The pair will likely resume the bearish trend as sellers attempt to move below the support at 1.2000.

Bearish View

• Set a sell-stop at 1.2000 and a take-profit at 1.1900.
• Add a stop-loss at 1.2200.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2135 and a take-profit at 1.2250.
• Add a stop-loss at 1.2000.

The GBP/USD price rose slightly ahead of the upcoming UK consumer and producer inflation data and the relatively weak US housing numbers. It rose to 1.2100, which was about 70 basis points above the lowest level this week.

UK Inflation and US Retail Sales Data

The GBP/USD price will be in the spotlight on Wednesday as investors reflect on key data from the United States and the UK.

The Office of National Statistics (ONS) will publish July’s inflation numbers. Economists surveyed by Reuters expect the data to show that inflation continued rising in July. Precisely, they expect that the headline CPI rose from 9.4% in June to 9.8% in July on a year-on-year basis. On a positive note, they believe that inflation dropped from 0.8% to 0.4%.

Excluding the volatile food and energy prices, analysts expect that the country’s inflation rose from 5.8% to 5.9%. On Tuesday, data compiled by Kantar showed that food prices in the country rose by 11.6% YoY in the four weeks to August 7. This was the biggest increase since the company started collecting the data in 2008.

The data will come a day after the UK published relatively weak jobs data as the unemployment rate rose from 3.7% to 3.8%. The employment rate dropped t 75.5% while the number of open vacancies dropped to 1.27 million.

The GBP/USD price will next react to the upcoming American retail sales numbers. With inflation soaring, analysts believe that sales dropped from 1.0% in June to 0.1% in July while core sales fell from 0.6% to -0.6%. On a positive note, top retailers like Walmart and Home Depot published strong results on Tuesday.

The pair will also react to the latest minutes of the FOMC. These minutes will provide more color about what the officials talked about in their meeting.

GBP/USD Forecast

The GBP/USD pair has been in a strong downward trend in the past few days. This decline started when the pair formed a double-top pattern at around 1.2288. In price action analysis, this pattern is usually a bearish sign. The pair rose in the overnight session after it hit the neckline of this pattern.

The GBP/USD pair remains below the 25-day and 50-day moving averages and the 38.2% Fibonacci Retracement level. Therefore, the pair will likely resume the bearish trend as sellers attempt to move below the support at 1.2000.

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The pair will likely keep rising as bulls target the next key resistance point at 26,000.

Bullish View

• Buy the BTC/USD pair and set a take-profit at 26,000.
• Add a stop-loss at 22,500.
• Timeline: 2 days.

Bearish View

• Set a sell-stop at 23,800 and a take-profit at 22,000.
• Add a stop-loss at 25,000.

The BTC/USD price made a bullish breakout as demand for cryptocurrencies rose. The pair crossed the important resistance point at 24,000, which was the highest point since July 30th of this year. Bitcoin has recovered by more than 36% from its lowest level this year.

Cryptocurrency Recovery Continues

Bitcoin has had a relatively difficult year as worries of high-interest rates rose. It dropped from last year’s high of almost $70,000 to about $18,000. Recently, however, bitcoin and other cryptocurrencies have staged a strong recovery, bringing their total market cap to over $1.1 trillion.

This recovery has happened at a time when the Federal Reserve has ramped up its rate hikes. The bank hiked interest rate hike by 0.75%, bringing the total year-to-date increase to 225 basis points. Analysts expect that the bank will continue hiking rates this year, especially after the strong US jobs data.

Data by the Bureau of Labor Statistics (BLS) showed that the American economy added over 528k jobs in July. The unemployment rate dropped from 3.6% to 3.5% while wages continued rising. As a result, some Fed officials, including Mary Daly hinted that the bank will hike rates by 0.50% in September.

The next key economic data to watch will be the upcoming US consumer price index (CPI) data. Economists expect the data to reveal that the country’s inflation slipped slightly in July as gasoline prices retreated.

The BTC/USD price also bounced back because of the strong correlation between technology stocks and cryptocurrencies. The Nasdaq 100 index, which is made up of the biggest tech companies, has risen by about 20% from the lowest level this year. This means that the index is exiting the bear market.

BTC/USD Forecast

The four-hour chart shows that the BTC/USD price has been in a strong bullish trend in the past few weeks. The pair has moved above the 25-day and 50-day moving averages. At the same time, the MACD has moved above the neutral point.

Notably, the pair has formed an ascending triangle pattern that is shown in green. In price action analysis, this pattern is usually a bullish sign. It has moved to between the 50% and 38.2% Fibonacci Retracement level.

Therefore, the pair will likely keep rising as bulls target the next key resistance point at 26,000. A drop below the support at 23,000 will invalidate the bullish view.

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You may need to pay attention to Asia, specifically the Nikkei 225, and how it behaves overnight to get an idea of how the DAX may behave.

