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GBPJPY: ⬇️ Sell

• GBPJPY reversed from resistance zone
•  Likely to fall to support level 198.00

GBPJPY currency pair recently reversed up from the resistance zone located between the long-term resistance level 200.00 (which has been reversing the price from October of 2024) and the upper daily Bollinger Band.

The downward reversal from this resistance zone stopped the earlier impulse wave iii of the intermediate wave (3) from the end of May.

Given the overbought daily Stochastic, GBPJPY currency pair can be expected to fall to the next support level 198.00.

Yen accelerated higher in US session as the selloff in NASDAQ intensified. Profit-taking in heavyweight technology and semiconductor names deepened concerns that valuations in the AI space may have run too far, too fast. The move fueled risk aversion and sparked a flight to traditional safe havens, leaving commodity currencies under heavy pressure.

Kiwi and Aussie bore the brunt of the market shift. For the New Zealand Dollar, the weakness was compounded by RBNZ’s dovish 25bps cut earlier in the day. Fresh projections showed policymakers still see scope for one more cut this year and another early in 2026, signaling a deeper easing cycle than markets had been positioned for.

Technically, NZD/JPY is now pressing an important support at 38.2% retracement of 79.79 to 89.05 at 85.51. Firm break there will pave the way to 61.8% retracement at 83.32. In case of recovery, outlook will stay bearish as long as 86.65 support turned resistance holds.

More importantly, rejection by 55 W EMA keeps the down trend from 99.01 (2024 high) intact. Further downside acceleration should at least bring another test on 79.79 low.

AUD/JPY's decline from 97.41 also resumed by breaking through 94.88 support. Further decline is now in favor back to 38.2% retracement of 86.03 to 97.41 at 93.06. Sustained break there will target 61.8% retracement at 90.37 next.

Just as in NZD/JPY, AUD/JPY's rejection by 55 W EMA keeps the down trend from 109.36 (2024 high) intact. Any downside acceleration would at least bring a retest on 86.03 low.

Yesterday evening's Royal Bank of New Zealand Meeting delivered a much expected 25 bps cut.

Usually, a rate decision that is released as expected will then point participants towards the communication.

As explained in our pre-Rate decision analysis, there are different scenarios: a dovish or hawkish approach to again different possibilities of rate decisions (cut, pause, hike, 25 bps or more).

Yesterday's dovish 25 bps cut from the RBNZ caught markets by surprise: a lower longer-run inflation outlook and subsequent lower projected OCR (New Zealand's main interest rate) combined with some lower revised growth and employment outlooks sent the Kiwi dropping against all majors.

You can access another NZD strategy analysis published earlier on our website for NZDJPY.

Let's now look at the major Kiwi pair: NZDUSD.

OANDA's Currency Strength tool, August 20, 2025 – Source: OANDA Labs (look at the NZD)

NZDUSD Multi-timeframe technical analysis

NZDUSD Daily Chart

NZDUSD Daily Chart, August 20, 2025 – Source: TradingView

The Kiwi was evolving in a consistent upward trend since the April Liberation Day troughs, but has since broken and retested the channel supporting it.

The current downtrend is forming a downward channel and the 1% down-move from yesterday's meeting is now stalling at the 0.58 support zone.

Look at the reactions as mean-reversion buyers are now stepping at the 200-Day Moving average (0.5830) and lower bound of the same downward channel, from oversold RSI levels – let's have a closer look to see if the current support will be enough to hold the downtrend.

Note that a failure to do so should trigger a prolonged selling trend.

NZDUSD 4H Chart

NZDUSD 4H Chart, August 20, 2025 – Source: TradingView

Multiple scenarios are possible here.

Effectively, despite momentum being in sellers' hands, multiple selling targets have been attained: The 4H RSI is also oversold, with a 4H Head and Shoulders pattern attaining its measured move target at a confluence with the lower bound of the downward channel.

In such bear channels with new fundamentals, mean-reversion isn't always a given: prices may consolidate sideways before attaining the other side, upper bound of the channel.

If buyers do step in around here, look at the mid-point of the channel located right at the 0.59 Pivot Zone.

Levels to look for NZDUSD trading:

Resistance Zones:

• 0.59 (+/- 150 pips) Main Pivot acting as Resistance
• 0.5950 Resistance Zone
• 0.60 Psychological level.

