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Re: Daily Market Analysis from ForexMart

Hot forecast for EUR/USD on July 22, 2022

Until yesterday, the last time the European Central Bank raised the refinancing rate was in July 2011. That was exactly eleven years ago. So there is nothing surprising in the fact that as soon as it was announced that all interest rates were raised by 50 basis points, the single European currency immediately jumped. But it returned to its original position almost immediately, and began to show a downward trend. The ECB was able to surprise everyone greatly. And quite unpleasant. The fact is that, coupled with an increase in the refinancing rate, the launch of the TPI program was announced, which can be deciphered as a Transitional Protective Instrument. In fact, this is another quantitative easing program. It is aimed at supporting the countries of the euro area in the face of rising interest rates. The fact is that the increase in rates will lead to an increase in the yield of government bonds. So borrowing will become more expensive, and the level of public debt is extremely high. Many countries may well be unable to service their debts. This alone simply cancels out any effect from higher interest rates. But what is most important is that the parameters of this program are not known. No timing, no volume. Simply put, the ECB can print as much money as it wants. That opens the way not just to parity, but also to lower values.

Refinancing rate (Europe):

The EURUSD currency pair only locally showed speculative interest during the announcement of the results of the ECB meeting and the press conference. The scale of fluctuations was about 100 points. As a result, the current momentum led to forming a short-term flat within the boundaries of 1.0150/1.0270.

The technical instrument RSI H4 is moving in the upper area of the 50/70 indicator, which indicates a residual signal of a corrective move. RSI D1 has come close to the 50 middle line, which corresponds to the usual correction.

The MA moving lines on the Alligator H1 indicator have many intersections with each other, which indicates a flat. Alligator H4 is in the process of decelerating the upward cycle. Alligator D1 ignores local price rules. There is no intertwining between the MA sliding lines.

Expectations and prospects

In this situation, the current range focuses all the attention of traders on itself. For this reason, the most appropriate trading tactic is considered to be the method of breaking through one or another flat border.

We concretize the above into trading signals:

Long positions on the currency pair are taken into account after keeping the price above the value of 1.0280 in a four-hour period.

Short positions should be considered after keeping the price below 1.115 in a four-hour period.

Complex indicator analysis has a variable signal in the short-term and intraday periods due to the flat. Technical instruments in the medium term give a sell signal due to a downward trend.

Re: Daily Market Analysis from ForexMart

Tips for beginner traders in EUR/USD and GBP/USD on July 25, 2022

Details of the economic calendar from July 22
Preliminary data on business activity indices in Europe, Great Britain, and the United States reflected an overall decline. And since the picture is the same, there was no reason for fuss.

Details of statistical indicators:

In Europe, the index of business activity in the service sector fell from 53.0 to 50.6 points, while the forecast was 52.0 points. Manufacturing PMI fell from 52.1 to 49.6 points, with forcast of a decline to 51.0 points. The composite index fell from 52.0 to 49.4 points.

The situation is slightly better in the UK. Services PMI fell from 54.3 to 53.3 points, while the forecast assumed a decline to 53.0 points. Manufacturing PMI, on the other hand, fell from 52.8 to 52.2, with a forecast of 52.0 points. The composite index fell from 53.7 to 52.2 points.

In the US, Manufacturing PMI fell from 52.7 to 52.3 points. Services PMI fell from 52.7 to 47.0 points, while forecasts expected it to remain at the same level. As a result, the composite index fell from 52.3 to 47.5 points.

Analysis of trading charts from July 22
The EURUSD currency pair is in the flat stage, where the values of 1.0150/1.0270 serve as boundaries. The prolonged presence of the price in a closed amplitude indicates a characteristic uncertainty among traders. At the same time, this process can lead to a cumulative effect, which will lead to speculative price jumps.

The GBPUSD currency pair has been moving along the psychological level of 1.2000 for almost a week, only having a local deviation from the control range of 1.1950/1.2050.

Economic calendar for July 25
Monday is traditionally accompanied by an empty macroeconomic calendar. Important statistics in Europe, the United Kingdom and the United States are not expected.

Trading plan for EUR/USD on July 25
In this situation, trading tactics still considers the method of breaking through one or another border of the established flat. In this regard, buy positions will be valid after the price holds above 1.0280 in a four-hour period, and sell positions will arise after the price holds below 1.0115 in a four-hour period.

Trading plan for GBP/USD on July 25
In this situation, the pound sterling repeats the movement of the European currency, where there is a similar flat. Thus, based on a positive correlation, the completion of the euro flat will lead to a movement in the pound.

If we proceed from the price levels, then to increase the volume of short positions in the pound, it is necessary to keep below the value of 1.1950. Meanwhile, the conversation about buying the pound may come if the price holds above the 1.2050 mark in a four-hour period.

Re: Daily Market Analysis from ForexMart

US stock market closed mixed, Dow Jones up 0.28%

At the close of the New York Stock Exchange, the Dow Jones rose 0.28%, the S&P 500 rose 0.13%, and the NASDAQ Composite index fell 0.43%.

Chevron Corp was the top performer among the components of the Dow Jones index today, up 4.29 points or 2.98% to close at 148.48. The Travelers Companies Inc rose 3.56 points or 2.28% to close at 159.98. Caterpillar Inc rose 3.19 points or 1.79% to close at 181.81.

The biggest losers were Salesforce.com Inc, which shed 5.18 points or 2.84% to end the session at 177.29. McDonald's Corporation was up 3.61 points (1.42%) to close at 250.38, while Boeing Co was down 1.52 points (0.96%) to close at 156.64 .

Leading gainers among the components of the S&P 500 in today's trading were SVB Financial Group, which rose 8.25% to 391.16, Marathon Oil Corporation, which gained 6.57% to close at 23.18, and also shares of CF Industries Holdings Inc, which rose 6.45% to end the session at 90.28.

The biggest losers were Newmont Goldcorp Corp, which shed 13.23% to close at 44.59. Shares of Align Technology Inc shed 5.19% to end the session at 252.07. IDEXX Laboratories Inc fell 4.56% to 375.56.

Leading gainers among the components of the NASDAQ Composite in today's trading were GeoVax Labs Inc, which rose 150.39% to hit 1.59, Redbox Entertainment Inc, which gained 81.97% to close at 5.55, and also shares of Virax Biolabs Group Ltd, which rose 62.48% to close the session at 16.80.

Shares of Yoshitsu Co Ltd ADR became the leaders of the decline, which decreased in price by 29.57%, closing at 1.62. Shares of Enveric Biosciences Inc shed 28.36% to end the session at 6.92. Quotes Addex Therapeutics Ltd fell in price by 28.28% to 1.42.

On the New York Stock Exchange, the number of securities that rose in price (1923) exceeded the number of those that closed in the red (1233), and quotes of 146 shares remained practically unchanged. On the NASDAQ stock exchange, 1,957 stocks fell, 1,816 rose, and 210 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 1.43% to 23.36.

Gold futures for August delivery lost 0.60%, or 10.35, to hit $1.00 a troy ounce. In other commodities, WTI crude for September delivery rose 2.13%, or 2.02, to $96.72 a barrel. Brent futures for October delivery rose 1.77%, or 1.74, to $100.12 a barrel.

Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.14% to 1.02, while USD/JPY quotes rose 0.43% to hit 136.63.

Futures on the USD index fell 0.29% to 106.31.

Re: Daily Market Analysis from ForexMart

The euro is trying to put pressure on the gas

The euro once again demonstrated its dependence on the situation on the gas market. Difficulties encountered by the euro bloc countries regarding the payment of energy resources had a negative impact on the euro's dynamics. The euro's current task is to find a balance in the EUR/USD pair.

Significant pressure on the euro's dynamics was exerted by fears about the possibility of another reduction in Russian gas supplies. This topic is relevant for European countries dependent on the supply of blue fuel. Difficulties in resolving this issue jeopardize the euro's succeeding growth, experts believe.

Against this backdrop, the threat of a recession looms over the eurozone, which is complicated by the blue fuel conjuncture. The next round of the energy crisis in Europe reduces the single currency's chances to recover, which was violated after reaching parity with the dollar.

European countries are trying to solve the emerging problems in their own way. France has begun to limit domestic energy consumption, and Germany is in the process of state harmonization of moderate fuel consumption. The deteriorating situation with gas supplies and the lack of alternative mechanisms for solving the problems that have arisen are alarming signals for the euro.

Amid current difficulties, the euro exchange rate reached parity against the USD, but then won back its losses. However, the euro is walking on thin ice, risking repeating destructive actions at any moment. Support for the single currency, which grew moderately on Wednesday, was provided by the expectation of positive data on consumer confidence in the German economy. According to preliminary estimates, this indicator increased to -28.9 points after the previous mark (-27.4 points) recorded last month. The EUR/USD pair traded up to 1.0145 on Wednesday morning, July 27, trying to gain a foothold in current positions.