The German DAX Index initially rallied on Tuesday to reach the €13,450 level before turning back around. By doing so, it suggests that we are going to continue to see negative pressure, especially as the dreaded “shooting star” formed by the end of the day. It’s worth noting that the most recent impulsive candles have all been red and that suggests that there is plenty of interest in selling.

That being said, we have bounced quite sufficiently from the €13,000 level to suggest that perhaps it is important, and there are buyers down there willing to defend it. If we break down below the €13,000 level, then it is likely that the DAX will break down rather significantly, perhaps reaching down to the €12,500 level. The German index will have a lot of the same issues that other indices have around the world right now, as there is a real concern about growth, or perhaps the lack thereof. With that in mind, feeding rallies continue to make sense, which is exactly what people did during the day.

The alternative scenario is if we turn around and take out the big massive red candlestick from Thursday of last week, meaning that we can break above the €13,750 level. If we do that, it would be a very positive turn of events, perhaps opening up a move to the €14,000 level where the 50-day EMA presently sets. I’m not looking for that move but would have to pay close attention to it if it does in fact occur. Keep in mind that the DAX should move right along with other indices around the world, so you may need to pay attention to Asia, specifically the Nikkei 225, and how it behaves overnight to get an idea of how the DAX may behave. Granted, it doesn’t have to follow it, but it gives you a good idea as to what the risk appetite is going to be around the world.

I do think eventually the sellers come back, so not looking for the market to end the downtrend anytime soon. Because of this, I’m simply looking for signs of exhaustion that I can sell into. Unfortunately, it happened much quicker than I would’ve thought so, therefore, I’m still looking for opportunities at this point. Ultimately, DAX is likely to continue falling.

 In the past few days, key commodity prices have been in a strong bearish trend

Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6830.
• Add a stop-loss at 0.7020.
• Timeline: 2 days.

Bullish view

• Set a buy-stop at 0.700 and a take-profit at 0.7050.
• Add a stop-loss at 0.6950.

The AUD/USD pair moved sideways on Tuesday morning after the latest minutes by the Reserve Bank of Australia (RBA). It is also reacting to the falling iron ore prices as concerns about global growth remains. The pair is trading at 0.6957, which is slightly below this week’s high of 0.700.

Global recession worries

The Australian dollar has struggled in the past few days as investors continue worrying about the global economy as central banks embrace a more hawkish tone.

According to the Wall Street Journal, odds of an American recession happening in 2022 rose to 44% from the previous 26%. The report was based on estimates by leading economists in the US.

The AUD/USD pair tends to underperform in periods of weak output because of the role commodities play in Australia. The country exports key commodities like coal, natural gas, and iron ore.

This explains why the pair is struggling. In the past few days, key commodity prices have been in a strong bearish trend. For example, copper has tumbled to the lowest level in more than 12 months. Similarly, iron ore has crashed as investors anticipate weak spending as interest rates rise.

The pair is also under pressure as investors reflect on the actions of the Fed and the Reserve Bank of Australia (RBA). Last week, the Fed decided to hike interest rates by 0.75%, the biggest increase in almost three decades. Officials also hinted that more hikes were on the way.

The decision came a week after the RBA surprised investors by hiking rates by 0.50%. Analysts were expecting a 0.25% hike. Minutes published earlier on Tuesday revealed that officials expressed hopes that they will continue hiking rates in the upcoming meetings. But they also cautioned that inflation will continue as the crisis in Ukraine escalates.

AUD/USD forecast

The four-hour chart shows that the AUD/USD pair has formed what looks like an inverted cup and handle pattern that is shown in black. The lower side of this pattern is at 0.6831. The pair remains slightly below the 25-day and 50-day moving averages.

It has moved to the standard pivot point while oscillators are pointing downwards. Therefore, because of the inverted cup and handle pattern, there is a possibility that it will have a bearish breakout to the first support at 0.6831.

There is a likelihood that the pair will retreat and retest the lower side of the channel at 0.7175.

Bearish View

• Sell the AUD/USD pair and set a take-profit at 0.7150.
• Add a stop-loss at 0.7245.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 0.7235 and a take-profit at 0.7300.
• Add a stop-loss at 0.7160.

The AUD/USD pair has pulled back in the past few days as the US dollar crawls back and as investors wait for the upcoming interest rate decision by the Reserve Bank of Australia (RBA). The pair also retreated slightly after the mild jobs numbers from the United States.

RBA Interest Rate Decision

The AUD/USD has pulled back slightly as investors wait for the upcoming interest rate decision by the RBA. Analysts believe that the bank will continue hiking the hiking cycle that it started in May this year when it hiked by 0.25%.

