A move above the resistance point at 1.0070 will invalidate the bearish view.

Bearish view

• Set a sell-stop at 0.9950 and a take-profit at 0.9800.
• Add a stop-loss at 1.0050.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.0030 and a take-profit at 1.0100.
• Add a stop-loss at 0.9950.

The EUR/USD currency pair was hovering at the parity level on Tuesday morning as investors waited for important economic data from Europe and the US. It was trading at 1.000, which was slightly above this month’s low of 0.9902.

US and EU confidence data

The EUR/USD price moved sideways at the parity level as investors reflected on last week’s statement by Jerome Powell and other Fed officials like Neel Kashkari.

Speaking at the Jackson Symposium, Federal Reserve officials reiterated that the bank will continue hiking interest rates in the coming months. This decision mirrored what the officials wrote in the last meeting.

The next key catalyst for the pair will be the important economic data from the United States and Europe. In the morning session, the European Commission will publish the latest consumer and business confidence data.

The numbers are expected to show that sentiment continued to drop in August as challenges rose. For example, consumer confidence is expected to have dropped to -24.9 in August. They also expect that services and industrial sentiment dropped sharply in August.

This happened as the cost of energy and basic items in Europe jumped sharply. Indeed, European leaders are scheduled to meet this week to deliberate on the possible action to cushion their residents as prices rise.

The EUR/USD pair will also be moved by the flash inflation data from Germany, Belgium, and Spain. With gas and electricity prices rising, analysts expect that inflation rose sharply in August. For example, the expectation is that inflation in Spain rose to 10.9% while in Germany it rose to 8.8%.

The pair will also react to the latest US consumer confidence data by Conference Board. Economists expect that confidence improved in August as gasoline prices eased.

EUR/USD forecast

The EUR/USD price moved sideways on Tuesday morning. This price managed to move below the 25-day and 50-day moving averages. It is also trading at the standard pivot point. At the same time, it has formed what looks like an inverted cup and handle pattern, which is usually a bearish sign. This consolidation can be viewed as the handle section.

Therefore, there is a likelihood that the pair will soon have a bearish breakout as sellers target the next psychological level at 0.9800. A move above the resistance point at 1.0070 will invalidate the bearish view.

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The EUR/USD sell-off paused slightly ahead of the upcoming minutes by the ECB.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 0.9850.
•  Add a stop-loss at 1.0025.
• Timeline: 1 day.

Bullish view

• Set a buy-stop at 1.0010 and a take-profit at 1.0100.
• Add a stop-loss at 0.9925.

The EUR/USD price moved sideways on Thursday morning as investors waited for the upcoming European Central Bank (ECB) minutes. The pair was trading at 0.9962, which was slightly above this week’s low of 0.9900.

ECB minutes, US GDP, and Jackson Hole

The EUR/USD sell-off paused slightly ahead of the upcoming minutes by the ECB. These minutes will provide more color about the deliberations that happened in the committee during the July meeting. In it, the members decided to hike interest rates for the first time in 11 years. It hiked by 0.50% and hinted that more increases were coming.

Therefore, the minutes will shed more light on whether the committee expects rates to keep rising even as the economic crisis escalates. In addition to high inflation, Europe is facing additional challenges like a prolonged drought that has led to substantially low water levels in key rivers. At the same time, the bloc risks power rationing in winter.

The EUR/USD price will react to the latest German GDP and business sentiment data. Based on the first estimate, analysts expect that the German economy expanded by 1.5% year-on-year in the second quarter. The country is under intense pressure because of its reliance on German natural has.

Meanwhile, analysts expect data by the IFO Institute to show that business climate, current assessment, and expectations dropped sharply in August. This will be in line with the relatively weak flash manufacturing and services PMI numbers that were published on Tuesday.

In the United States, the main event will be the Jackson Hole Symposium where central bank officials will have a chance to reset expectations. Jerome Powell’s speech will be the headline event. Christine Lagarde will not attend the event.

The second reading of US GDP data will not significantly impact the pair unless there is a major change. Data published in July showed that the economy moved to a recession in Q2 as it contracted by 0.8%.

EUR/USD Forecast

The EUR/USD pair has been in a strong bearish trend in the past few weeks. It moved from this month’s high of 1.0368 to below the parity level. On the four-hour chart, it dropped below the important support at 1.0095 and the 25-day and 50-day moving averages,

It has also formed what looks like a bearish consolidation pattern. Therefore, the pair will likely resume the downward trend and retest the key support at 0.9850.

