We will see a lot of choppy and sideways behavior, meaning that you should probably be looking more or less at a range-bound type of trade.

• The AUD/USD currency pair pulled back a bit Tuesday to test the 0.70 level. 
• It should be noted that the 0.70 level has been important multiple times in the past, so it does make quite a bit of sense that the market would stall here.
• The question now is where we go from here, as this was the scene of a rather significant breakout.

The 0.70 level of course has a lot of psychology attached to it, so in and of itself is reason enough to think there might be some trouble. If we break down below the bottom of the candlestick for the trading session on Tuesday, then it’s likely that we go lower, perhaps reaching the 50-Day EMA. The 50-Day EMA is closer to the 0.6925 level, and of course, we have seen support at the 0.69 level previously. In other words, there is a lot of noise underneath that could come into the picture and keep the market somewhat elevated.

Tied to the US Dollar

At this point, it’s probably worth noting that the Australian dollar has fared better against the US dollar than many other currencies, so if we are going to see the US dollar selloff, it’s likely that we will see it get turned around here first. The market breaking above the 200 Day EMA above would be a very bullish sign, perhaps kicking off a new bullish trend.

We will have to be very cautious about that though because the Australian dollar is highly levered to China, which seems to have a lot of its own problems right now. Furthermore, we also have to worry about risk appetite in general, because the US dollar could pick up a bit of a bid if people start freaking out. I think more than anything else, we will see a lot of choppy and sideways behavior, meaning that you should probably be looking more or less at a range-bound type of trade. In the next 24 hours, it does look like we are going to deal with a little bit of support that could cause his market to bounce, albeit ever so slightly. This is a market that continues to see a lot of crosscurrents, but you can probably say that about almost every currency pair at the moment. Pay attention to the 10-year yield in America, because if it starts to rise again, that could send the Aussie lower.

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I think the only thing you can count on is seeing a lot of fake-outs in both directions.

• The AUD/USD currency pair has dropped rather heavily to kick off the week on Monday, slamming into the 0.70 level.
• This is an area that I will be watching very closely because it is a large, round, psychologically significant figure, and an area that I think a lot of people will be paying close attention to.
• We have seen a lot of support in that area in the past, right along with resistance.
• “Market memory” comes into play rather drastically in this general vicinity.

Risk Appetite May Cause Bullishness

The size of the candlestick is somewhat impressive, and therefore you need to take that into account. However, this is also a lot of noise underneath here so you also would have to assume that there will be people willing to get involved and try to pick up value in the Aussie if they are truly bullish on risk appetite. One of the main things that kicked this off during the Monday session was the fact that Chinese numbers came in rather lackluster. Retail sales missing by almost 3% does not bring in a lot of confidence when it comes to the Chinese economy. Remember, Australia is highly dependent on the Chinese economy, so if the Chinese economy does poorly, so will the Australian economy.

Underneath, we have the 50-day EMA, and that of course comes into the picture as well, as the market pays close attention to that quite often. The 0.6939 level is where it currently is, so breaking down below that will open up an attack on the 0.69 level, and then possibly breaking down below there to reach the lows again. I don’t know that it will happen easily, but it’s obvious that there is still plenty of volatility in the market, so you have to be very cautious on the whole.

If we were to break above the 200-day EMA, it opens up the possibility of a move above the 0.72 level, an area that has a certain amount of historical importance and of course psychology attached to it as well. Either way, I think the only thing you can count on is seeing a lot of fake-outs in both directions, and a lot of accounts destroyed in this pair as it has bucked the trend when it comes to how it behaves against the US dollar.

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The USD/JPY currency pair is likely going to continue to see this area just below as support, and we will have to pay close attention to it. 

• The CPI number came out to 0.0% month over month on Wednesday morning, and the Core CPI figure came out at 0.3% month over month.
• This was lower than anticipated, so traders started to bet that the Federal Reserve is closer to pivoting than they originally thought.
• As a result, interest rates started to drop across the board, just exactly what the Japanese yen needs to see.

Market Likely to Go Higher in Long Term

Remember, the Bank of Japan continues to buy 10-year Japanese Government Bonds, keeping the interest rate down to the 0.25% level. Every time they have to buy more bonds, they are essentially “printing yen.” This is what is known as quantitative easing, while other central banks around the world are doing quantitative tightening. With that in mind, it’s essentially a “perfect setup” for this market to go higher over the long term as long as that’s going to be the situation. This is why the CPI number was so important for the day.

That being said, inflation is still running over three times what the Federal Reserve is aiming for, so they are still going to be aggressive, and we are already starting to see the US dollar pick up a little bit of momentum. You are not seeing it as much here as you are against the euro and the British pound, but we have bounced. With that being the case, the USD/JPY currency pair is likely going to continue to see this area just below as support, and we will have to pay close attention to it. If we do break down below the ¥132.50 level, it’s possible that we go looking to the ¥127.50 level.