Support Zones:

• 0.58150 Daily lows
• 0.58 immediate Support Zone
• Next Main Support 0.57 to 0.5750

Safe Trades!

Cable edged higher on Wednesday after testing next key support provided by daily cloud base (1.3464), following break below psychological 1.3500 level (reinforced by daily Tenkan-sen) previous day.

Pound was lifted by disappointing UK July inflation data which further darkened outlook as Britain’s inflation is the highest and fastest growing among G7 economies.

In addition, economic growth remains weak that makes the position of UK policymakers more difficult, with bets about rate cut by the end of the year, fading after today’s data.

However, stronger than expected rise in consumer prices and weaker dollar, were unable to significantly lift pound, as traders remain very cautious about growing threats of stagflation (elevated inflation, weak economy, although the labor sector is still resilient) that may sour sentiment and limit gains.

Daily technical studies are still in predominantly positive configuration, with slight bullish bias expected to stay alive while the price holds above daily cloud base, though sustained break above 1.3500 level will be needed to boost initial positive signal and expose pivotal barrier at 1.3554 (daily cloud top).

Strong positive momentum and multiple MA bull-crosses continue to underpin the price, but risk of further weakness remains in play, due to weakening sentiment.

In the negative scenario on firm break of cloud base, the price would target 1.3421 (Fibo 38.2% of 1.3141/1.3594) and 1.3400 (100DMA) with 1.3367 (50% retracement) expected to come in focus on stronger acceleration.

Res: 1.3500; 1.3554; 1.3564; 1.3594.
Sup: 1.3464; 1.3421; 1.3400; 1.3367.

Markets

The waiting game continues today in anticipation of PMI business surveys tomorrow and especially Fed Chair Powell’s speech in Jackson Hole on Friday. Core bonds are marginally better bid with daily changes on the US and EMU yield curve limited to -2 bps. Yesterday’s equity market rotation (out of US tech into European (laggards)) seems to continue with European names able to undo a red start to currently trade mixed. US stock markets start the day on the backfoot (up to -0.5% for Nasdaq). EUR/USD is going nowhere at 1.1660. Bridging the gap to next events/eco data, ECB president Lagarde gave some panel remarks at the International Business Council of the World Economic Forum in Geneva. She didn’t really touch on monetary policy though suggested that the implications of the EU-US trade deal will be factored into the ECB’s September macroeconomic projections which will help guide future decisions. Lagarde’s comments centered around the resilience of the global economy despite trade tensions and uncertainty. Frontloading (stockpiling goods ahead of anticipated tariffs) was name of the game in Q1, especially in export-heavy sectors like pharmaceuticals. Domestic factors such as strong private consumption, investment, and a stable labour markets supported EMU growth as well. However, the frontloading effect began reversing in Q2 as tariffs were implemented and is expected to weigh on growth in Q3 as well. The EU-US trade deal imposes average tariffs of 12%-16% on EU goods, below worst-case scenarios. Lagarde did warn for lingering uncertainty about sector-specific tariffs, particularly on pharmaceuticals and semiconductors. She lauded the EU’s strong position as top trading partner for 72 countries around the world and the extensive network of trade agreements, while emphasizing the importance of further diversification beyond the US.

UK July inflation rose by 0.1% M/M and 3.8% Y/Y (from 3.6% vs 3.7% expected) with core inflation (3.8% from 3.7%) and services inflation (5% from 4.7%) picking up faster as well. The move strengthens the hawkish rate cut signal by the BoE earlier this month, putting in doubt the likelihood of another rate cut this year. Sterling initially tried to gain on the prospect of longer interest rate support, but ran into a countermove. Failing to really test EUR/GBP support, the pair made a U-turn towards 0.8650. UK Gilts equally showed some kind of sell-the-rumour, buy-the-fact reaction. They outperform Bund and Treasuries with UK yields currently up to 5 bps lower across the curve.