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Price likely to remain bearish below $1.1868.

My previous GBP/USD signal on 16^th August could have produced a slightly profitable short trade from the bearish rejection of the resistance level which I had identified at $1.2100 if the trade had been closed out at the end of the day’s London session.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time Thursday.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1791 or $1.1695.
• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 25 pips in profit.
• Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.

Short Trade Ideas

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1791, $1.1864, or $1.1878.
• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 25 pips in profit.
• Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

GBP/USD Analysis

I wrote in my last forecast on 16^th August that the downwards price movement looked most likely to continue, as we saw a bearish technical situation with the price selling off within descending bearish wedge chart patterns. I thought that a bearish reversal from $1.2100 could be a good short trade opportunity.

This was partially correct – although the level at $1.2100 initially held it was broken later, but the price fell early the next day and is now trading considerably lower.

We saw the GBP/USD currency pair reach its lowest price since the coronavirus panic of March 2020 yesterday, not far above $1.1700, before the price rebounded strongly during the New York session later. However, the key resistance levels at $1.1864 and $1.1878 held, and the price was pushed back down. We also have a medium-term bearish trend line, which is shown within the price chart below, which is helping to suppress the price.

There is a long-term bearish trend, with good fundamental reasons for the strength of the US Dollar (a Fed that is talking about getting tighter with its monetary policy) and the weakness of the British Pound (inflation above 10% and the Bank of England forecasting a five-quarter recession).

I look to trade this pair short, and I see the area from $1.1878 down to the bearish trend line as a good zone in which to enter a short trade after a bearish reversal in price action. In fact, the price can now be contained within a bearish price channel which I have completed in the chart with the lower descending trend line.

If the price does not retrace to that zone but just falls, scalpers might try to be brave and capture a few long pips from a bullish bounce at $1.1791 or $1.1750 below that. The latter is not a key support level, but it does look like the price is taking note of it and reacting when it gets there.

There is nothing of high importance due today regarding either the GBP or the USD.

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The pair will likely have a bearish breakout as sellers target the key support at 20,000.

Bearish view

• Sell the BTC/USD pair and set a take-profit at 20,000.
• Add a stop-loss at 23,500.
• Timeline: 1 day.

Bullish view

• Set a buy-stop at 22,000 and a take-profit at 24,000.
• Add a stop-loss at 20,000.

The BTC/USD price moved sideways as investors reflected on the recent sell-off. The pair was trading at 21,550 during the Asian session, which was significantly lower than this month’s high of 25,271. Other cryptocurrencies like Ethereum and BNB also continued moving sideways.

Bitcoin sell-off pauses

Bitcoin has been in a strong comeback since June. It managed to move from the year-to-date low of about $17,600 to a high of 25,155. This rebound happened as investors bought the dip in both cryptocurrencies and global equities.

This week, however, the pair has lost its bullish momentum and crashed to the lowest level since July 26. Analysts attribute the sell-off to the recent minutes, which showed that the Federal Reserve was committed to hiking interest rates.

Fed officials believe that more hikes are necessary in order to prevent inflation from being entrenched in the economy. At the same time, they are worried about hiking too fast, which could lead to a hard landing of the economy.

The BTC/USD stabilized as the US dollar index pulled back slightly following weak housing and PMI numbers from the US. The data showed that the services sector contracted hard in August while new home sales dropped by a whopping 12.3%. Therefore, analysts expect that the Fed will slow on its hikes.

Another concern among investors is that network activity has been a bit weak in the past few weeks. The number of new addresses in the network has been under pressure during the recent rally. Also, according to Glassnode, miner revenue from fees has also been a bit weak.

In addition, exchange flows have dropped to the lowest level since late 2020 while speculative interest has been falling. These numbers imply that cryptocurrencies likely went through a bear market rally.

BTC/USD forecast

The BTC/USD price has been in a strong bearish trend in the past few days. The sell-off paused on Tuesday as the pair remained slightly below 22,000. It has moved below the 25-day and 50-day moving averages.

In addition, the pair crashed below the lower side of the ascending triangle pattern that is shown in purple. The MACD also moved below the neutral level while the pair has formed what looks like a bearish flag pattern. Therefore, the pair will likely have a bearish breakout as sellers target the key support at 20,000.

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The pair will likely resume the bearish trend as sellers target the next key psychological level at 0.6800.

Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6800.
• Add a stop-loss at 0.7000.
• Timeline: 1 day.

Bullish view

• Set a buy-stop at 0.6965 and a take-profit at 0.7048.
• Add a stop-loss at 0.6880.

The AUD/USD price rebounded slightly as the recent US dollar rally took a breather. It rose to a high of 0.6963, which was the highest point since August 17. That price was about 1.17% from its lowest level this week.

US dollar rally takes a breather

The Australian dollar has pulled back recently amid a sustained US dollar comeback. The closely watched dollar index managed to move from this month’s low of $104.3 to over $109.30. This rally accelerated after the Federal Reserve published the minutes of the last meeting. These minutes showed that the bank was committed to continuing with the hiking process.

However, data published recently could see the bank reducing the pace of tightening. For example, on Tuesday, numbers released by S&P Global showed that the services PMI declined to 44.1 in August as demand waned and cost of doing business rose. A PMI reading of 50 and below is usually a sign that an industry is contracting.

Meanwhile, new home sales declined by 12.6% in July to 511k. This decline was worse than the median estimate of 575k. These numbers, together with the pending and existing home sales, imply that the housing sector is cooling down.

The AUD/USD price has also been in a downward trend because of the weakening Chinese economy. On Monday, the country’s central bank decided to slash interest rates in a bid to stimulate the economy. It slashed the five-year prime mortgage rate to 4.3%.

The deteriorating Chinese economy will have a negative impact on Australia. For one, analysts expect that iron ore prices will drop by half by next year because of the deteriorating housing sector in China. Analysts also expect that the Chinese economy will have a slower growth than the 5.5% that the government expects.

AUD/USD forecast

The AUD/USD slipped to a low of 0.6865 on Tuesday and then bounced back slightly after the weak US data. This price was an important one since it was the lowest point since August 5.

It has struggled moving below the support level several times since Monday. The pair is slightly above the 38.2% Fibonacci Retracement level while the MACD has tilted upwards. The pair will likely resume the bearish trend as sellers target the next key psychological level at 0.6800.

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• The bearish stability still dominates the performance of the EUR/USD currency pair since the start of trading this week.
• According to its performance, it fell to the 1.0122 support level before settling around the 1.0180 level at the time of writing the analysis.
•  Performance supported by investors’ appetite to buy the US dollar as a safe haven, in addition to strong expectations for the future tightening of the US Federal Reserve’s policy.

EUR/USD Forecast for Coming Days

The rise of the US dollar will continue and ensure that the euro remains under pressure, according to new research from Swedbank. The Scandinavian bank and investment bank say it is maintaining its EUR/USD exchange rate forecast to stay on course to test the parity rate 1.0 support. Anders Eklöf, chief forex analyst at Swedbank, says, “The notion that the peak of headline inflation in the US would be enough to calm the Fed is wishful thinking. US dollar longs were lowered, and pricing showed less than 50/50 gain of 75 basis points in September. We see continued demand for the US dollar when buying and the challenge, and therefore the future outlook in Europe / China, and the EURUSD is back to parity.”

These forecasts come after a period of respite for the euro that saw its advance against the dollar during most of July and the first half of August. The rise reached its peak on the background of data from the United States of America, which showed that inflation rates have reached their highest levels, and with it the US Federal Reserve interest rate hike cycle.

For the forex and financial markets in general, the Fed’s shift to smaller rate increases will represent a key moment, allowing investors to become increasingly confident of the end of the hiking cycle. Meanwhile, the Fed’s bullish cycle has been the mainstay of the US dollar’s strength, so its demise could mean a turn in the direction of the EUR/USD.

“The long dollar position was further reduced last week after US inflation data, which came in less than expected,” the bank analyst added. The rate-sensitive part of the US economy is slowing but with core inflation running at 5 per cent momentum in the past three months and a tight labor market.” Swedbank economists note that the market is currently priced in for another potential 75 basis point hike in the Fed in September, followed by further hikes to push the money rate to a peak of 3.6% in early 2023.

From there, it is expected to stop before cutting.

However, “we believe the risk if anything is tilted to the upside at this rate, which should support the US dollar,” and in relation to the euro, Swedbank says the challenges facing the eurozone are enormous as the rising cost of living of energy digs Deep holes in real income and it appears that export demand from China remains sluggish. They also say there is a clear risk that Germany will run out of natural gas in the winter.