The market breaking through all of that would of course be extraordinarily negative, and at that point in time I think the trend is over. On the upside, we have the 50-day EMA sitting at the top of the candlestick for the trading session on Wednesday which could be a little bit of a short-term technical barrier, but I feel that it is only a matter of time before we reach above that area. If and when we do, that could kick off the next move higher. At that point, I think we go looking toward the highs again, giving us an opportunity to test the ¥140 level.

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I am looking for signs of exhaustion to get involved with and will continue to buy US dollars whenever I get the possibility to pick them up “on the cheap.”

• The AUD/USD currency pair has rallied rather significantly during the trading session on Monday, but as you can see, the market seems to be struggling with the 0.70 region.
• The 0.70 region is significant resistance that extends at least 50 points.
• I think that the market is going to continue to see a lot of noise due to the fact that there are concerns when it comes to global risk appetite.

Eventual Interest Likely

At this point, the 50-day EMA sits right in the middle of the candlestick for the session, so it does suggest that it is probably only a matter of time before we start seeing a lot of interest overall. If we were to break down below the 0.69 level, that opens up the possibility of the Australian dollar falling quite drastically. At that point, the market more likely than not will go down to the 0.67 level, which is an area that has offered up massive support in the past.

If we were to break down below there, it would almost certainly come down to a major turnaround in risk appetite and the US dollar strengthening against almost everything. With this being the case, the market is likely to enter a tailspin in almost anything close to being a risk appetite asset. Ultimately, the Australian dollar would have to clear the 0.7050 level on a daily close to making a strong statement, something that it has not been able to do since June. Because of this, I think it’s likely that we will continue to see a lot of selling pressure more than anything else. Because of this, I am looking for signs of exhaustion to get involved with and will continue to buy US dollars whenever I get the possibility to pick them up “on the cheap.”

If we do break out to the upside, the 200-day EMA is an area that we need to pay close attention to and breaking above that would obviously be a very bullish turn of events. However, I think it would take quite a bit of shift in momentum overall. I don’t expect that, so I think given enough time we will break down more than anything else. Whether or not we can break down below 0.67 is a completely different question as well.

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This is a market that has been noisy, but reliably positive. 

• The USD/JPY currency pair rallied significantly Friday to break above the ¥135 level.
• A lot of this has come down to the fact that the interest rates in America spiked after the jobs number came up much stronger than anticipated.
• Keep in mind that a lot of questions are being asked about whether or not the Fed is going to have to continue tightening or not, and by the end of the day on Friday it seemed that consensus has shifted from a potential 50 basis points in September to the possibility of 75.

Buyers to Come in On Dips

Looking at this chart, it’s obvious that we have a lot of the interest rate differential pricing, but at the same time, we have the Bank of Japan doing everything it can to keep interest rates down to 0.25% on the 10-year JGB. Because of this, the Bank of Japan continues to have to buy unlimited bonds, which is the same thing as printing unlimited yen. Because of this, the market is quite likely to see buyers coming in on dips, due to the fact that the Japanese are doing everything they can to keep those rates down. On the other side of the equation, you have the Federal Reserve which is in the process of tightening monetary policy. In other words, it sets up a “perfect storm” for a continuation.

Underneath, the ¥132 level is an area where you would expect to see support, just as we had previously. If we break it down through there, then the ¥128 level began significant support going forward, possibly being trend-defining level as well. Ultimately, it’s worth noting that we are breaking above the 50-day EMA as well, as it is an area that a lot of technical traders pay close attention to.

If we can continue going higher, it’s very likely that the markets will find plenty of reason to test the highs again. Quite frankly, this is a market that has been noisy, but reliably positive. The action that we had seen during the session on Friday should continue to add credence to the idea of this pair continuing to climb over the longer term. Breaking above the ¥140 level could be a huge deal going forward, allowing for more of a “buy-and-hold” scenario.

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Today’s recommendation on the lira against the dollar

Risk 0.50%.

None of the buying or selling transactions were activated yesterday, Wednesday

Best selling entry points

• Entering a short position with a pending order from levels of 18.33
• Set a stop-loss point to close the lowest support levels at 18.55.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 17.70.