News & Views

The Swedish Riksbank (RB) left its policy rate unchanged as expected at 2% today. In its monetary policy update the RB admits that inflation has been higher than expected during summer, with CPIF inflation in July at 3% and CPIF excluding energy printing 3.2% Y/Y. The higher outcome was mainly due to volatile factors such as foreign travel and car rentals. Other services and goods overall basically increased in line with the June RB forecast. The RB sees the summer inflation uptick as temporary as other indicators are not pointing to any lasting elevated inflationary pressures. At the same time, growth has been lower than expected. Amongst others, households are still cautious regarding spending in Q2. That said, the RB sees good conditions for a rebound in the Swedish economy later this year, but it will take time before the labour market improves from the currently elevated unemployment rate. Looking forward, the RB concludes that there is still some probability of a further interest rate cut this year, in line with the June forecast. The market reaction to the RB decision was limited. Money markets still see about a 50% chance of a rate cut next month. The krone briefly oscillated at the time of the RB decision but currently trades little changed near EUR/SEK 11.18.

Bloomberg reports that Karel Havlick, the Deputy Chairman of the Czech ANO opposition party led by former Prime Minster Andrej Bebis, indicated that the party intends to change the current policy of fiscal austerity if it returns to power after parliamentary elections scheduled to take place on October 3-4. According the Havlicek, the Czech Republic needs to move away from excessive focus on fiscal restraint to kickstart economic growth. He assesses that spending on infrastructure and welfare may lead to a “slightly” bigger deficit, but benefit the country and its finances in the longer term. The ANO party currently leads the SPOLU party of reigning prime minister Petr Fiala in the opinion polls.

The Nasdaq100, the leader among US indices in recent years, remains one step ahead even during periods of decline. The index has been declining for the sixth consecutive trading session, but careful profit-taking on Tuesday became more nervous with a 1.4% drop, and the total decline from the peak exceeds 2.4%.

Market commentators note a decline in euphoria surrounding the revolutionary nature of AI implementation and compare the situation to the dot-com bubble. The problem is indeed very similar, from the revolutionary nature of the technology and the desire of market leaders to show their involvement in it, to the overvaluation of companies based on projections of rapid early success into the future. An example is the launch of GPT-5, which attracted criticism and complaints about quality rather than the expected breakthrough, forcing OpenAI to roll back to the previous model in some cases. And all this despite multi-billion dollar investments.

While comparisons with events and market impacts from a quarter of a century ago make sense, it is also important to remember that talk of a dot-com bubble began as early as 1996–1997 and was very loud in 1999. However, the most intense part of the rally was still ahead, with more than 120% growth from August 1999 to March 2000. This is a crucial point for investors: Is it really time to open a global short position?

We believe that the recent market sluggishness is related to a change in expectations regarding US monetary policy following alarming inflation reports: higher rates are a heavier burden for fast-growing companies that need money for investment.

In addition, August is statistically the second-worst month for stocks, second only to September, which is likely holding back buyers.

At the same time, we continue to believe that the Fed remains in a cycle of rate cuts, having taken a long pause of three quarters. The April correction removed the market’s long-term overheating, creating room for growth. This means that the market’s tactic of buying on dips and taking profits with shallow corrections is more likely to be replaced by a resumption of growth than to turn into a global sell-off.

Daily Pivots: (S1) 1.1627; (P) 1.1660; (R1) 1.1681; More...

Intraday bias in EUR/USD remains neutral for the moment as sideway trading continues. Further rally is expected as long as 1.1589 support holds. Above 1.1729 will bring retest of 1.1829 high. On the downside, however, firm break of 1.1589 will turn bias to the downside, and extend the corrective pattern from 1.1829 with another fall.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 1.1604 support holds.

Daily Pivots: (S1) 1.3469; (P) 1.3500; (R1) 1.3522; More...

GBP/USD's correction from 1.3594 is still in progress and deeper fall cannot be ruled out. But downside should be contained well above 1.3398 support. On the upside, break of 1.3594 will resume the rise from 1.3140 to retest 1.3787 high.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3090) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8055; (P) 0.8070; (R1) 0.8094; More….

USD/CHF is still bounded in range trading and intraday bias stays neutral. On the downside, break of 0.8020 will revive that case that the corrective pattern from 0.7871 has completed, and target a retest on 0.7871 low. On the upside, firm break of 0.8710 will resume the corrective from 0.7871. Intraday bias will be back on the upside for 38.2% retracement of 0.9200 to 0.7871 at 0.8379.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.