Sudden change in market sentiment from bearish to bullish.

Last week’s trading was in favor of the bulls’ strength and control over the direction of the USD/JPY currency pair, as the currency pair moved in this path towards the 137.24 resistance level, the highest for the currency pair in nearly a month. This performance restored the currency pair’s bullish expectations to move towards the psychological resistance level of 140.00 again. In the middle of last month’s trading, the dollar-yen pair jumped towards the resistance level of 139.38, the highest for the currency pair in 25 years. I often recommended buying the dollar-yen from every descending level until the currency pair fell towards the 130.40 support level at the beginning of this month’s trading.

The results of the recent US economic data have removed many doubts about the future of the US economy stagnation in light of the continued hike in interest rates by the Federal Reserve, which brought back the strong impetus to think of buying the US dollar again.

USD/JPY Fundamental Analysis

The USD/JPY currency pair is trading higher after investors interpreted the minutes of the FOMC meeting last Thursday as an indication that the Federal Reserve has not finished raising US interest rates yet. The announcement came on the back of promising claims data, with initial US jobless claims last week at 250K, well below expectations of 265K.

Continuing claims for the previous week also exceeded 1.438 million with 1.437 million recorded. Prior to that, US retail sales figures also came in better than expected although general retail sales did not miss the estimates.

In Japan, the national CPI for July beat the expected change (annualized) by 2.2% with a change of 2.6%. On the other hand, the CPI for food and energy products beat expectations by 0.6% (1.2% yoy), while the CPI for non-fresh food was in line with expectations by 2.4%. Prior to that, Japanese exports and imports also exceeded expectations by 18.2% and 45.7% respectively, with 19% and 47.2% (y/y), while the merchandise trade balance for this month missed expectations.

Commenting on the performance of the US dollar. “The bigger picture for the dollar is that it is in a strong uptrend,” said Matt Simpson, senior analyst at City Index brokerage in Brisbane, adding that it halted a weeks-long decline. “In some ways, the bulls are looking to pull back and I think the Fed minutes gave them a reason to do so,” he added.

The minutes of the last meeting of the US Federal Reserve showed that bank officials saw “little evidence” late last month that inflation pressures in the United States were easing. The minutes noted an eventual slowdown in the pace of the increases, but not the shift to the cuts in 2023 that traders until recently were pricing in interest rate futures.

For his part, Philip Marie, strategic analyst at Rabobank, said in a note to clients, “Once they reach a sufficiently restrictive level, they will stick to that level for some time.” And “obviously, this contrasts with the early Fed pivot that markets were pricing in.” Investors expect there is a 39% chance of a US interest rate hike of 75 basis points in a row in September, and they expect rates to peak around 3.7% by March, and hover there until later in 2023.

USD/JPY Technical Analysis

In the near term and according to the performance on the hourly chart, it appears that the USD/JPY is trading within an ascending channel formation. This indicates a significant short-term bullish momentum in market sentiment. Therefore, the bulls will look to ride the current wave of gains towards 136.84 or higher to 137.45. On the other hand, the bears will look to take profits at around 135.69 or lower at 134.99.

In the long term and according to the performance on the daily chart, it appears that the USD/JPY pair recently completed an upward breach of the descending channel formation. This indicates a sudden change in market sentiment from bearish to bullish. Therefore, the bull will look to extend the current rally towards 139.47 or higher to the resistance 142.50. On the other hand, the bears will target long-term profits at around 133.26 or lower at 130.23 support.

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Despite the recent stability in the performance of the GBP/USD currency pair with gains on the cusp of the 1.2100 resistance level, the pessimistic expectations about the future of the British economy stagnation and the disparity in the pace of interest rate hike between the Federal Reserve and the Bank of England, along with British political anxiety may bring the pair currencies selling again.

The price of the pound against the dollar GBP/USD will fall amid a “significant rise” on the part of the Federal Reserve, according to Western Union. The British Pound and the Dollar could see high volatility over the next 48 hours with the Federal Reserve expected to raise interest rates again on Wednesday and release US GDP data on Thursday.

Accordingly, analyst George Vessey at Western Union Business Solutions says that those who monitor the forex foreign exchange market should be wary of a potential “significant rally” from the Fed, as rates are raised by more than 75 basis points. Accordingly, “although it is unlikely at this point, that the dollar will rise if it surprises the Federal Reserve with a 100 basis point hike this week.”

The exchange rate of the pound against the dollar proved remarkably flexible during the past 24 hours, and settled above the level of 1.20 despite the sharp decline in the exchange rate of the euro against the dollar in response to the rise in European gas prices. Thus, flexibility is likely to persist if the Fed enters the market and delivers the expected 75 basis point rise. The analyst added, “Markets are expecting a 75 basis point rise by the US Federal Reserve (Fed) with a 90% probability of that happening. A significant 100 basis point rise is unlikely given the weak leading economic indicators and the lack of support by some Federal Reserve officials.”