The base case is that the RBA will hike interest rates by 0.25% and push the base lending rate to 0.60%. The most important catalyst for the pair will be the bank’s statement on the number of rate hikes that it will make later this year. Most analysts expect that it will signal that it will have a few more hikes in a bid to fight inflation.

The RBA meeting comes at an important time for the global economy. Last week, Jamie Dimon of JP Morgan warned that the global economy faces a hurricane in the coming months. He cited the rising cost of energy and food prices. In the same week, Elon Musk of Tesla said that he felt super bad about the American economy. As such, he hinted that Tesla would slash its workforce by about 10%.

The AUD/USD pair also declined after the latest American jobs numbers. The data revealed that the country’s economy added over 390k jobs in May while the unemployment remained close to its record low. At the same time, wages held quite well.

In addition to the RBA decision, the next key data to watch will be the upcoming US inflation numbers. Analysts will be watching whether inflation is showing signs of topping.

AUD/USD Forecast

The four-hour chart shows that the AUD/USD pair formed an evening star pattern last week. In price action analysis, this pattern is usually a bearish sign. The pattern happened when the pair rose to the highest level since the first week of May.

Now, the pair has moved slightly below the 61.8% Fibonacci Retracement level. The pair has also formed an ascending channel pattern that is shown in black. It remains slightly above the 25-day and 50-day moving averages. Therefore, there is a likelihood that the pair will retreat and retest the lower side of the channel at 0.7175.

The pair will likely retest the support at 1.2400 and then extend its gains.

Bullish View

• Buy the GBP/USD pair and set a take-profit at 1.2600.
• Add a stop-loss at 1.2355.
• Timeline: 1 day.

Bearish View

• Set a sell-stop at 1.2400 and a take-profit at 1.2350.
• Add a stop-loss at 1.2500.

The GBP/USD pair found some support at its lowest level since May 2020 after the strong UK employment numbers. It rose from this week’s low of 1.2170 to a high of 1.2495. Focus now shifts to the upcoming UK inflation data.

UK Retail Sales Data

Recent economic data from the UK is sending a mixed picture of the economy. For example, recently, data showed that the country’s retail sales declined for the fourth straight month. Another metric revealed that the country’s economy barely grew in March.

At the same time, data published on Monday showed that the labor market continued to strengthen in April. The numbers revealed that the country’s unemployment rate declined to the lowest level in since 1974.

The sharp decline of the unemployment rate coincided with an increase in wages in the country. Wage growth that excludes bonus increased from 4.1% to 4.2%. With bonuses included, the country’s inflation rose from 5.6% to 7.0%.

The next key catalyst to watch will be the upcoming UK inflation data. Economists polled by Reuters believe that the headline consumer price index rose from 7.0% to 9.1% in April as the price of fuel jumped. Excluding food and oil, analysts expect the data to show that the country’s inflation rose from 5.7% to 6.2%.

The same trend is expected to be seen in the producer sector. They expect that the PPI input and output rose by 19% and 12.5%, respectively. These numbers will come two days after the BOE governor warned that inflation will continue rising even as it continues hiking interest rates.

The GBP/USD pair will react mildly to the latest US building permits and housing starts data. Estimates are that these numbers declined slightly in April.

GBP/USD Forecast

The GBP/USD pair formed a rounded bottom pattern after the strong UK unemployment rate data. As it rose, the metal moved above the important resistance level at 1.2400, which was the highest level on May 9 and 10. It has risen above the 25-day moving average while oscillators like the Relative Strength Index (RSI) and Stochastic have risen to the overbought level.

Therefore, the pair will likely retest the support at 1.2400 and then extend its gains. If this happens, the next key resistance level to watch will be 1.2600.

I do believe it is only a matter of time before the bears come in and punish the market yet again.

The Euro Stoxx 50 rallied rather significantly after dropping in the early hours on Tuesday, as it looks like the oversold condition has caused a bit of profit-taking. Ultimately, the market is likely to continue to see the negativity around the world as something to be shorted. However, markets do not go in one direction forever, so it is likely that a bit of a rally will probably get sold into. The €3600 level is an area that we had gapped below over the last couple of days, so it does suggest that we are going to see a lot of resistance.

If we do break above there, then the market has to deal with a lot of selling pressure from the previous trading, as the 50-day EMA is currently sitting just below the €3800 level. That is an area that we would have to break above to think that the Euro Stoxx 50 would suddenly turn around. After all, the index is a collection of nine different countries, and it is likely that the index will eventually see a lot of shorting pressure.

If we did break above all of that, specifically the €3800 level, then we could see a significant turnaround to reach the 200-day EMA. That obviously would be a huge turn of events, but ultimately this is a market that still has further to go before testing the previous lows, which is near the €3400 level. The market breaking down below that level could send the market much lower, in a huge flush. That being said, I think the only thing you can probably count on is a lot of volatility, so you should probably be cautious about position sizing, and look for rallies to sell into as it should be more or less a continuation of what we have been seeing for quite some time.