Best entry points buy

• Entering a buy position with a pending order from levels of 17.85
• The best points for setting stop-loss are closing the highest levels of 17.54.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 18.31

Analysis of the Turkish Lira

The Turkish lira fell against the dollar during trading yesterday, Wednesday, after the country’s inflation data released yesterday, the number rose by 2.37%. It recorded 79.6% during the month of July. The interventions of the Central Bank of Turkey are clear, as the dollar crossed the levels of 18 lira for a while before falling again to levels of 17.90, the same levels that the pair has been trading at about two weeks ago. Despite the intervention of the Central Bank of Turkey, the impact of these interventions is limited. This is especially with the reduction of solutions available to the bank’s board of directors in light of adhering to an incentive policy that refuses to raise the interest rate to keep pace with other central banks around the world. This increases the pressure on the price of the lira.

Turkish Lira Technical Forecast

The Turkish lira fell against the US dollar, as it recorded a new high at 18.07 levels, the highest level for the dollar against the lira this year. In general, the pair’s movement continued with the same trading pattern as the pair since last week. Where the lira traded around the highest recorded during the current year. The pair is trading above the 50, 100 and 200 moving averages, respectively, on the four-hour time frame as well as on the 60-minute time frame, indicating the long-term bullish trend. The pair is also based on the rising trend line on the four-hour time frame shown on the chart, at the same time the pair is trading the highest support levels that are concentrated at 17.90 and 17.85 levels, respectively. The lira is trading below the resistance levels at 18.00 and 18.07, respectively. We expect to re-record new highs, especially with every dip in the pair, which represents a buying opportunity. Please adhere to the numbers in the recommendation with the need to maintain capital management.

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Despite the recovery of the US dollar during the recent trading sessions, the XAU/USD gold price is trying to hold its ground this week. The price of gold jumped towards the resistance level of 1788 dollars an ounce and was subjected to limited selling towards the level of 1754 dollars an ounce. It settled around the level of 1765 dollars an ounce in the beginning of trading today, Thursday . The US dollar reversed its earlier losses to post daily gains against some of the other major currencies after the Institute for Supply Management (ISM) Services Purchasing Managers’ Index (ISM) confounded market expectations with a July rally in contrast to the alternative measure compiled by S&P Global.

Yesterday’s ISM Services Index surprised the currency and bond markets when it rose from 55.3 to 56.7 last month after rising due to sharp increases in new orders and general business activity within the largest and most important sector of the US economy. Supplier deliveries also accelerated while the price sub-component of the gauge fell 7.8% in its third consecutive monthly decline, also its largest decline since 2017, indicating that inflation pressures may be moderating.

About 13 out of 16 subsectors in the overall service industry reported a slight increase in business activity for the month of July, leading to an increase in the overall ISM services PMI in contrast to the S&P Global survey, which previously indicated that the sector contracted sharply last month.

The decline reported by S&P Global pushed the services sector PMI to its lowest level since June 2020.

The survey comes just days after the Bureau of Economic Analysis said US economic output fell -0.9% during the second quarter, making it the second straight quarterly decline that has many in the market asking aloud whether the US is on the cusp of a recession.

For its part, the Federal Reserve last week cited evidence of further economic slowdown in the second quarter as one of the reasons it has been more attentive to US economic numbers over the eight weeks leading up to its next monetary policy decision in September. Chairman Jerome Powell said last Wednesday that the Fed will take into account a range of US economic indicators when deciding in September whether to cut the size of US interest rate increases, sending the dollar broadly lower.

While the Fed acknowledged signs of slowing last week, many Fed officials were also quick to express skepticism about the idea that the economy is on the cusp of a recession and Wednesday’s data is one indication that they may be right to be conservative. This is to the extent that the message of the ISM survey is replicated by other data in the coming weeks, it could lead the Fed to feel more comfortable continuing to raise interest rates in big increases over the coming months, especially if inflation shows no signs of doing so.

Today’s XAU/USD Gold Price Forecast:

Despite the recent strength of the US dollar, the XAU/USD gold price showed resilience as this recovery was offset by increased global geopolitical tensions, which is a fertile environment for gold gains. The bulls are determined so far to move towards the psychological resistance level of 1800 dollars per ounce, which is the most important level for the outlook of the general upward trend. On the other hand, according to the performance over the same time period, the movement of the gold price towards the support levels of 1748 and 1730 dollars will be important for the bears in controlling the direction of gold. I still prefer buying gold from every bearish level.

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I think you have a lot of noise ahead of you, so you are going to need to be very cautious with your position sizing.

• The US dollar fell again against the Japanese yen on Monday as we continue to see a lot of problems out there.
• Ultimately, this is a market that I think given enough time we will have to find some type of stability, or we will break down rather drastically.
• The market is likely to continue being noisy in general, as we have a lot of different things going on at the same time.