According to currency strategists at UniCredit Bank, EUR/USD's ability to stay above 1.0100 will help the euro survive the Federal Reserve's 75 bp rate hike expected today. Global markets are focused on the results of the Fed meeting. Note that an increase of 75 bp already included in current prices. At the same time, some experts do not rule out a 100 bp rate hike. According to analysts, the markets are fully prepared for any decision by the US central bank, although a 100 bp increase is expected. Unlikely and undesirable. Such actions are unlikely to help the dollar's growth, since the appreciation of the latter is a settled issue, experts conclude.

At the same time, the euro's positions after the Fed meeting remain shaky. The next interest rate hike by the US central bank will not add optimism to the euro, which is overcome by gas problems. Add fuel to the fire messages about the restriction of Russian gas supplies to Europe, knocking out the ground from under the feet of the euro.

According to experts, at the beginning of this week, the euro was among the outsiders. The reason is the difficulties with the supply of blue fuel through the Nord Stream gas pipeline and with the return of the turbine after repair. The situation is complicated by the increase in the wholesale price of gas by 17%, to 192 euros/MWh. At the same time, the European price for natural gas TTF Cal23 exceeded 150 euros per MWh, reaching the highest value for this contract.

Measures taken by Russia to reduce natural gas supplies to the EU have intensified global competition for blue fuel. According to Bloomberg, against this background, Asian importers are increasing their purchases of LNG for the winter, trying to get ahead of Europe. As a result, LNG prices may exceed $40 per barrel, experts believe. Note that Europe imports 35% of its energy from Russia, but the latter's energy income from trade with the EU is 70%. At the same time, these deliveries are made through pipelines that cannot be redirected to Asia.

Against this backdrop, the euro rate showed a decline, causing traders and investors to worry about the future of the single currency. At the moment, gas prices remain a ticking time bomb for the markets and for the EUR, risking "detonation" in the coming months. According to experts, a further reduction in the supply of blue fuel to the EU and rising prices for raw materials deprive the euro of chances for an effective and long-term recovery.

1,455 (edited by KostiaForexMart 2022-07-28 12:34:56)

Re: Daily Market Analysis from ForexMart

Hot forecast for GBP/USD on 28/07/2022

The increase in the refinancing rate of the Federal Reserve by 75 basis points, from 1.75% to 2.50%, did not come as a surprise. In principle, the market was ready for this since the previous meeting of the Federal Open Market Committee. It is surprising how rapidly the dollar began to lose its positions. It is noteworthy that this happened during the press conference of Fed Chairman Jerome Powell. Indeed, Powell's words caused complete surprise.

First, he did not give any specifics on the extent of the increase in the refinancing rate during the FOMC's September meeting. Powell only noted that it will be "massive." At the same time, he noted that when making a decision, the central bank will be guided by inflationary dynamics. So in September, the refinancing rate may be raised once again by 75 basis points, for which the market has long been ready. But the difference is that now there is no guarantee of such a rise in interest rates. On the contrary, there is a possibility of a somewhat more modest increase.

Second, Powell said nothing about the coming recession. More precisely, during his speech, he did not say anything about it. When asked a direct question, he only replied that there was no recession, and that the first estimate of GDP for the second quarter, which is published today, is likely to be not entirely accurate. It turns out that the Fed does not see any signs of the beginning of a recession, or pretends not to.

Thirdly, in the final part of his speech, Powell assured that the central bank would seek employment growth, although in the spring there were signs of overheating of the labor market. And this may well become a completely independent cause for a recession and an explosive increase in unemployment. In such a situation, the central bank, on the contrary, should strive to stabilize the labor market and slow down the rate of growth in the creation of new jobs.

Otherwise, the consequences will be horrendous. But according to Powell, nothing will be done in this direction. In other words, the central bank does not see any signs of a recession, and will continue to do everything to start it as soon as possible.

Refinance rate (United States):

All this, of course, not only surprised investors, but rather frightened them. Which weakened the dollar. However, a strong interest rate differential will take its toll and the dollar will soon rise again. Although today it is likely to continue to lose ground. Just under the pressure of GDP data. Of course, there is no talk of any recession in the second quarter, but there is no doubt that they will show a significant slowdown in economic growth. Which would contradict Powell's words. And this reduces the credibility of the central bank, which is probably even worse.

Change in GDP (United States):

The GBPUSD currency pair successfully rebounded from the psychological level of 1.2000, as a result, the primary signal about the prolongation of the corrective move was confirmed on the market. As a result, the quote rushed towards the level of 1.2155.

The technical instrument RSI H4 during the speculative price momentum came close to the level of 70. This approach may indicate a characteristic overheating of long positions. RSI D1 is at the levels of February this year. This may be a signal of a change in trading interest. In this case, this is only an assumption, we should get many more confirming signals of this theory.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move. Alligator D1 has a clear intersection between the green and red MA lines, which indicates a slowdown in the downward trend.

Expectations and prospects

In this situation, much depends on how the quote behaves within the level of 1.2155. Since keeping the price above it with confirmation of the breakdown of the value of 1.2200 can strengthen the upward move.

At the same time, a slowdown in the upward cycle cannot be ruled out, where a rebound may occur amid overheating of long positions. In this case, the course may return to the previously completed level.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the prolongation of the correction.

Re: Daily Market Analysis from ForexMart

Hot forecast for EUR/USD on 08/08/2022

The content of the report of the United States Department of Labor came as a complete surprise, and eventually led to a noticeable strengthening of the dollar. And the fact is that all the main indicators turned out to be much better than forecasts. Thus, the unemployment rate, instead of remaining unchanged, fell from 3.6% to 3.5%. Moreover, 528,000 new jobs were created outside of agriculture. Although, according to forecasts, the creation of 290,000 new jobs was expected. In fact, they were about twice as many. And do not forget that in order to maintain the stability of the labor market, a little more than 200,000 new jobs should be created outside of agriculture. And since they turned out to be more than twice as many, the unemployment rate will continue to decline. Which somewhat contradicts the idea that the US economy is sliding into recession.

Number of new non-agricultural jobs (United States):

Today the macroeconomic calendar is absolutely empty, and apparently, the market will consolidate around the values reached on Friday.

Despite everything, the EURUSD currency pair is moving within the 1.0150/1.0270 horizontal channel, consistently working out the set boundaries. Last Friday, the quote rebounded from the area of the upper border and rushed to the area of the lower one, where the volume of short positions decreased. A consistent cycle of fluctuations is essential in the market, which makes it possible for traders to work based on the natural basis of the past.

The technical instrument RSI H4, following the price rebound from the upper border of the flat, crossed the middle line 50 from top to bottom. This signal only indicates the bounce method, but not the end of the flat. In general terms, the indicator is still centered on the middle line.

The moving MA lines on the Alligator H4 have a lot of interlacing, this indicates a variable signal that corresponds to the flat stage.

Expectations and prospects

The flat stage is still relevant in the market, which is indicated by the current price rebound from the lower border. In this situation, the subsequent increase in the volume of long positions is expected after the price stays above the value of 1.0200. In this scenario, it is possible to consider movement towards 1.2150/1.2170.

The main strategy, as before, is the method of breaking through one of the control levels: 1.0300 - when considering the upward development of the market; 1.0100 - if market participants are oriented towards a hike towards the parity level.

It is worth noting that the signal must be confirmed in a four-hour period.

Complex indicator analysis has a variable signal in the short-term and intraday periods due to the current flat. At the moment, the indicators point to long positions on the euro, due to the price rebound from the lower border of the outset.

Re: Daily Market Analysis from ForexMart

Analysis and trading tips for EUR/USD on August 9

Analysis of transactions in the EUR / USD pair

When EUR/USD tested 1.0178, the MACD line had just started to move below zero, which was a good signal to sell. Surprisingly, the quote did not decrease, but rose and tested 1.0195 instead. At that time, the MACD line was just beginning to move above zero, which was a good signal to buy. It prompted a 20-pip increase, while its second test did not bring significant profit.

As expected, the report on investor confidence in the Euro area was ignored by the market.

Today promises to be another calm day as investors are likely to be preparing for tomorrow's release of US inflation. The data will set the direction of the market, right before the end of this month. In the afternoon, reports on small business optimism, labor productivity and labor costs will be published in the US, all of which will affect EUR/USD. Expect it to trade horizontally.

For long positions:

Buy euro when the quote reaches 1.0215 (green line on the chart) and take profit at the price of 1.0248. However, there is little chance for a rally today, especially considering today's lack of statistics and tomorrow's inflation data in the US.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 1.0193, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0215 and 1.0248.

For short positions:

Sell euro when the quote reaches 1.0193 (red line on the chart) and take profit at the price of 1.0161. Pressure will return if buying pressure decreases.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 1.0215, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0193 and 1.0161.

Analysis and trading tips for GBP/USD on August 9

Analysis of transactions in the GBP / USD pair

When GBP/USD tested 1.2094, the MACD was far away from zero, so the upside potential was limited. But in the afternoon, its second test happened when the MACD line had just started to move above zero, which was a good signal to buy. This prompted to a price increase of more than 40 pips. Sadly, the target price of 1.2140 was not reached.

