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The decline of the EUR/USD continued on Wednesday, as the rate eventually reached the support of the weekly S1 simple pivot point at 1.1806.

However, after touching the pivot point, the pair recovered to the 1.1830 level. Up to the middle of Thursday's trading, the EUR/USD has been fluctuating sideways between the 1.1810 and 1.1830 levels.

In the case that the rate ends the sideways trading with a surge, the 55 and 200-hour simple moving averages near 1.1840 could provide resistance. Above these levels, the rate could find resistance in the 100-hour SMA and the weekly simple pivot point at 1.1855 and 1.1858.

On the other hand, a decline of the pair might find support in the weekly S1 simple pivot point at 1.1806 and the 1.1800 mark. Below the 1.1800 mark, the most close by technical level was the weekly S2 at 1.1731. Due to that reason, round exchange rate levels like the 1.1750 were more likely to provide support.

On Wednesday, the GBP/USD found support in the 1.3730 level and started a surge. The surge ignored most technical levels or broke their resistance with ease. By the middle of Thursday's European trading hours, the rate had reached the 100-hour simple moving average near 1.3810.

If the pair passes the resistance of the 100-hour simple moving average, it would first aim at the weekly simple pivot point at the 1.3833 level. Above the pivot point, the rate could find resistance at 1.3845. The rate bounced off the 1.3845 level on Monday.

On the other hand, if the GBP/USD drops, it could look for support in the 200-hour SMA at 1.3795, 55-hour SMA at 1.3784 and the weekly S1 simple pivot point at 1.3773. However, note that these levels failed to stop the rate from declining on Wednesday.

Wednesday's decline of the USD/JPY currency exchange rate continued on into Thursday's early trading hours. By the middle of the day's European trading hours, the pair had reached below the 110.00 mark and the weekly simple pivot point at 109.92.

A potential target for the decline was the 109.60 level, which provided the pair with support on September 3. However, the 109.70 level could also provide support, as it did on September 7.

On the other hand, any kind of recovery of the USD/JPY would face the resistance of the weekly simple pivot point at 109.92, the 100 and 200-hour SMAs near 110.00 and the 55-hour SMA at 110.17.

The yellow metal's decline eventually found support in a zone that is located just below the 1,785.00 level. Meanwhile, it was spotted that the pair has been finding resistance in a zone just above the 1,800.00 mark.

In the near term future, the metal could trade sideways between the mentioned 1,785.00 and 1,800.00 levels until it is approached by the simple moving averages. The SMAs could provide resistance and push the price through the support of the 1,785.00 level.

On the other hand, a recovery of the bullion's price might face resistance near 1,810.00 where the 100 and 200-hour simple moving averages were located at on Thursday.

Three-day pullback from six-week high (1.1909) found footstep at 1.1815/10 zone (Fibo 38.2% of 1.1664/1.1909 upleg/55DMA) and edges higher in European session on Thursday, lifted by better than expected German data.

Wednesday’s close below daily cloud was negative signal, as falling thick cloud weighs and cloud base offers immediate resistance at 1.1830.

Traders focus the key event - ECB policy meeting, awaiting signal that the central bank is on track to start normalizing monetary policy as the life turns to normal after the pandemic.

Faster than expected rise in consumer prices and falling unemployment pressure policymakers to start exiting ultra-loose policy, but also to signal that ample support to the economy will remain for years to come, in other words – to signal that this is not the start of a gradual exit from easy policy.

The ECB is likely to cut bond buying from around 80 billion euros to the range of 60-70 billion, but will keep its discretion over the size of purchase under the 1.85 trillion euro Pandemic Emergency Purchase Program (PEPP).

Res: 1.1830, 1.1846, 1.1894, 1.1944.
Sup: 1.1810, 1.1800, 1.1786, 1.1757.

Atlanta President Raphael Bostic "as strong as the data was coming in the early part of the summer, I was really very much leaning into advocating for an earlier start than what many may have expected".

However, "the weaker data that we've seen more recently suggests to me that maybe there's a chance for some play on this, but I still think that sometime this year is going to be appropriate" to taper.

