection is. If the price could break the 1st support, the 2nd support could be at 85.715, where the 100% fibonacci projection is. Alternatively, the price may continue the pullback trend and rise to the 1st resistance at 93.159, where the 50% fibonacci retracement and previous swing support are.

Areas of consideration:

• H4 time frame, 1st support at 88.332
• H4 time frame, 2nd support at 85.715

Dow Jones Industrial Average:

On the H4, with price moving below the ichimoku indicator, we have a bearish bias that price will drop from 1st resistance at 31904 where the pullback resistance and 23.6% fibonacci retracement are to the 1st support at 31025 where the swing low support is. Alternatively, price could break 1st resistance and rise to 2nd resistance at 32632 where the pullback resistance, 50% fibonacci retracement and 78.6% fibonacci projection are.

Areas of consideration:

• H4 time frame, 1st resistance of 31904
• H4 time frame, 1st support at 31025

DAX:

On the H4, with price moving below the ichimoku indicator, we have a bearish bias that price will drop from 1st resistance at 13017.19 where the pullback resistance is to the 1st support at 12601.62 where the swing low support and 78.6% fibonacci projection are. Alternatively, price could break 1st resistance structure and rise to 2nd resistance at 13361.47 where the overlap resistance, 61.8% fibonacci retracement and 78.6% fibonacci projection are.

Areas of consideration:

• H4 time frame, 1st resistance of 13017.19
• H4 time frame, 1st support at 12601.62

ETHUSD:

On the H4, with price moving within an ascending channel and above the ichimoku indicator, we have a bullish bias that price will rise to 1st resistance at 1651.19 where the pullback resistance is. Once there is upside confirmation that price has broken 1st resistance structure, we would expect bullish momentum to carry price to 2nd resistance at 1723.42 where the swing high resistance and 78.6% fibonacci projection are. Alternatively, price could drop to the 1st support at 1562.81 where the overlap support is.

Areas of consideration:

• H4 time frame, 1st resistance of 1651.19
• H4 time frame, 1st support at 1562.81

BTCUSD:

On the H4, with price moving below an ichimoku indicator, we have a bearish bias that price will drop from the 1st resistance at 19498.02 where the pullback resistance and 23.6% fibonacci retracement are to the 1st support at 18588.89 where the swing low support and 78.6% fibonacci projection are. Alternatively, price could rise to 2nd resistance at 20711.10 where the pullback resistance and 61.8% fibonacci retracement are.

Areas of consideration:

• H4 time frame, 1st resistance of 19498.02
• H4 time frame, 1st support at 18588.89

S&P 500:

On the H4, with prices breaking out of the ascending trendline and moving below the ichimoku indicator, we have a bearish bias that the price will drop to the 1st support at 3945.01 where the pullback resistance is. Once there is downside confirmation that price has broken 1st support structure, we would expect bearish momentum to carry price to 2nd support at 3722.42 where the swing low support is. Alternatively, price could rise to 1st resistance at 4089.97 where the pullback resistance, 50% fibonacci retracement and 100% fibonacci projection are.

Areas of consideration:

• H4 time frame, 1st resistance of 4089.97
• H4 time frame, 1st support at 3945.01

Key Highlights

• AUD/USD extended losses and traded below the 0.6750 support.
• A key bearish trend line is forming with resistance near 0.6760 on the 4-hours chart.
• USD/JPY accelerated further higher above the 144.00 level.
• Crude oil price declined below the key $85.80 support zone.

AUD/USD Technical Analysis

The Aussie dollar started a strong decline from well above 0.7000 against the US Dollar. AUD/USD declined below the 0.6850 and 0.6800 support levels to move into a bearish zone.

Looking at the 4-hours chart, the pair settled below 0.6750, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The decline gained pace and the pair even broke the 0.6750 level. It tested the 0.6700 zone and started a consolidation phase. If there is a recovery wave, the pair might face resistance near the 0.6750 level.

There is also a bearish trend line forming with resistance near 0.6760 on the same chart. A clear move above the trend line resistance might start a move towards the 0.6800 level. The next major resistance is near 0.6820, above which AUD/USD might test the 100 simple moving average (red, 4-hours).

Conversely, the pair might continue to move down below 0.6700. The next major support is near the 0.6665 level. A downside break below the 0.6665 support might spark more losses. The next major support is near the 0.6620 level, below which the pair could even test the 0.6600 level.

Looking at crude oil price, there was a key downside break below the $85.80 support and there is a risk of more losses in the near term.

Economic Releases

• ECB Interest Rate Decision – Forecast 0.5%, versus 0% previous.
• Federal Reserve Chair Jerome Powell speech.

Decline in Oil (CL) from 7.20.2022 high is unfolding as a zigzag Elliott Wave structure. Down from July 20, wave A ended at 87.01 and wave B rally ended at $97.66. Oil has resumed lower in wave C with subdivision as a 5 waves impulse. Down from wave B, wave (i) ended at $88.27 and wave (ii) bounce ended at $91.61. Oil resumed lower in wave (iii) towards $87.12, wave (iv) ended at $88.63, and final leg lower wave (v) ended at $85.98. This completed wave ((i)) of C.

Wave ((ii)) rally ended at $90.38 with internal subdivision as a zigzag in lesser degree. Up from wave ((i)), wave (a) ended at $89.66, and pullback in wave (b) ended at $86.62. Final leg higher wave (c) ended at $90.38 which completed wave ((ii)). Oil turns lower again in wave ((iii)) with internal subdivision of an impulse. Down from wave ((ii)), wave (i) ended at $85.08 and rally in wave (ii) ended at $87.76. Oil then resumes lower in wave (iii) towards $81.50. Expect rally in wave (iv) to fail below $90.38 for further downside.

From larger point of view, Oil has reached 100% – 161.8% Fibonacci extension area from 3.7.2022 high at $63.3 – $86.3 and this area should be the daily support area for Oil for at least larger 3 waves rally.

Oil (CL) 60 Minutes Elliott Wave Chart

• AUDJPY broke key resistance level 96.65
• Likely to rise to resistance level 98.00

AUDJPY currency pair recently broke the key resistance level 96.65 (previous multi-month high from the start of June).

The breakout of the resistance level 96.65 should accelerate the active impulse waves 3 and (3).

Given the clear daily uptrend and continuation of the widespread yen sales – AUDJPY can be expected to rise further toward the resistance level 98.00 (target price for the completion of the active impulse wave (3)).

• NZDCAD reversed from strong support level 0.7920
• Likely to rise to resistance level 0.8030

NZDCAD currency pair recently reversed up from the strong support level 0.7920 (which stopped the earlier impulse waves 5 and (5) in July).

The upward reversal from the support level 0.7920 stopped the previous intermediate impulse wave (3).

Given the strength of the support level 0.7920 and the oversold daily Stochastic – NZDCAD can be expected to rise further toward the resistance level 0.8030 (which stopped the previous intermediate correction (2)).

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