Today promises to be another calm day as investors are likely to be preparing for tomorrow's release of US inflation report. The highest value GBP/USD could reach is yesterday's local resistance level of 1.2135. In the afternoon, data on small business optimism, labor productivity and labor costs will be published in the US, all of which will affect the direction of the market. Expect the pair to trade horizontally.

For long positions:

Buy pound when the quote reaches 1.2092 (green line on the chart) and take profit at the price of 1.2132 (thicker green line on the chart). There is a chance for a rally today, but only after the breakdown of 1.2092.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. It is also possible to buy at 1.2068, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2092 and 1.2132.

For short positions:

Sell pound when the quote reaches 1.2068 (red line on the chart) and take profit at the price of 1.2031. Pressure will increase if the attempt to continue the upward correction fails.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Pound can also be sold at 1.2092, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2068 and 1.2031.

Re: Daily Market Analysis from ForexMart

EUR/USD. The euro bear trap

The EUR/USD pair remains sensitive to the release of inflation data today. Will there be a surge of interest in one direction or another, or will it remain trading in the current range for quite a long time? Payrolls, although they turned out to be far off from the forecast, failed to stir up traders of the EUR/USD pair.

In the coming sessions, only the dollar will do the weather in the pair, since the calendar of European data is very disappointing. EUR/USD is influenced by geopolitical factors, statistics from the United States and the Federal Reserve press conference. However, no major changes are expected. According to ING, the euro will continue to trade in the middle of the 1.0100-1.0300 range until the end of this year. There will be small bursts, but they will not break the range limits.

Even if an exit does happen, it is more likely to go down than up. The strongest CPI data, especially in detail, may change the forecast for US rates for September, which will put pressure on the quote. Meanwhile, a surprise downside inflation is likely to have traders betting on a less hawkish approach from the Federal Reserve next month.

Euro bulls are pulling like a magnet towards the August high of 1.0293. Pushing the euro beyond this value, bulls will return the upward dynamics for a short time. The exchange rate, under the most optimistic scenario for the euro, may be around 1.0386.

In general, you can't argue with the trend, a bearish view of the pair remains relevant. While EUR/USD is trading below 1.0913, there is no chance of a change in direction.

The picture is that the dollar will continue to receive support, and the euro, on the contrary, will be bombarded with new negative factors. The 1.0100 area is a strong support, but with a steady and strong negative, it may not be able to resist – and then hello parity again!

Catalysts for the Dollar

Rabobank believes that the Fed seems to be going to announce another rate hike of 75 bps. Such a decision may be supported by an impressive report on the US labor market for July, published last week.

In addition, the US currency will find support from the demand for safe assets. The dollar is a widely used billing currency in the world by a wide margin. This means that the growth of the exchange rate tends to have a depressive effect on trade.

Another risk to the global recovery is a decline in demand for commodities from China.

The dollar will remain stable until the situation with risky currencies improves. Consequently, there is a potential for further growth not only this year, but also next year, bank analysts write.

Catalysts for the Euro

A steady sell-off, according to Rabobank, will provoke a number of factors. Firstly, it is a harsh winter for Europe. Cold weather plus the possibility of a complete shutdown of the gas supply via the Nord Stream-1 will do their job.

High energy prices are a serious obstacle for businesses and consumers. The chances of a recession in the euro bloc are high, this is the opinion of most strategists and economists.

As we can see, the euro does not have the slightest hope for growth. In such conditions, how not to fall lower than expected.

Re: Daily Market Analysis from ForexMart

SEC on a new form of cryptocurrency regulation

Sentiment to increase regulatory oversight of cryptocurrencies continues to gain momentum after it was revealed on Wednesday that the Securities and Exchange Commission (SEC) asked major hedge funds to report their exposure to cryptocurrencies.

Under the proposal, the SEC and the Commodity Futures Trading Commission (CFTC) are seeking to amend the Form PF process to require accurate reporting of digital asset strategies that involve an amount of at least $500 million.

Form PF was created in the aftermath of the 2008 financial crisis to help regulators identify asset bubbles and other potential risks to financial market stability by bringing greater transparency to the opaque private equity landscape.

Both agencies cited the rapid growth of the hedge fund industry as the main reason for the proposed changes, as well as the fact that cryptocurrencies did not yet exist when the form was originally introduced. Consultations have been held with the Treasury Department and the Federal Reserve to ensure that there are no risks to the private fund industry as a result of the changes.The number of private funds increased by about 55% from 2008 to the third quarter of 2021, according to a newsletter published with the offer, with IBISWorld data showing that there were 3,841 hedge funds in the US as of early 2022.

SEC Chairman Gary Gensler noted that under this form of regulation, which includes business practices, complexity, and changes in investment strategies, the gross asset value of the private fund industry has risen nearly 150 percent.

As to why he supports the proposal, Gensler stated that "if passed, it would improve the quality of the information we get from all PF form fillers, with a particular focus on large hedge fund advisors, which will help protect investors."

The proposal requires comments from the investment community on whether the funds should disclose details of the cryptocurrencies they hold, such as their name and characteristics.

Members of the Securities and Exchange Commission voted 3-2 in favor of passing the motion, with Republican commissioners Hester Pierce and Mark Ueda voting against. Concerns raised by those who disagree included whether the government really needed all the information the new PF form would collect.

Re: Daily Market Analysis from ForexMart

The music did not play for long, the yen danced for a short time

The dollar is getting up from its knees after a crushing fall on Wednesday. The yen is currently feeling the greatest pressure from the greenback, which showed the strongest growth on the US inflation data the day before.

The market freaked out
By the end of the week, investors continue to digest the July statistics on US inflation. Recall that the data turned out to be cooler than forecasts, which caused a large-scale sell-off of the dollar.

Last month, annual inflation in the US fell from the previous value of 9.1% to 8.5%, although economists had expected the CPI to fall to 8.7%.

A significant easing of inflationary pressures has increased fears that the Federal Reserve may reduce the degree of its aggressiveness with respect to interest rates already at the September meeting.

The reaction of the market was lightning-fast and very emotional: the yield of US government bonds fell sharply, followed by a plunge in the dollar. The DXY index sank 1.5% to a low of 104.646 on Wednesday.

The dollar's weakness provided support to all major currencies, but the yen gained the most in this situation. The yen soared by more than 1.6% against its US counterpart, to a mark of 135.

The dollar is gaining momentum
After a loud fall on Wednesday, the yield of 10-year US government bonds turned towards growth yesterday. It rose by 3.41% during the day and reached a new high of 2.902%.

The sharp increase in the indicator again widened the gap between the yields of US treasury bonds and their Japanese counterparts.

The yen, which is very sensitive to this difference, could not resist the pressure and moved to decline.

The USD/JPY pair managed to recover by 0.12% to 133.19 on Thursday. It was also supported by the general strengthening of the dollar.

The greenback grew by 0.1% against its main competitors. Its index remained almost unchanged and stayed at 105.2 during the day.

Yesterday's comments by Federal Reserve members contributed to the reversal of the yield of US government bonds and the dollar. Despite the slowdown in inflation in July, the tone of officials still remains hawkish.

Neil Kashkari, president of the Federal Reserve Bank of Minneapolis, said that the latest CPI data did not change his expectations about the Fed's future course.

In addition, he stressed that the central bank is still very far from declaring victory over inflation.

The head of the San Francisco Federal Reserve, Mary Daly, was in solidarity with her colleague. She also does not rule out the continuation of the Fed's hawkish policy, unless, of course, the next portions of macro data will favor such a sharp increase.

Recall that the key Fed's goal is to bring interest rates from the current level of 2.25–2.5% to 4% by the end of the year.

Some analysts believe that the central bank will try to solve this problem as soon as possible, and predict another rate increase of 75 bps at a meeting in September.

Why does the yen have no chance?
This year the dollar index rose by 10%. The greenback received such a solid increase thanks to the aggressive policy of the Fed.

Since March, the US central bank has raised interest rates by 225 bps. This makes it the undisputed leader: none of the major central banks can compete with the Fed in the pace of tightening.

But the biggest divergence in monetary policy right now is between the US and Japan. Despite the global increase in rates, the Bank of Japan is still bending its line and continues to keep the rate at a low level.

The priority for the Japanese central bank is not to fight inflation, but to restore the economy, which has been hit hard by the COVID-19 pandemic.

Unlike the US and EU, which have already managed to get out of the crisis caused by the coronavirus, the Japanese economy is just beginning to show signs of recovery.

According to preliminary estimates, in the second quarter, Japan's annual GDP could show growth of 2.7%, which is in line with pre-pandemic indicators.

Statistics on the gross domestic product will be published on Monday. But even if the data turns out to be positive, it most likely will not affect the policies of BOJ Governor Haruhiko Kuroda in any way.