• Euro holds above $1.18 ahead of expected ‘tapering’ by ECB
• Fresh China crackdowns and fears of slowing growth dent sentiment
• Stocks slip, dollar rebound eases but yen edges up

ECB to taper but call it something else

The European Central Bank will probably join the taper bandwagon when it announces the outcome of its policy meeting later today. However, with some way still to go for the Eurozone recovery and a sizeable degree of uncertainty about the outlook, policymakers will likely attempt to avoid calling the move tapering so as not to spark a market tantrum.

A sharper-than-expected slowdown in the pace of asset purchases would risk pushing up Eurozone government bond yields, which had climbed to elevated levels before the ECB intervened and stepped up its emergency bond purchases in March. Although the euro area’s recovery is somewhat more fragile than America’s, it’s difficult to see hawkish Governing Council members supporting this accelerated pace for much longer given the progress since March.

Bond yields have come down considerably from the yearly highs, the EU’s virus recovery fund is finally being disbursed among member states, and the economic data remain solid despite some easing in the growth momentum. More importantly perhaps for policymakers, inflation in the euro area hit a decade high of 3% in August.

President Lagarde will have to tread carefully in her press briefing to reporters if she does not want to see any reduction in the pace of asset purchases being perceived as tapering by the markets. However, even if today’s meeting turns out to be slightly more hawkish than anticipated, it’s unlikely the euro will be able to make significant advances as the bigger questions about how PEPP will be wound down will probably be put off until December.

Plus, investors will want to weigh the ECB’s taper plans with the Fed’s before substantially adjusting their euro/dollar positions. For now, the single currency has found some support above the $1.18 handle.

Dollar falls versus majors but yen climbs

The euro’s steadier footing following three days of declines was mirrored by other majors as the US dollar’s rebound cooled off somewhat. The greenback is being pulled down slightly by lower Treasury yields, which came under pressure on Wednesday following the release of the Fed’s Beige Book. The Fed’s regular update on economic conditions across its 12 districts pointed to a slight “downshift” in economic growth, adding to existing doubts about the outlook amid the ongoing Delta outbreak.

With central banks gradually removing or getting ready to trim their pandemic-era stimulus, markets are becoming increasingly anxious about how well the recovery will hold up.

The dollar’s broad retreat bolstered even the riskier pound and antipodean pairs. Sterling edged back above the $1.38 level and the aussie and kiwi were last up about 0.2%. Though, the overall mood was one of risk-off, which lifted the safe-haven Japanese yen against most of its peers.

Apart from the dollar’s pullback, the pound found support in more hints from the Bank of England that a rate hike is forthcoming next year following Governor Andrew Bailey’s hearing yesterday before a parliamentary committee.

The Canadian dollar underperformed after the Bank of Canada cited some downside risks to the growth outlook even as it kept policy unchanged yesterday.

Stocks tumble on growth and China worries

Sentiment in equity markets was also dented by the growth concerns and fears that central banks might withdraw stimulus too quickly as the Fed looks set to announce tapering soon. Comments from Kaplan and Williams yesterday indicated the soft August jobs report hadn’t materially changed policymakers’ views on the timing of tapering.

Meanwhile, another round of crackdowns by Chinese authorities on the gaming industry slammed the stocks of gaming companies, not just in China but those listed in the United States as well. The Nasdaq Composite slipped 0.6% on Wednesday as the tighter regulations in China took the steam off the latest rally that had produced four consecutive days of record closes.

The S&P 500 and Dow Jones also closed lower and their futures were indicating a negative open today. However, despite the sea of red in global stock markets today, there were no signs of panic in China just yet, with the CSI 300 index ending the day marginally in negative territory.

Investors will be watching more Fed speakers today as well as the debate in the House Ways and Means Committee plan on part of the $3.5 trillion infrastructure bill.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1838
Prev Close: 1.1815
% chg. over the last day: -0.19%

The number of vacancies in the US reached a record high of 10.9 million since employers struggled to find workers. This news had a positive effect on the dollar index. Today, the European Central Bank will publish its interest rate decision and announce further monetary policy plans.