Therefore, the EUR/USD rally in July-August appears to have faded as Eurozone energy prices rose again and the exchange rate fell again. The lowest level for the EUR/USD pair in 2022 is at the 0.9954 support.

EUR/USD analysis:

The bearish stability still dominates the performance of the EUR/USD pair. The rush towards the parity price is still possible if the current weakness factors. These are the strong economic performance of the United States and a sharp tightening path of the Fed’s policy, in addition to pressure on the euro area due to Russian energy. The current trend hit 1.0000. With the continuation of these factors, any attempts by the Euro-dollar to rebound to the highest opportunity to sell again will remain.

The nearest resistance levels for the EUR/USD today are 1.0230 and 1.0345, respectively. The currency pair will be affected today by the release of inflation figures in the euro zone, the reading of the Philadelphia industrial index and the number of US weekly jobless claims.

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Breakdown below supportive trend line confluent with resistance.

My previous EUR/USD signal last Thursday were not triggered.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today only.

• Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0195, $1.0220, $1.0240, or $1.0269.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Remove 50% of the position as profit when the price reaches 50 pips in profit and leave the remainder of the position to ride.

Long Trade Idea

• Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0073.
• Put the stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

EUR/USD Analysis

In my last analysis of the EUR/USD currency pair on 11^th August, I noted that we were seeing the price sell off continuously following the spike up to the $1.0350 area.

I thought that both the nearest support levels at $1.0250 and $1.0202, as well as the nearest support level at $1.0294, looked firm and likely to hold at least for a while when next reached.

This call was not useful during the day, but the next morning when $1.0294 was first reached, a long scalp could have produced a few pips of profit.

The technical picture now is more bearish, as we have seen the price break down and get established below the ascending trend line, which was formerly supportive, shown within the price chart below. This trend line has now become resistant, and it is confluent with a clear level of resistance at $1.0195, which is also quite confluent with the round number at $1.0200.

The best trade which might set up here today will likely be a short trade from a bearish reversal off $1.0195 – if the rejection also touches the $1.0200, that will be even better.

The price has plenty of room to fall before reaching any key support levels, but it is likely we will still see strong support the closer we get to the parity level, which again begins to come into view now.

Concerning the USD, there will be a release of Retail Sales data at 1:30pm London time, followed by the FOMC Meeting Minutes at 7pm. There is nothing of high importance scheduled today regarding the EUR.

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Price has room to fall to $1.1958.

My previous GBP/USD signal last Tuesday could have produced a profitable short trade from the bearish rejection of the resistance level which I had identified at $1.2130, which capped the day’s high price right to the pip.

Today’s GBP/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 5pm London time Tuesday.

• Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.1958 or $1.1926.
• Put the stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 25 pips in profit.
• Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.

Short Trade Ideas

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.2100 or $1.2170.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 25 pips in profit.
• Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

GBP/USD Analysis

I wrote in my last forecast on 9^th August that we had new lower resistance at the very clearly defined level of $1.2130, which was somewhat confluent with the upper trend line of the price channel.

I thought a short trade from a bearish reversal at that level would likely be the best set up in this currency pair, and that was a good and accurate call.

The price rose in the later section of last week, but we have seen the US Dollar make a recovery so far again this week, making gains against the British Pound yesterday. This downwards price movement looks most likely to continue, as we see a bearish technical situation with the price selling off within descending bearish wedge chart patterns. Even more significantly, there are no key horizontal support levels until $1.1958, so the price has plenty of room to fall further. However, it is possible that the big round number at $1.2000 could be supportive if reached.

The British Pound is relatively weak as the UK economy is widely seen as having a poor outlook, with the Bank of England forecasting peak inflation later this year above 13%, and a recession lasting five quarters.

I would not pay much attention to the trend lines shown in the price chart below, but a bearish reversal from $1.2100 if we get a retracement later could be a good short trade opportunity. Scalpers might find short trades on retracements below that level, as long as the price is above or has cleared $1.2000.

There is nothing of high importance due today regarding either the GBP or the USD.

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With the start of this week’s trading, the price of the EUR/USD currency pair completed the downward path, closing last week’s trading around the support level 1.0232. The EUR/USD pair was subjected to selling operations for the third consecutive day, starting from the resistance level 1.0368.