Many experts are inclined to believe that the head of the BOJ will not give up his commitment to a super-soft monetary rate. The main argument in its favor now will be the low wages remaining in the country.

At this stage, salaries in Japan are far behind the rate of inflation, which undermines the purchasing power of citizens.

Another big reason to keep rates low is the coronavirus statistics. Japan is at the epicenter of a new COVID-19 outbreak, posing a major threat to the world's third largest economy.

According to economists at the Japan Research Institute, the BOJ's position can be changed to hawkish only after Kuroda leaves his post.

Given that he is due to retire no earlier than April 2023, one can estimate how long the downward trend promises to be for the yen.

Analysts at the Finnish bank Nordea predict that the USD/JPY pair will continue to strengthen on the tight policy of the Fed and reach the level of 140 in the foreseeable future.

Re: Daily Market Analysis from ForexMart

GBP/USD: How deep could GBP fall?

The pound encountered support after the release of better-than-expected data. The fact that the British economy is not in its best state ahead of the winter season is clear. There are great risks of a recession in the country as monetary tightening along with high energy prices are posing a threat to the economy.

Meanwhile, Pantheon Macroeconomics sees Q4 GDP rising by 0.3% from the previous period.

"A winter recession can't be ruled out, given that the rise in Ofgem's energy price cap in October will boost CPI inflation—and hence reduce real incomes—by nearly four percentage points. But with fiscal support likely to be scaled up considerably by the next PM and high income households still possessing substantial savings, we think that GDP will flatline through the winter, rather than fall," economists at Pantheon Macroeconomics said.

In the second quarter, the British economy contracted by 0.1%, below the expected 0.2%. Overall, the economy expanded by 2.9% year-on-year, above the market forecast of 2.8%.

The pound saw an increase in volatility, but traders made no attempts to trade in any direction. In light of a rise in the dollar, however, a sell-off occurred. At the beginning of the trading week, the pair is trying to consolidate. Demand for the pound is decreasing and the currency is edging down amid gloomy forecasts made by the Bank of England.

On Monday, bearish pressure on the pound increased, and the price fell below 1.2100. So, GBP/USD was unable to rise on better-than-expected macro data.

At the same time, the dollar does not show steady growth either. Traders are now uncertain about the Federal Reserve's further monetary stance. The hawkish comments of some policymakers hint that the regulator will remain aggressive. Yet, there are still questions. The situation will get clearer when the FOMC Minutes are released this week. Should the Federal Reserve stay aggressive, the greenback's rally will extend.

Therefore, the dollar is unlikely to be bearish at the beginning of the trading week although its growth potential will be limited. So, GBP/USD may recover eventually.

Weekly outlook for GBP

This week, the focus will be on the retail sales report scheduled for Wednesday as well as US weekly jobless claims and the FOMC Minutes.

"Next week's FOMC minutes will contain some discussion of the FOMC's apparent desire to slow the pace of hikes soon. But we do not expect it to be a lasting relief," Goldman Sachs said.

Analysts now see a 50 basis-point hike as the unlikely outcome at the September meeting.

US macro data will surely be of great importance to the GBP/USD quotes. Still, macro results in the United Kingdom could affect the Bank of England's interest rate forecast.

On Tuesday, traders will see the release of data on the UK labor market report, which will influence the Bank of England's monetary policy stance.

Meanwhile, the inflation report published on Wednesday will be of primary importance as it will affect both the BoE's monetary policy and the pound's short-term potential. At this point, it is unclear how the market could react to a possible increase or decrease in rate hikes.

Therefore, in light of a busy trading week, the pound is likely to trade in a trend in the coming days after consolidation.On Monday, bullish demand for the pound is falling. In the short-term, the pair is expected to be bearish, with targets at 1.2050 and 1.2000 (psychological level).

Resistance is seen at 1.2200, 1.2265, and 1.2315. Support stands at 1.2080, 1.2030, and 1.1965.

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Tips for beginner traders in EUR/USD and GBP/USD on August 16, 2022

Details of the economic calendar for August 15

Monday was traditionally accompanied by an empty macroeconomic calendar. Important statistics in Europe, the United Kingdom, and the United States were not released.

In this regard, traders focused on the information flow, and practiced technical analysis.

Analysis of trading charts from August 15

The EURUSD currency pair, during an intense downward movement from the resistance level of 1.0350, reached the lower limit of the previously passed flat of 1.0150/1.0270. As a result, there was a local reduction in the volume of short positions in the market, which led to a slowdown.

The GBPUSD currency pair accelerated its decline after breaking through a number of variable levels. As a result, the quote came close to the important psychological level of 1.2000, where it formed a small stagnation.

Economic calendar for August 16

At the opening of the European session, the UK labor market data was released, where unemployment remained at the same level of 3.8%. At the same time, employment in the country increased by 160,000 against 296,000 in the previous reporting period. Forecasts assumed that employment would grow by 256,000. At the same time, the change in the number of applications for unemployment benefits in July decreased by 10,500, which is good, but forecasts assumed -32,000.

Statistics for the UK stand out only by the unemployment rate, since everything is ambiguous on other indicators. The pound sterling was standing still at that time.

During the American trading session, data on the construction sector in the United States will be published. The number of issued building permits and the volume of new housing starts is assumed to decrease.

Subsequently, data on the volume of industrial production will be published, which is assumed to decline from 4.2% to 4.0% YoY and grow by 0.3% MoM.

Time targeting:

U.S. Building Permits Issued – 12:30 UTC (prev. 1.696M; prog. 1.65M)

US Housing Starts – 12:30 UTC (prev. 1.55 M; prog. 1.54 M)

US Industrial Production – 13:15 UTC

Trading plan for EUR/USD on August 16

Presumably, the 1.0150 area will put pressure on sellers, which may lead to a gradual slowdown in the downward cycle, resulting in a technical pullback in the market.

Traders will consider a prolonged downward cycle if the price stays below 1.0100. In this case, the quote will rush towards the parity level.

Trading plan for GBP/USD on August 16

In this situation, the area of the control level puts pressure on sellers, negatively affecting the volume of short positions. In view of the local signal about the oversold pound sterling, we can assume the formation of a pullback.

Traders will consider the next downward move if the price holds below 1.1950. Under this scenario, a resumption of the medium-term downward trend is possible.

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Tips for beginner traders in EUR/USD and GBP/USD on August 17, 2022

Details of the economic calendar for August 16

The UK's Office for National Statistics (ONS) report on the labor market yesterday showed unemployment rate stabilized at around 3.8%. Employment in the country increased by 160,000 against 296,000 in the previous reporting period. Forecasts predicted that employment would grow by 256,000. At the same time, the change in the number of applications for unemployment benefits in July decreased by 10,500, which is good, but they predicted -32,000.

Statistics for the UK stand out only by the unemployment rate, since everything is ambiguous on other indicators. The pound sterling stood still at the time of publication.

During the American trading session, data on the construction sector in the United States were published, which recorded a widespread decline in performance.

Details:

U.S. Building Permits Issued – Prev. 1.696M; Fact. 1.674M.

U.S. Housing Starts – Prev. 1.599M; Fact. 1.446M.

Subsequently, data on the volume of industrial production were published, which recorded a slowdown from 4.02% to 3.9% YoY, and increased by 0.6% MoM.

Conclusion:

Data on the US came out negatively; the dollar was under pressure from sellers.

Analysis of trading charts from August 16

The EURUSD currency pair overcame the support level of 1.0150 locally during an intense downward movement, but the sellers failed to stay below the reference value of 1.0100. As a result, there was a pullback in the market above the support level.

The GBPUSD currency pair rebounded from the psychological level of 1.2000 with surgical precision. As a result, there was an increase in the volume of long positions, strengthening the pound sterling by about 100 points.

Economic calendar for August 17

At the opening of the European session, data on UK inflation was published, which recorded an increase from 9.4% to 10.1%. Such a high level of inflation is likely to lead to an even stronger increase in the interest rates of the Bank of England.

In Europe, the second estimate of GDP for the second quarter will be published, where no reaction is expected since it should coincide with the first estimate, which is already included in the current quotes.

During the American trading session, traders expect retail sales data in the United States, the growth rate of which is likely to slow down from 8.4% to 8.1%. Even with a possible slowdown, retail sales are still at a high level. However, the very fact of a slowdown amid fears of a recession will be a catalyst for fear among investors. Thus, the US dollar may be under pressure.

Near the closing of the European session, and when Western traders will be in the active phase, the FOMC minutes will be published.

Time targeting:

EU GDP – 09:00 UTC

US Retail Sales – 12:30 UTC

FOMC protocol – 18:00 UTC

Trading plan for EUR/USD on August 17

Presumably, the area of the level of 1.0150 is still putting pressure on sellers. For this reason, one of the possible scenarios for the price development is a rebound towards 1.0240.

As for the prolongation of the downward cycle, this scenario will be relevant only after holding the price below 1.0100 for at least a four-hour period. In this case, the quote will rush towards the parity level.