Trading recommendations

Support levels: 1.1816, 1.1799, 1.1759, 1.1704, 1.1620
Resistance levels: 1.1854, 1.1894, 1.1934, 1.1969

From a technical point of view, the general trend of the EUR/USD currency pair is bullish, but there is also a corrective downward movement observed on the hourly time frame. The MACD indicator became negative. Under such market conditions, it is better to look for sell trades from the resistance levels, where sellers show initiative. Buy trades can be considered from the support levels near the moving average but after additional confirmation in the form of a buyers' initiative.

Alternative scenario: if the price breaks through the 1.1704 support level and fixes below, the mid-term uptrend will likely be broken.

News feed for 2021.09.09:

• Eurozone Marginal Lending Facility (m/m) at 14:45 (GMT+3);
• Eurozone ECB Monetary Policy Statement (m/m) at 14:45 (GMT+3);
• Eurozone ECB Interest Rate Decision (m/m) at 14:45 (GMT+3);
• Eurozone ECB Press Conference (m/m) at 15:30 (GMT+3);
• US Initial Jobless Claims (w/w) at 15:30 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3784
Prev Close: 1.3769
% chg. over the last day: -0.11%

The UK Parliament supported Boris Johnson's plan to increase the tax on national insurance, social and health care services. Johnson made some members of his ruling party angry by breaking campaign promises not to raise taxes. Under the proposal, the National Insurance payroll tax rate paid by both employees and employers would increase by 1.25%, with the same increase applied to the shareholder’s dividend tax.

Trading recommendations

Support levels: 1.3741, 1.3692, 1.3632, 1.3614, 1.3525
Resistance levels: 1.3793, 1.3886, 1.3935, 1.4002

On the hourly time frame, the GBP/USD trend is bullish, but the beginning of a corrective downward movement is observed. The MACD indicator became negative, but there are signs of divergence. Under such market conditions, it is better to look for buy trades from the support levels, where buyers show initiative. Sell positions can only be considered with short targets from the resistance levels.

Alternative scenario: if the price breaks through the 1.3692 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 110.23
Prev Close: 110.26
% chg. over the last day: +0.03%

The USD/JPY currency pair is highly dependent on the dynamics of the dollar index now. The dollar index strengthened yesterday, which led to a slight increase in the USD/JPY quotes. Japan's revised GDP data has slightly strengthened the national currency.

Trading recommendations

Support levels: 110.11, 109.88, 109.43, 109.19, 108.65
Resistance levels: 110.26, 110.66, 110.95, 111.48

The main trend of the USD/JPY currency pair is bullish. Yesterday, the price returned to the wide corridor, forming a false breakout zone. The MACD indicator is in the positive zone but with signs of the buyer’s weakness. Under such market conditions, traders should look for buy trades near the moving average line from the support level, where buyers show initiative. Sell positions should be considered from the false breakout zone on the lower time frames.

Alternative scenario: if the price falls below 109.43, the uptrend is likely to be broken.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2644
Prev Close: 1.2694
% chg. over the last day: +0.39%

The Bank of Canada left its key interest rate unchanged, referring to the risks associated with the pandemic. The Management Board of the Central Bank believes that the Canadian economy still requires support for monetary policy. With the release of this news, the Canadian dollar lost its position.

Trading recommendations

Support levels: 1.2656, 1.2583, 1.2518, 1.2425
Resistance levels: 1.2713, 1.2812, 1.2891, 1.2951

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. But the price has consolidated in a local correctional upward movement. The MACD indicator began to signal a reversal. It is better to consider sell positions from the resistance levels, where sellers show initiative. Buy positions can be considered with short targets from the support levels, where buyers show initiative.

Alternative scenario: if the price breaks through the 1.2812 resistance level and fixes above, the uptrend will likely resume.

News feed for 2021.09.09:

• Canada BOC Gov Macklem’s Speech at 19:00 (GMT+3).