The euro was affected by the June industrial production in the EU exceeding expectations (MoM) at 0.2% with 0.7%. The equivalent (YoY) outperformed 0.8% by 2.4%. In Germany, the HS CPI for July matched expectations (on an annual basis) at 8.5%. The EQ (MoM) also came in line with expectations of 0.8%.

From the United States, the preliminary US consumer confidence index from Michigan for August exceeded expectations at 52.5 with a reading of 55.1. The import and export indicators for July left expectations (monthly) at -1% and -1.1% respectively with readings of -1.4% and -3.3%. Earlier last week, initial US jobless claims last week beat the expected claims count of 263K with a total drop of 262K. On the other hand, the previous week’s continuing claims went against the 1.407 million expectation with the number of claims rising by 1.428 million.

EUR/USD Technical Analysis

In the near term and according to the hourly chart, it appears that the EUR/USD is trading within a descending channel formation. This indicates a significant short-term bearish momentum in market sentiment. Therefore, the bulls are looking to extend Friday’s rebound towards 1.0313 or higher to 1.0359. On the other hand, the bears will look to take profits around 1.0213 or lower at 1.0168.

In the long term and according to the performance on the daily chart, it appears that the EUR/USD is trading within a gently descending channel formation. This indicates a slight long-term bearish momentum in the market sentiment. Therefore, the bears will target long-term profits at around 0.10003 or lower at 0.9707. On the other hand, the bulls will look to pounce on profits at around 1.0537 or higher at 1.0776.

As I mentioned before, the divergence in economic performance and the future of monetary policy tightening by central banks between the eurozone and the United States of America will continue to hamper any gains for the EUR/USD currency pair.

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There is no doubt that the decline in US inflation rates stronger than expected contributed a lot to the decline of the US dollar against the rest of the other major currencies. The share of the EUR/USD currency pair rose quickly, reaching the resistance level of 1.0368, the highest for the currency pair in a month. The rebound was due to the investors’ view of the US inflation figures, which might impede the path of a strong tightening of the US interest rate hike. The EUR/USD pair is stabilizing around the 1.0300 level at the time of writing, awaiting a new round of important US economic data.

All in all, the EUR/USD exchange rate jumped to a double level of technical resistance on the charts after both official measures of US inflation came in lower than market expectations for July, dragging down US bond yields and the dollar more than recent highs. Falling gasoline prices have lowered the overall inflation rate in the US from 9.1% to 8.5% last month

How does the economy affect the markets?.

Economists had expected that metric to fall to 8.7% although if gasoline and natural gas prices fell, increases in the cost of electricity, food and housing would weigh on the metric. Meanwhile, the top rate of core inflation rose 5.9% unchanged last month in the face of expectations for an increase of 6.1% after declines in airline tickets, used cars and trucks, telecommunications and clothing prices offset increases in other categories.

Commenting on this, Biban Ray, FX Analyst at CIBC Capital Markets says, “The impulse in commodity-driven inflation is probably going down, but not so much from the services side (which tends to be more flat).” He noted that the 50-day moving average is an area. Possible short-term resistance of the price of the euro against the dollar. Analysts and economists warned on Wednesday that the data was unlikely to prevent the Federal Reserve from moving toward the interest rate forecast it set in June, which envisions a US interest rate of between 3% and 3.5% by the end of the year.

“The continued decline in gasoline will mean the headline rate drops further in August, but core inflation is likely to be more steady due to labor costs and will keep the Fed in a tightening mode,” says James Knightley, chief economist at ING. As Knightley cautioned after reviewing the data: “Core inflation remains on an upward trajectory due to rising housing rental costs and service sector inflation pressures. Wages are the largest cost input to the service sector.”

Wednesday’s numbers were closely followed by other data from the Bureau of Labor Statistics that on Tuesday indicated that US labor costs, or individual labor costs, rose by more than double during the second quarter and for the second consecutive quarter. This data is in part a reflection of higher wage growth rates that were also depicted rising at an accelerating pace in the US Non-Farm Payrolls report released last week.

Euro forecast against the dollar:

• The recent gains for the EUR/USD pair are a first step towards breaking the downside trend.
• The currency pair will need to move towards the 1.0400 and 1.0485 resistance levels to confirm that according to the performance on the daily chart.
• On the downside, the euro dollar price returned towards the support levels 1.0225 and 1.0155, ending the bullish aspirations.
• We prefer to sell EURUSD from every bullish level.
• Today, the currency pair will await the release of the US Producer Price Index as well as the number of jobless claims

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