The pullback stage may well slow down the move around 1.2120/1.2150. In this case, there will be a gradual increase in the volume of short positions, returning the quote to the psychological level of 1.2000.

Prolonging the current pullback will be considered if the price holds above the value of 1.2160 in a four-hour period.

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Dollar - period. USD again trumps on all fronts

The FOMC minutes, published on Wednesday, became another springboard for the dollar. Today, the US currency, inspired by the hawkish mood of the Federal Reserve officials, is growing in all directions.

Temporary weakness
Yesterday investors focused on the minutes of the FOMC meeting. Immediately after its release, the dollar was defeated, but a little later the market interpreted the report in favor of the greenback.

Short-term pressure on the USD came from Fed officials' concerns about a recession. During the meeting, it was noted more than once that sectors of the economy that are sensitive to higher interest rates have already begun to show signs of slowing down.

Some Fed members fear that as part of their commitment to bring inflation under control, the central bank may tighten policy more than is necessary to restore price stability. In this case, the American economy is unlikely to survive.

The rhetoric of the FOMC meeting participants initially seemed dovish to the market. After the release of the minutes, the probability of a rate hike by 75 bps fell to 40% in September, while earlier traders estimated it at 52%.

Against this background, the yield of US government bonds began to decline, which provoked a fall in the dollar index. The greenback's low from yesterday was the 106.39 mark.

The euro won the most from the short-term rebound of the greenback. After the release of the July minutes, the EUR/USD pair rose by almost 50 points and reached the level of 1.0202.

This helped the euro to close the day with a slight increase (+0.13%), while other major currencies, on the contrary, sank in tandem with the USD.

Invincible Hulk
Despite short-term weakness, the dollar index finished Wednesday's session with growth. The revaluation of the FOMC minutes by the market helped it recover.

When the first emotions subsided, the main thing came to the fore: the Fed still intends to fight inflation, which implies further aggression towards interest rates.

At the July meeting, absolutely all of its participants agreed to raise rates by 75 bps. Moreover, many of them supported the view that the Fed will continue to move at the same pace if necessary.

Of course, by "necessary" we mean the persistence of inflationary pressures. At this stage, Fed members do not see convincing signs of a decrease in price growth, so they do not exclude that even more efforts will be needed to resolve the situation.

As for the economy, politicians said they would closely monitor its adaptation to the new monetary rate and take all necessary measures to prevent a recession.

In the ranks of the Fed, they do not deny a possible slowdown in economic growth, but at the same time officials manage to remain optimistic. Many of them believe that thanks to a strong labor market, US GDP could grow in the third quarter.

The data on retail sales in America, which were published on Wednesday, also helped reduce fears of a recession.

The US Department of Commerce said that in July the indicator rose by 10.3% year on year, which is higher than the forecast estimate (8.3%) and more than the previous month's value (8.5%).

A positive retail sales report coupled with hawkish FOMC minutes provided strong support for the dollar. Yesterday, the US currency managed to strengthen against its competitors by almost 0.1%.

The most important outsider was the Australian dollar. It plunged 1.23% against the greenback. The aussie's appeal has also been eroded by heightened concerns about Chinese demand for commodities, including iron ore.

The greenback soared 0.98% against the New Zealand dollar, negating the earlier growth of the NZD. Recall that on Wednesday the Reserve Bank of New Zealand increased interest rates by 50 bps to 3%, and signaled the continuation of the aggressive rate in the coming months. This triggered the rise of the kiwi.

The US dollar jumped 0.55% against the Japanese yen to 134.97. Such significant dynamics is a completely logical reaction of the USD/JPY pair to another increase in the gap between the yields of US and Japanese government bonds.

The greenback edged up 0.34% against the pound. The pound's weakening on Wednesday was also facilitated by the release of July statistics on inflation in the UK.

The report showed that consumer prices in the peninsula hit 10.1% last month, the highest in 40 years.

Double-digit inflation has heightened investor fears that the Bank of England will have to be even more aggressive on rates. This raises the already high risk of a recession in Britain.

Brilliant outlook for USD
"Now the overall picture for the dollar looks very positive. It is in a strong upward trend across the board," notes analyst Matt Simpson.

On Thursday morning, under the pressure of the greenback, the euro, the only currency from the group of 10, which showed growth yesterday in tandem with the USD, could not resist.

EUR/USD fell to 1.0150 amid growing recession risks. Recall that yesterday Eurostat presented the second estimate of the eurozone GDP for the second quarter. The indicator was revised downward.

Also, the euro is under strong pressure from the energy crisis flaring up in the eurozone, which is aggravated by abnormal heat.

Record high temperatures and a lack of rainfall caused the Rhine to dry up in Germany. Since the water level in the river has fallen below the critical level of 40 cm, the transport of coal, food and other goods has been significantly reduced.

Also, the appetite for the euro is now declining amid anti-risk sentiment among investors. The safe dollar is in high demand due to another escalation in geopolitical tensions between the US and China. Washington just announced official trade talks with Taiwan earlier this fall.

As you can see, the EUR/USD pair has fallen into a "perfect storm". According to analysts' forecasts, the dollar will continue to strengthen against the euro in the foreseeable future. Its growth is also expected in other directions.

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Tips for beginner traders in EUR/USD and GBP/USD on August 19, 2022

Details of the economic calendar for August 18

The annual inflation rate in the euro area accelerated to 8.9% in July from 8.6% a month earlier, eventually updating the historical record. The market ignored the data since it completely coincided with the preliminary estimate. Nevertheless, rising inflation in the EU points to further steps by the ECB to raise interest rates.

During the American trading session, weekly data on jobless claims in the United States were published, where, despite the divergence of forecasts, we still saw an increase in their volume.

Statistics details:

Continuing claims for benefits increased from 1.430 million to 1.437 million.

Initial claims for benefits decreased from 252,000 to 250,000.

Analysis of trading charts from August 18

The EURUSD currency pair, after a short stagnation within the 1.0150 level, managed to regroup trading forces. As a result, traders managed to properly increase the volume of dollar positions. This step led to a breakdown of the reference value of 1.0100.

On the trading chart of the daily period, there is an attempt to prolong the medium-term downward trend. The recovery of the dollar relative to the recent correction is 72%.

The GBPUSD currency pair noticeably accelerated the decline, which led to the breakdown of the psychological level of 1.2000. Typical speculative interest has accelerated the sale of the pound by more than 140 points, placing the quote below 1.1900.

On the trading chart of the daily period, there is also an attempt to resume the medium-term downward trend. The recovery of dollar positions relative to the recent correction is 72%.

Thus, based on the daily charts, it can be seen that EURUSD and GBPUSD are moving after, actively restoring the downward trend.

Economic calendar for August 19

At the opening of the European session, UK retail sales data were published, its rate of decline slowed down from -6.2% to -3.0%. And let's talk about the decline in sales. The very fact of slowing down this process is important.

Important statistics in Europe and the US are not expected.

Trading plan for EUR/USD on August 19

Despite the local signal of oversold euro in the short term, the market remains in a downward interest. Thus, the subsequent price retention below the 1.0100 mark may push the quote towards parity.

Traders will consider an alternative scenario if the price returns above 1.0100 in a four-hour period.

Trading plan for GBP/USD on August 19

The current price change suggests a recovery of the downward trend relative to the recent correction. Keeping the price below the 1.1880 mark may well prolong the set inertial move in the direction of the local low of the medium-term trend at 1.1750.

It is worth considering that the signal about the oversold of the pound sterling is already taking place in the short-term and intraday periods. Thus, a technical pullback in the market cannot be ruled out.

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Asian markets close mixed on Monday

Asian stock markets were mixed on Monday. The Shanghai Composite and the Shenzhen Composite gained 0.57% and 0.64% respectively, while the Hang Seng Index went up by 0.12%. The Nikkei 225 decreased by 0.55%, the S&P/ASX 200 fell by 0.96%, and the KOSPI lost 1.15%.

Investors are awaiting new information from Fed chairman Jerome Powell regarding the further monetary policy course of the US central bank. Powell is set to give a speech this week.

Furthermore, market players took note of the Chinese central bank decreasing two of its key interest rates. The People's Bank of China cut its one-year loan prime rate to 3.65% from 3.7%. The five-year rate was cut to 4.3% from 4.45%. The move was not unexpected – earlier, the PBoC decreased its medium-term lending facility loan rate by 10 basis points to 2.75%.

The Chinese central bank's rate cuts are aimed at boosting the country's economic growth, which has slowed down due to rising energy prices, weak property market, and COVID-19 lockdowns.

On the Hang Seng Index, the biggest movers were Agile Group Holdings, Ltd. (+6%), CIFI Holdings (Group), Co. (+7%), Country Garden Holdings, Co., Ltd. (+3%), and China Resources Land, Ltd. (+2%)

Shares of Sinopec Engineering (Group), Co. gained 4% after the company reported that its net profit increased by 0.6% in the first half of 2022.