Expect Buyers

The US dollar has dropped down to the ¥132 level, an area that is the beginning of a significant area of “market memory” that we will be paying attention to from both sides. Ultimately, this is a market that is paying close attention to the Bank of Japan, and what it is doing with its interest rates. Furthermore, interest rates in the United States have been falling, so at the same time, it looks as if the Bank of Japan will have to do a lot less quantitative easing, at least in this environment. This is part of why the Japanese yen has strengthened. That being said, the market was also overbought, so a little bit of a pullback does make quite a bit of sense. With this being the case, I think you are more likely than not going to see buyers jumping in sooner or later, and we are at the first major support region.

If we do break down from here, the next major support level is closer to the ¥127.50 level. That is an area where we have seen a lot of buying pressure previously, so I think it makes quite a bit of sense that “market memory” comes into play. Breaking down below that level could open up a significant selloff, sending this market much lower. At that point in time, I would assume that the uptrend is over. On the other hand, if we turn around and bounce at one of these levels, it’s very possible that we could continue to go much higher. Either way, I think you have a lot of noise ahead of you, so you are going to need to be very cautious with your position sizing. We do not have a set up to start buying quite yet, so I am essentially sitting on my hands at the moment.

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The pair will likely continue falling as sellers target the next psychological level of 1.1800.

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.1800.
• Add a stop-loss at 1.1975.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.1935 and a take-profit at 1.2000.
• Add a stop-loss at 1.1850.

The GBP/USD sell-off gained steam during the American and Asian sessions as the US dollar strength continued. The pair dropped to a low of 1.1880, which was the lowest point since 2020. It has crashed by about 12% in 2022.

UK Economic Outlook

The GBP/USD pair declined as the outlook for the UK economy worsened. On Monday, many unions representing rail workers announced that they will strike soon. This will be the biggest strike in over 25 years and will affect train passengers across the UK. The workers are protesting poor wages amid soaring inflation.

The UK government has asked unions to go back to the negotiating table and reach a deal. At the same time, groups representing rail companies urged their workers not to strike. Other unions, especially those representing postal workers, have warned of a major strike.

These strikes will affect the country’s economy at a difficult time when inflation has surged to the highest level in over four decades. House prices have surged while retail sales have all declined. Consumer confidence has slumped to the lowest level in over a decade.

The GBP/USD pair also declined as the US dollar strength continued broadly. The closely watched US dollar index rose to $106 as the currency rose against developed and emerging market currencies. The index rose as investors reacted to the strong labor market data.

On Friday, data published by the Bureau of Labor Statistics (BLS) showed that the economy added over 372k jobs in June while the unemployment rate remained at 3.7%. While the participation rate is still low, analysts expect that the Federal Reserve will continue tightening policies in the coming months.

The next key catalyst for the GBP/USD pair will be the upcoming US consumer inflation data. Analysts expect that inflation jumped to 8.8% in June.

GBP/USD Forecast

The four-hour chart shows that the GBP/USD pair has been in a strong bearish trend in the past few months. Recently, it formed an inverted cup and handle pattern that is shown in black. As it dropped in the overnight session, the pair managed to move below the lower side of the cup. It has also moved below the 25-day and 50-day moving averages.

Therefore, the pair will likely continue falling as sellers target the next psychological level of 1.1800. A move above the resistance point at 1.1950 will invalidate the bearish view.

It certainly looks as if we are going to go higher than lower.

• The Canadian dollar initially fell on Wednesday to reach down toward the ¥104 level.
• The ¥104 level is an area that has been previous support, soit’s not a huge surprise to see this market turnaround and show signs of life.
• In fact, by the end of the day, the pair ended up forming a bit of a hammer, which is telling considering that the crude oil market recovered quite nicely as well.

The 50-day EMA is at the ¥103 area and rising, and because of this, it’s very likely that we continue to see more of a “buy on the dips” type of attitude. This is especially true considering that the Bank of Japan is doing everything it can to work against rising yields, thereby essentially buying as many bonds as it takes. That is the same thing as printing currency hand over fist, so we should continue to see the Japanese yen suffer as a result.

Pay Attention to Crude Oil

However, you should keep in mind that the Canadian dollar is highly levered to the crude oil markets, so pay attention to how they are behaving to get a feel for how the Canadian dollar will do. In other words, if the crude oil market recovers, then it’s likely that we would see the pair do quite well. However, if oil takes a bit of a dip, it could either turn this market around and make a breakdown, or it may work against the upward momentum.

This looks like a market that is trying to do everything it can to show signs of life, and I think we continue to consolidate back and forth. The 50-day EMA might be reason enough for people to get long, but really at this point, I think what we are seeing is the market trying to chip away at the ¥106 level. The attitude of the market remains very noisy, so you should be very cautious about your position size. Regardless, it certainly looks as if we are going to go higher than lower. However, if we were to break down below the ¥100 level, that could change a lot of things as it would almost certainly have a certain amount of psychology working as well.