He explains that interest rate speculation is the main driver of forex volatility, and a larger 100 basis point lift was soon enjoyed by money market managers after US inflation hit a new 40-year high in June and a stronger-than-expected US jobs report . This month.

Expectations for a 100 basis point rise were raised following the release of inflation data this month, which showed US inflation rose 9.1% year-on-year in June. But a number of Fed members immediately dismissed this shift in market expectations in speeches and in media appearances, which cooled market expectations.

This has since been helped by some lower-than-expected US economic data readings that indicate the US economy will slow sharply over the coming months, reducing the Fed’s need to crush activity and cool inflation by raising interest rates. Accordingly, the analyst adds, “The main economic results indicated weak growth and weaker inflation on the horizon, which led to the weakness of the US dollar last week. EUR/USD is up over 1.3% and GBP/USD is up over 1% over the week.”

GBP/USD analysis:

Amid the state of pessimism about the future of the British economy, the political situation, and the difference in the rate hike path between the Federal Reserve and the Bank of England, I expect that the next GBP/USD gains will be subject to selling again. The closest resistance levels for the currency pair are 1.2120 and 1.2230, respectively. On the other hand, according to the performance on the daily chart, the currency pair’s move towards the 1.1940 support level will confirm any bullish expectations for the pair and start expecting to test new record levels of support.

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We expect the price to rise in its upcoming trading.

Spot natural gas prices (CFDS ON NATURAL GAS) declined in their recent trading at the intraday levels, to record daily losses until the moment of writing this report, by -3.08%. It settled at the price of $7.328 per million British thermal units, after rising in trading yesterday by 4.76%.

Natural gas futures advanced for the second day in a row on Wednesday amid expectations of higher demand, Nymex June gas futures gained 25.5 cents on the day and settled at $7,640 per million British thermal units. The July contract rose 26.0 cents to $7.727.

Weather On Demand said the forecast for the next two weeks and beyond requires strong seasonal heat and strong cooling demand in large parts of the southern US providing price support.

Meanwhile, despite outages from spring maintenance, US LNG export volumes remained above 12 billion cubic feet per day in May. As European countries pull back from Russian gas imports in the face of the Kremlin’s war in Ukraine, US supplies are helping to fill the void.

Some analysts said that cutting off the gas pipeline in Ukraine from Russian supplies flowing to European homes is causing concern and may strengthen the overall background for energy prices.

Although the Ukrainian pipeline operator said it would use another hub and not affect the flow, Russian state-owned oil group Gazprom said gas supplies were down 25% from the day before it was sent through Ukraine, according to a report from the Associated Press. The two countries have been at war since the Russian invasion in late February.

Technically, natural gas is rising amid the dominance of the main bullish trend over the medium term along a slope line, supported by its continuous trading above its simple moving average for the previous 50 days. We notice the beginning of a positive crossover on the relative strength indicators.

Therefore, our positive expectations surrounding natural gas continue, and we expect the price to rise in its upcoming trading, especially if its stable above the level of 7.368, and targets the first resistance levels at the price of 8.054.

Today’s USD/TRY Signal

Risk 0.50%.

None of the buy or sell transactions of yesterday were activated

Best entry points buy

• Entering a long position with a pending order from 14.62 مستويات levels
• Set a stop-loss point to close the lowest support level 14.46.
• 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 75 pips and leave the rest of the contracts until the strong resistance levels at 14.85.

Best selling entry points

• Entering a short position with a pending order from 14.85 levels
• The best points for setting the stop loss are closing the highest levels of 14.98.
• 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 75 pips and leave the rest of the contracts until the support levels 14.40

The Turkish lira fell against the dollar as investors followed up on the report of the International Monetary Fund on Monday, which included expectations for a decrease in global growth forecasts this year by nearly one percent, with a decline from the previous rate of 4.4 percent to 3.6 percent, because of the war in Ukraine. As for the Turkish issue, the IMF lowered the forecast for the growth of the Turkish economy during the current year from the previously expected rate of 3.3 to 2.7 percent. It is noteworthy that the Turkish currency is facing pressures like the currencies of emerging economies with the rise of the US dollar, which is awaiting a new decision to raise the interest rate during trading next month.

On the technical front, the Turkish lira fell slightly against the dollar with the opening of trading, as it continued within a limited trading range, which is evident on the chart. The pair has breached the resistance line at 14.76 on the 240-minute time frame, shown on the chart. The pair also rose around the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame. The pair is trading the highest support levels that are concentrated at 14.76 and 14.60 levels, respectively. On the other hand, the lira is trading below the resistance levels at 14.85 and 14.89, respectively. We expect the lira to decline, especially after breaching the shown support level, as it targets 15.00 levels in the medium term. Please adhere to the numbers in the recommendation with the need to maintain capital management.