In Japan, the worst-performing stocks on the Nikkei 225 were Hino Motors, Ltd. (-3.5%), CyberAgent, Inc. (-3.1%), and Nippon Sheet Glass Co., Ltd. (-2,9%).

The share price of Ai Holdings, Corp. advanced by 5%, thanks to the company's net profit jumping by 32% in the previous fiscal year.

In South Korea, Samsung Electronics, Co. and Hyundai Motor, Co. lost 1.6% and 0.5% respectively.

In Australia, BHP shed 0.2%, while Rio Tinto declined by 0.53%.

Shares of NIB, Ltd. gained 6.6% thanks to the company's operating profit exceeding market expectations.

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Technical analysis recommendations on EUR/USD and GBP/USD for August 23, 2022

EUR/USD

Higher timeframes

Last week's sentiment retained its strength and predominance, which contributed to the continuation of the decline. Bears managed to close the last day below the indicated reference points of psychological support (1.0000) and the minimum extremum (0.9952). If bulls recover their positions, the passed levels of 1.0000 and 0.9952 can exert attraction and resistance. Reliable consolidation below 1.0000 and 0.9952 will restore the downward trend of the higher timeframes. The reference points for a further decline in the current situation can be the psychological level (0.9000) and the minimum extremum of 2000 (0.8225).

H4 – H1

Bears currently have the advantage on the lower timeframes. They are now testing the first support for the classic pivot points (0.9896). Further reference points for the decline within the day are two other supports of the classic pivot points—0.9851 (S2) and 0.9775 (S3). With the correction developing, bulls will need to focus on passing the key levels, which are now the resistance levels 0.9972 (central pivot point of the day) and 1.0088 (weekly long-term trend). Intermediate resistance can be noted at 1.0017 (R1).

GBP/USD

Higher timeframes

Yesterday, bears updated the minimum extremum and tested its support (1.1759). Soon, the result of interaction with the level will form. As the downward trend movement continues, the next reference point will be the minimum extremum of 2020, fixed at 1.1411.

H4 – H1

The pair continues to decline, there is a downward trend, and the main advantage in the lower timeframes belongs to the bears. The reference points for the decline within the day are the support of the classic pivot points (1.1725 – 1.1685 – 1.1630). A corrective rise, consolidation above the key levels of 1.1780 (central pivot point of the day) – 1.1936 (weekly long-term trend) and a reversal of the moving average will help change the current balance of power. Intermediate resistance on this path can be provided by the resistance of the classical pivot points (1.1820 – 1.1875 – 1.1915).

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USD/JPY: sadness, melancholy, sorrow...

After a multi-day rally on Tuesday, the USD/JPY pair reversed sharply to the downside and bounced down hard. This morning, the bulls are struggling to regain the advantage, but the bears are gaining.

Who brought down the dollar?
Yesterday, nothing foreshadowed a catastrophe of this magnitude. Ahead of the release of the next batch of US economic data, the dollar index reached a multi-year high of 109.27.

In the first half of the day, the greenback felt the strong support of the Federal Reserve's hawks, which helped it strengthen against the yen to a 5-week peak of 137.70.

However, US statistics turned out to be worse than forecasts and traders were disappointed, as a result of which the USD/JPY pair abruptly changed direction and shot down to the level of 135.80.

Literally overnight, the dollar plunged against the Japanese currency by 100 points, or 0.7%. The key pressure on it was increased concerns about the slowdown in the American economy.

The risk of recession has increased due to the pessimistic data provided by S&P Global. The agency reported that in August, the composite purchasing managers' index fell from the July value of 47.7 to the level of 45, which is the lowest since February 2021.

The PMI in the services sector showed an even more significant drop this month. The indicator dropped from 47.3 to 44.1, while economists, on the contrary, expected an increase to 49.2.Fresh statistics on the US real estate market, which was published on Tuesday, also added fuel to the fire. New home sales in the US fell by more than 12% in July, to the lowest level in six years (from 585,000 to 511,000).

In addition, the dynamics of the index of manufacturing activity from the Richmond Fed, which was also published yesterday, turned out to be negative. The index fell to -8.0 in August from the previous reading of 0.0.

Taken together, all of these data pointed to signs of a slowdown in US economic growth. Now the markets are once again fearing that the Fed may loosen its hawkish grip on inflation with the looming recession.

The resumption of speculation about a less aggressive rate hike has awakened the dollar bears. They increased their pressure on the USD, even though in the coming days Fed Chairman Jerome Powell may trample on the root of all doubts about the US central bank's decisiveness.

Caution: High volatility!
Most analysts predict that in the short term, the USD/JPY pair will continue to storm strongly. The high volatility of the asset will be associated with the continuing uncertainty about the Fed's future course.

Now traders expect that Powell's speech on Friday at the 3-day Fed symposium in Jackson Hole will bring clarity to this issue.

Many experts are betting that Powell will remain true to the current monetary rate despite the increasing risks of recession.

This opinion is supported by recent hawkish comments by members of the Fed. So, yesterday, the president of the Federal Reserve Bank of Minneapolis Neil Kashkari said that the central bank will have to act more aggressively for a longer time if inflation turns out to be much more stable than expected.

According to analysts, any hint by the head of the Fed to further tightening at a given pace can inspire the dollar to new highs. And most of all, in this case, the yen will suffer again.

Recall that this year, the JPY plunged more than other currencies from the group of 10 against the dollar due to the divergence in the monetary policy of the Fed and the Bank of Japan.

According to forecasts, after Jackson Hole, bulls can push the USD/JPY pair to the psychologically important 140 mark.

However, let's not force things, especially since today we are expecting a new batch of important economic data from the United States.

Statistics on basic orders for durable goods will be published on Wednesday. According to economists, the indicator will be 0.2% against the previous value of 0.4%.

If the forecast is justified and the volume of orders falls, this will indicate a decrease in the activity of manufacturers, which will be another blow to the gut for the dollar.

In the near future, the USD/JPY pair risks being far down again. The technical picture also gives hope to intraday bears: a pullback of the RSI (14) and bearish MACD signals.

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Powell vs dollar: will he support or let it float freely?

At the start of the symposium in Jackson Hole, the intrigue about the succeeding dynamics of the dollar increases. Market participants are tensely waiting for what Federal Reserve Chairman Jerome Powell will say and how his speech will affect the current monetary policy and the prospects of the greenback.

At previous symposiums, Powell paid attention to very important issues. In 2020, he announced monetary stimulus for the American economy affected by the COVID-19 pandemic. Last year, the key moment was the statement about the temporary nature of inflation and the curtailment of incentives. Powell's mistake. His stance on inflation has cost the world and American economies dearly, although this situation is fixable.

In 2022, the theme of the event is a reassessment of the current constraints in the economy, namely a large-scale price increase and ways to combat off-scale inflation. Experts are considering two scenarios of Powell's speeches:

1) Basic

The head of the Fed will once again pay attention to extremely high inflation, stressing that the monetary authorities will fight it. The US central bank will do everything possible to maintain economic growth in the United States.

2) Negative

Powell will confirm that the Fed is following the chosen course and is ready to aggressively raise rates to combat inflation. Against this background, the US economy will experience strong pressure. In addition, there may be an increase in yields and a correction in the markets. However, there are no prerequisites for the implementation of the second scenario.

According to experts, Powell's actions will determine the further dynamics of the greenback. Market participants expect that Powell's speech will clarify the immediate prospects of monetary policy. According to analysts, Powell "will try to manage market expectations" while maintaining the hawkish position of the Fed. On Thursday, August 25, at the symposium that began in Jackson Hole, representatives of the Fed confirmed their intention to raise rates and keep them at a high level until inflation weakens. At the same time, investors remain optimistic about the US currency and cautious with a negative bias towards the European one.

The dollar showed confidence this week, gaining momentum after the release of positive macroeconomic data. As a result, in the second quarter of 2022, the US GDP growth rate was revised upward (from -0.9% to -0.6%). At the same time, the number of applications for unemployment benefits decreased more than expected. After the statistics were released, profitability in the US peaked, but then retreated slightly from high levels.

Experts have recorded a steady growth of the greenback over the current year (by 13.5% against a basket of key currencies). The US currency has risen to its highest level in 20 years, while the euro has fallen by about 12% to below parity, which has not been the case for two decades. At the moment, there are many USD bulls on the market betting on its rise. Traders and investors are confident that the dollar has the strength to continue growing thanks to the hawkish attitude of the Fed and inspiring economic indicators in the United States.

Against this background, the European currency is noticeably losing to its American competitor. The energy crisis in Europe and the European Central Bank's unstable stance on raising rates add fuel to the fire. At the same time, most representatives of the central bank support an interest rate hike by 50 bps. However, many investors are deterred by the deteriorating economic prospects of the eurozone and constantly rising inflation. Against this background, the inflationary situation in the United States looks much more stable than on the other side of the ocean.

According to analysts, double-digit inflation in the eurozone is due to the long-term Russian-Ukrainian conflict, which provoked the energy crisis. Economists fear that the euro bloc countries will fall into the so-called "downward spiral of wage and price growth", from which it is difficult to get out. Against this background, long positions on the euro sharply plunged, which was under pressure.