American employers struggle to find workers. As a result, the number of vacancies in the US reached a record high of 10.9 million. The news was positive for the dollar index and negative for the major stock indices. At the close of the stock market, the Dow Jones index decreased by 0.20%, the S&P 500 decreased by 0.13%, and the NASDAQ technology index lost 0.57%. Mostly the negative dynamics were observed in the oil and gas and technology sectors.

John Williams, the representative of the US Federal Reserve Bank of New York, said that the labor market needs significant progress to achieve the maximum goal of the Central Bank. However, he added that it might be appropriate for the Federal Reserve to start cutting the QE program later this year if the economy continues to improve.

Eventually, it is becoming clear that growth in the US economy is slowing. There are plans to raise corporate taxes and reduce the quantitative easing program. Investors should not expect further stock market gains this year and should focus on closing positions and rebalancing their portfolios.

European stock indices also closed in the red zone yesterday. The British FTSE 100 decreased by 0.75%, French CAC 40 lost 0.85%, German DAX dropped 1.5%, Italian FTSE MIB and Spanish IBEX 35 lost 0.75% and 0.6% respectively. All indices finished the day at their lowest levels in the last two to four weeks. Significant declines were also posted by the pharmaceutical stocks, including Novartis (-1.8%), AstraZeneca (-1.8%), and Sanofi (-2.5%). JP Morgan downgraded green energy companies Siemens Gamesa Renewable Energy S.A. and Siemens Energy AG. As a result, the companies' shares lost 8.6% and 8.1%, respectively.

Today, the European Central Bank will publish its interest rate decision and announce further monetary policy plans. It is more likely that nothing will change, but amid high inflation in Europe, there are talks about possible stimulus cuts.

The US Department of Energy slightly lowered its forecast for the price of Brent crude oil for the current year from $68.71 to $68.61 per barrel. OPEC+ crude oil production increase and reduction of global oil demand in response to COVID-19 spread have a negative impact on the growth of quotes.

Against the backdrop of a rising dollar index and rising US Treasury bond yields, the price of gold and silver declined yesterday. Given the fact that the QE program is likely to be reduced this year, investors should not expect a significant increase in precious metal prices.

Japan is going to extend the state of emergency in Tokyo and other regions until the end of this month to curb the outbreak of the virus and prevent hospital overflow. Major Asian indices are still under pressure from the outbreak of the virus in the region and also because investors fear that major central banks will soon begin to cut the QE program, which will lead to a large correction in the markets. At the end of yesterday's trading, Japan's Nikkei 225 index decreased by 0.38%, Australia's ASX 200 index lost 1.01%, Korea's KOSPI decreased by 0.74%, and Hong Kong's Hang Seng index fell by 1.17%, with tech companies declining the most.

Main market quotes:

• S&P 500 (F) 4,514.07 −5.96 (−0.13%)
• Dow Jones 35,031.07 −68.93 (−0.20%)
• DAX 15,610.28 −232.81 (−1.47%)
• FTSE 100 7,095.53 −53.84 (−0.75%)
• USD Index 92.71 +0.20 (+0.21%)

Important events for today:

• China Consumer Price Index (m/m) at 04:30 (GMT+3);
• China Producer Price Index (m/m) at 04:30 (GMT+3);
• Eurozone Marginal Lending Facility (m/m) at 14:45 (GMT+3);
• Eurozone ECB Monetary Policy Statement (m/m) at 14:45 (GMT+3);
• Eurozone ECB Interest Rate Decision (m/m) at 14:45 (GMT+3);
• Eurozone ECB Press Conference (m/m) at 15:30 (GMT+3);
• US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• US Crude Oil Reserves (w/w) at 18:00 (GMT+3);
• Canada BOC Gov Macklem’s Speech at 19:00 (GMT+3).

The EUR/GBP is getting weaker. I expect a further move to the downside.

The EUR is losing vs GBP. The price has made 4 consecutive lower highs and this is the sign of continuation decline. We could see a retest of 0.8580 zone which could be good for positional shorts. Targets are 0.8560 followed by 0.8550 as the main support. If the price breaks 0.8550 watch for 0.8510.