The failures of the European currency play into the hands of the American one, experts emphasize. According to JPMorgan analysts, the greenback was supported not only by "encouraging economic data" on inflation and employment in the United States, but also by the "growing vulnerability" of the European economy. Recall that in July, the consumer price index in the United States rose by 8.5% in annual terms. At the same time, the unexpected increase in the number of jobs reduced market fears about the onset of a recession.

The US currency has received strong support thanks to the Fed's aggressive rate hike. According to investment analysts at U.S. Bank Wealth Management, this trend will continue in the near future. Against this background, the EUR/USD pair maintains a bearish trend, and the euro still looks vulnerable. Experts note the growing downside risks in relation to the euro.

In the short term, the EUR/USD pair is able to test the parity level again. The euro is still showing weakening, having failed to hold the 1.0000 mark. According to experts, the recovery above the level of 1.0030 will support the single currency. However, now it is rapidly sinking. The EUR/USD pair was near 0.9963 on the morning of Friday, August 26. Currently, experts consider the 0.9950 mark to be the support line, the breakdown of which will pull the pair to the low level of 0.9900.

Earlier, currency strategists at Capital Economics announced a prolonged period of the euro's weakness amid deteriorating economic conditions in the eurozone. Against this background, the dollar has every chance of rising, as markets expect the Fed to raise rates again in September. The implementation of such a scenario will increase pressure on the euro. However, any signals from the head of the central bank that the Fed recognizes the stabilization of the inflation rate will allow the markets to interpret what has been said in favor of easing the monetary policy. Misinterpretation of Powell's statements can shake the dollar's position and help the short-term recovery of the EUR/USD pair, experts believe.

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JPY is not a tenant. Powell and Kuroda signed the yen's death sentence

The Japanese currency is flying down at the start of the new week. The reason for the next peak of the JPY is still the same – the divergence in the monetary policy of the Federal Reserve and the Bank of Japan, which intensified after Jackson Hole.

The main event of last week was the annual Fed symposium in Jackson Hole, and its climax was the speech of the chairman of the US central bank.

As expected, Fed Chairman Jerome Powell stressed his firm intention to fight inflation by further raising interest rates.

– The restoration of price stability will take some time and will require the "decisive" use of the central bank's tools, – the official said during his speech at the forum.

The market interpreted this comment as hawkish, which provoked a sharp jump in the yield of US government bonds and, as a result, a large-scale rally of the dollar.

The DXY index updated its 20-year high on Monday morning, jumping to the level of 109.4.

The Japanese currency suffered the most from the strong greenback. In just a couple of hours, the Japanese fell by almost 0.6% and reached a 5-week low of 138.60.

The current weakness of the JPY is also dictated by the dovish tone of the head of the BOJ. Like his American counterpart, BOJ Governor Haruhiko Kuroda did not present any surprise at the Jackson Hole symposium.

Earlier, Kuroda repeatedly stated that the normalization of monetary policy could cause serious damage to the Japanese economy, which has not yet recovered after the COVID-19 pandemic.

Last Saturday, Kuroda again made it clear that he remains faithful to the ultra-soft course and will continue to adhere to it until "wages and prices will not grow in a stable and sustainable manner."

According to experts, this comment by the head of the BOJ was the last nail in the coffin of the Japanese currency.

In the near future, the yen will not only continue to fall, but also, most likely, will reach another record low against the dollar.

At the time of release, the USD/JPY pair rose above the 139 level and was aimed at the psychologically important 140 mark.

Most currency strategists believe that in the short term, the asset will be able to cross the key barrier that proved impregnable last month.

The probability of such a scenario developing is now very high. In the light of recent speeches by Powell. The markets expect that the wide difference in interest rates between Japan and the United States will remain longer than predicted.

This significantly strengthens the bulls' positions on the USD/JPY pair. According to experts, the upward trend of the asset will continue until at least one of the central banks signals a change in its current monetary rate.

We also draw your attention to the fact that this week the US dollar may receive another strong growth momentum. On Friday, traders expect the release of the US employment report for August.

We also draw your attention to the fact that this week the US dollar may receive another strong growth momentum. On Friday, traders expect the release of the US employment report for August.

If the data from the labor market turns out to be strong, it will push the greenback to new heights and send the yen even deeper to the bottom.

Re: Daily Market Analysis from ForexMart

Tips for beginner traders in EUR/USD and GBP/USD on August 30, 2022

Details of the economic calendar for August 29

The new trading week usually starts with an empty macroeconomic calendar. Important statistics were not published in Europe and the United States, while the UK observed a holiday.

Investors and traders were able to digest everything said by the head of the Fed last Friday, and a pullback in the US dollar appeared on the market.

Information from the Fed was by no means a catalyst for price surges in the euro and the pound, but it was an integral part of the entire information and news background.

What was the leverage for buying the euro?

Initially, the euro was inspired by the news that gas prices in the EU fell by almost 20% after Germany's statement about full storage facilities.

After that, information began to appear in the media that the ECB could start raising interest rates more sharply.

This news has become a catalyst for the growth of the euro.

Analysis of trading charts from August 29

The EURUSD currency pair opened the new trading week with a roll towards the parity level (1.0000). The activity was so strong that there was an inertial move of about 90 points.

The GBPUSD currency pair reached 1.1650 during an intensive downward movement, against which there was a reduction in the volume of short positions as a result of a technical pullback. In this case, the incentive to buy the pound sterling was the positive correlation with the euro, which has significantly strengthened in value over the past day.

Economic calendar for August 30

Today, data on the UK lending market will be published, which is expected to decline. This is a negative factor for the UK economy, which may lead to the weakening of the pound sterling.

During the American session, data on housing prices in the United States will be published, where a decrease is expected based on the forecast. Data on JOLTS job openings for July is also expected.

Time targeting:

UK lending market – 08:30 UTC

US House Price Index – 08:30 UTC

US JOLTS Job Openings – 14:00 UTC

Trading plan for EUR/USD on August 30

Despite the existing price changes, the quote is still within the weekly amplitude of 0.9900/1.0050. In order for a shift in trading forces to occur, which will lead to a full-fledged move, the quote must be kept outside of a certain control value for at least a four-hour period.

We concretize the above:

The upward move in the currency pair is taken into account after holding the price above the value of 1.0050 in a four-hour period.

The downward trend should be considered after holding the price below 0.9900 in a four-hour period.

Excerpt on indicator analysis

Comprehensive indicator analysis indicates multidirectional interest in the short term due to price stagnation within the parity level. Indicators in the intraday period are focused on the recent upward momentum from the value of 0.9900. In the medium term, the indicators are still focused on the downward trend.

Trading plan for GBP/USD on August 30

In this situation, the pullback returned the quote to the area of the previously passed level 1.1750, where the upward cycle slowed down. In order for a subsequent increase in the volume of long positions, which will lead to a pullback prolongation, the quote needs to stay above 1.1780 for at least a four-hour period.

Otherwise, we are waiting for the completion of the pullback stage, followed by a price rebound from 1.1750. This scenario does not rule out updating the local low of the downward trend.

Re: Daily Market Analysis from ForexMart

Hot forecast for EUR/USD on 31/08/2022

Today, the reason for the weakening of the US dollar will be preliminary data on inflation in Europe, which should accelerate from 8.9% to 9.1%. And this means that the European Central Bank will actively raise interest rates, which will cause the single currency to strengthen. And it will already pull other currencies with it. Given the high significance of inflation, the published data on employment in the United States, which, by the way, should increase by 180,000, will have little effect.

The EURUSD currency pair was conditionally standing in one place yesterday. The movement took place between the parity level and the variable value of 1.0050. In fact, there was a process of accumulating trading forces on the market, where traders took a break, which in the end can become a lever for speculative jumps.

The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which, from the point of view of indicator analysis, indicates the prevailing upward interest in the market. Take note that the quote has been moving in the 0.9900/1.0050 horizontal channel for the second week already. Thus, the signal from the RSI H4 indicator may be unstable.

MA moving lines on Alligator H4 have many intersections, which corresponds to the flat stage. Alligator D1 is directed downwards, there is no intersection between the MA lines. This signal from the indicator corresponds to the direction of the main trend.

Expectations and prospects
Despite the existing stagnation, the quote is still moving within the sideways range of 0.9900/1.0050. For this reason, the main decisions will be made by traders after one of the values of the current range is surpassed.

An upward movement in the currency pair is taken into account after keeping the price above the value of 1.0050 in a four-hour period.

A downward trend should be considered after keeping the price below 0.9900 in a four-hour period.

Complex indicator analysis in the short-term and intraday periods have a variable signal due to the current flat. Indicators in the medium term are focused on a downward trend.

Re: Daily Market Analysis from ForexMart

Hot forecast for EUR/USD on 02/09/2022

Yesterday, the single currency showed a rather impressive decline, falling below parity again. And it started during the European trading session, under the influence of the actual European macroeconomic statistics. In particular, the final data on the index of business activity in the manufacturing sector turned out to be worse than the preliminary estimate, and fell from 49.8 points to 49.6 points. While the preliminary estimate showed a decrease to 49.7 points. In addition, the data on unemployment also turned out to be not the best, although formally, it fell from 6.7% to 6.6%. But in fact, it remained unchanged, as the previous data were revised upwards.

Unemployment rate (Europe):

But in the United States, the final data on the index of business activity in the manufacturing sector turned out to be better than the preliminary estimate, which showed a decrease from 52.2 points to 51.3 points. In fact, it dropped to 51.5 points. However, the strengthening of the dollar is still somewhat surprising, as the data on applications for unemployment benefits do not inspire optimism. Of course, the number of initial requests decreased by 5,000. But the number of repeated requests increased by 26,000. And this is quite a lot.

Number of retries for unemployment benefits (United States):

It is possible that the dollar's growth is purely speculative in anticipation of today's release of the report of the United States Department of Labor. And while the unemployment rate is projected to remain unchanged, data on employment change clearly indicate a high potential for its growth. In addition, 310,000 new jobs should be created outside of agriculture, against 528,000 in the previous month. Such a strong decline in the rate of job creation clearly hints that the US labor market is losing momentum, and the situation is starting to worsen, which will be the reason for a sharp weakening of the dollar.

Number of new non-agricultural jobs (United States):

The EURUSD currency pair showed local speculative interest in short positions yesterday. As a result, the quote fell below the parity level, having almost reached the lower boundary of the sideways range of 0.9900/1.0050.

The technical instrument RSI H4 crossed the middle line 50 from top to bottom during the downward momentum. As a result, the indicator settled in the lower area of 30/50, which indicates the downward mood of market participants. It should be noted that the signals from RSI H4 are of a variable nature due to the fact that the quote, as before, is moving within the sideways formation.

MA moving lines on Alligator H4 have many intersections, which corresponds to the flat stage. Alligator D1 is directed to the downside, there is no intersection between the MA lines. This signal from the indicator corresponds to the direction of the main trend. In this case, the strengthening of the downward signal will occur at the moment when the MA (D1) lines are kept below the parity level.

Expectations and prospects

The convergence of the price with the lower limit of the flat 0.9900 led to an increase in the volume of long positions, as a result, a rebound appeared on the market. Despite the variable speculative interest, the quote is still in the sideways on the basis of a downward trend. Thus, the work can be built on the basis of two tactics: Rebound or breakdown relative to one or another control border.

Concretize the above

The bounce tactic is seen by traders as a temporary strategy.

The breakout tactic is considered the main strategy because it can indicate the subsequent price move.

Complex indicator analysis in the short-term and intraday periods have a variable signal due to the current flat. At this time, the indicators indicate a long position due to the price rebound from the lower border of the flat. Indicators in the medium term are focused on a downward trend.

Re: Daily Market Analysis from ForexMart

Tips for beginner traders in EUR/USD and GBP/USD on September 5, 2022

Details of the economic calendar for September 2

European Union Producer Price Index came out with a significant margin, rising from 36.0% to 37.9%. This news stimulated the euro to rise against the dollar.

The main event of the past week was the United States Department of Labor report, which slightly surprised market participants. The unemployment rate was forecast to remain unchanged at 3.5%. However, unemployment in the US rose to 3.7%, which was a catalyst for a local sell-off of the dollar, yet this is a possible signal for the Fed to take some easing measures. There is one important remark in this reflection, the regulator is ready to turn a blind eye to many things in order to overcome rising inflation.

Meanwhile, jobs created outside of agriculture came out in line with the consensus forecast, 315,000.

The reaction of the US dollar took place within the framework of speculation. In the beginning there was a sale and then a buy-off.

Analysis of trading charts from September 2

The EURUSD currency pair ended last week with an intense downward move. As a result, there was an inertial movement in the market for the US dollar, which returned the quote to the level of 0.9900.

The GBPUSD currency pair resumed its decline after a short stop. This step led to a subsequent update of the low of the medium-term trend, where only a few points remained to pass before the bottom of 2020.

Economic calendar for September 5

The new trading week starts with a holiday in the United States. The key player of the financial market will return on Tuesday. Trading volumes may decline at first.

As for statistical data, the publication of the final indicators on the index of business activity in the services sector in Europe and the UK is expected. If the data coincide with the preliminary assessment of the reaction in the market, it is not worth waiting. At the same time, Eurozone retail sales data is to be published. Its rate of decline may slow down, which is a positive signal for the euro.

Time targeting:

USA - Labor Day (holiday)

EU Services PMI – 08:00 UTC

UK Services PMI – 08:30 UTC

EU Retail sales volume – 09:00 UTC

Trading plan for EUR/USD on September 5

With the opening of the European session, a local level of 0.9900 appeared. The sale of the euro was associated with a sharp jump in gas prices in Europe. At the opening of trading, prices jumped by 30%, to $2,800 per thousand cubic meters.

The reason for the increase in the cost of gas lies in the message of Gazprom on Friday evening that the maintenance of the only working turbine of SP-1 revealed "gross violations" and the gas pipeline will not work without their elimination.

In order to confirm the signal about the prolongation of the long-term downward trend for the euro, the quote must be kept below the level of 0.9900 steadily in the daily period. In this case, a path will open in the direction of 0.9850–0.9500.

Otherwise, the amplitude 0.9900/1.0150 has every chance for further formation.

Trading plan for GBP/USD on September 5

Despite the growing oversold level of the pound sterling, the market remains an inertial course, where speculators ignore the overheating of short positions in vain. The low of 2020 (1.1410) may play as support on the sellers' path.

In this situation, traders will consider two possible options for price development:

The first scenario comes from a rebound from the 2020 local low area. In this case, an increase in the volume of long positions is possible, which at the beginning will slow down the downward cycle, after which a rebound will occur.

The second scenario considers the lack of reaction of traders to technical signals about the oversold pound and the support level. In this case, holding the price below 1.1400 in the daily period will lead to a prolongation of the long-term trend.

Re: Daily Market Analysis from ForexMart

Tips for beginner traders in EUR/USD and GBP/USD on September 6, 2022

Details of the economic calendar for September 5

Data on indices of business activity in the services sector in Europe and the UK were published, which came out worse than expected.

Details of statistical indicators:

Eurozone services PMI fell from 51.2 to 49.8 points against the expectation of 50.2 points. The composite index fell from 49.9 to 48.2 points.

The euro was already heavily oversold at the time of the release of the data, so it was difficult to fall further.

UK services PMI fell from 52.6 to 50.9 points, with forecast of a decline to 52.5 points. The composite index fell from 52.1 to 49.6 points.

The pound sterling, like the euro, was oversold; there was no reaction to the statistics.

Data on retail sales in the euro area were also published: its rate of decline slowed down from -3.2% to -0.9% YoY. Despite the fact that the data came out worse than expected (-0.7%), the euro ignored them.

The reason for the lack of response to statistical indicators arose due to the commodity market.

Yesterday, with the opening of trading, there was a sharp increase in the cost of gas in Europe, which jumped by 30% to $2,800 per thousand cubic meters.

The reason for the increase in the cost of gas lies in the message of Gazprom on Friday evening that the maintenance of the only working turbine of SP-1 revealed "gross violations" and the gas pipeline will not work without their elimination.

Speculators worked out this information flow in the form of a sell-off of the euro, where, through a positive correlation, it followed the euro and the pound sterling.

As soon as the price of gas began to recover relative to the morning jump, the euro began to strengthen, followed by the pound.

Analysis of trading charts from September 5

The EURUSD currency pair opened a new trading week with an intensive decline, during which the quote temporarily fell below 0.9900. The speculators failed to stay outside the control value, which resulted in a technical pullback.

The GBPUSD currency pair, through a positive correlation with EURUSD, first rushed down, almost reaching the 2020 low, and then moved into the pullback stage.

Economic calendar for September 6

The United States is coming off a three-day holiday today, and service sector PMI data will be released.

In the UK, data on the index of business activity in the construction sector will be released, where they predict its decline. Not the best signal for the pound sterling, but it is worth considering that it is already oversold in the market.

Time targeting:

UK Construction PMI (Aug) – 08:30 UTC

US Services PMI (Aug) – 13:45 UTC

Trading plan for EUR/USD on September 6

Despite the speculative activity, the quote is still within the range of 0.9900/1.0050. Thus, traders are guided by the borders of the flat, working according to the method of breakdown or rebound from the given values.

Trading plan for GBP/USD on September 6

With the pound losing more than 800 pips in value in three weeks, a pullback/correction was brewing in the market due to short overheating. In this situation, holding the price above 1.1620 will lead to the subsequent strengthening of the pound towards 1.1750.

As for the prolongation of the downward trend, it is necessary to keep the price below the value of 1.1400 in the daily period.

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