As long as there are a lot of concerns coming out of the European Union, and the European Central Bank has done nothing to increase liquidity, it is difficult to imagine a scenario where the Euro Stoxx 50 takes off. I do believe it is only a matter of time before the bears come in and punish the market yet again. Volatility should remain high, which is typically a negative sign.

There is a likelihood that the pair will have a bearish breakout as bears target the key support at 1.0500.

Bearish View

• Sell the EUR/USD and set a take-profit at 1.0450.
• Add a stop-loss at 1.0625.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0600 and add a take-profit at 1.0650.
• Add a stop-loss at 1.0500.

The EUR/USD is stuck close to the lowest level this year as investors focused on the interest rate decision by the Federal Reserve and the average US jobs data. The pair is trading at 1.0545, which is slightly above last week’s low of 1.0467.

Fed and NFP Data

The EUR/USD pair was in a tight range last week as investors reflected on the mixed events that happened last week. In the first place, data by Markit and the Institute of Supply Management (ISM) showed that the US and EU manufacturing and services sectors were cooling down as inflation continues.

The biggest event last week was the interest rate decision on Wednesday. In its decision, the bank decided to deliver its biggest interest rate hike in more than 20 years. It also hinted that it will continue hiking interest rates in the remaining meetings in a bid to counter the soaring inflation. Precisely, it noted that the neutral rate will be at 3%.

The EUR/USD pair also reacted to the latest American jobs data. The economy added 428k jobs in April while the unemployment rate moved to 3.6%. At the same time, wages held steady above 5% as the labor shortage continued rising.

In response to these jobs numbers, the bond and stock markets continued their sell-off. The 10-year bond yield, which moves inversely to prices, rose to a high of 3.14% while the 30-year rose to 3.2%. The Dow Jones and the Nasdaq 100 fell by more than 0.30%.

The pair will next react to important data from the United States. On Wednesday, the US will publish the latest consumer price index (CPI). Economists expect the data to show that inflation by 8.1% while core CPI rose by 6.1%. These numbers will provide signs that the American inflation has started peaking.

EUR/USD Forecast

The EUR/USD pair continued struggling last week as the market reflected on the latest jobs data and the FOMC decision. On the four-hour chart, the pair has formed a bearish flag pattern and moved below the 25-day and 50-day moving averages. The pair has also moved between the lower and middle lines of the Bollinger Bands.

Therefore, there is a likelihood that the pair will have a bearish breakout as bears target the key support at 1.0500. A move above the key resistance at 1.0600 will invalidate the bearish view.

There is a likelihood that the pair will have a bearish breakout as bears target the key support at 1.0500. 

Bearish View

• Sell the EUR/USD and set a take-profit at 1.0450.
• Add a stop-loss at 1.0625.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0600 and add a take-profit at 1.0650.
• Add a stop-loss at 1.0500.

The EUR/USD is stuck close to the lowest level this year as investors focused on the interest rate decision by the Federal Reserve and the average US jobs data. The pair is trading at 1.0545, which is slightly above last week’s low of 1.0467.

Fed and NFP Data

The EUR/USD pair was in a tight range last week as investors reflected on the mixed events that happened last week. In the first place, data by Markit and the Institute of Supply Management (ISM) showed that the US and EU manufacturing and services sectors were cooling down as inflation continues.

The biggest event last week was the interest rate decision on Wednesday. In its decision, the bank decided to deliver its biggest interest rate hike in more than 20 years. It also hinted that it will continue hiking interest rates in the remaining meetings in a bid to counter the soaring inflation. Precisely, it noted that the neutral rate will be at 3%.

The EUR/USD pair also reacted to the latest American jobs data. The economy added 428k jobs in April while the unemployment rate moved to 3.6%. At the same time, wages held steady above 5% as the labor shortage continued rising.

In response to these jobs numbers, the bond and stock markets continued their sell-off. The 10-year bond yield, which moves inversely to prices, rose to a high of 3.14% while the 30-year rose to 3.2%. The Dow Jones and the Nasdaq 100 fell by more than 0.30%.

The pair will next react to important data from the United States. On Wednesday, the US will publish the latest consumer price index (CPI). Economists expect the data to show that inflation by 8.1% while core CPI rose by 6.1%. These numbers will provide signs that the American inflation has started peaking.

EUR/USD Forecast

The EUR/USD pair continued struggling last week as the market reflected on the latest jobs data and the FOMC decision. On the four-hour chart, the pair has formed a bearish flag pattern and moved below the 25-day and 50-day moving averages. The pair has also moved between the lower and middle lines of the Bollinger Bands.

Therefore, there is a likelihood that the pair will have a bearish breakout as bears target the key support at 1.0500. A move above the key resistance at 1.0600 will invalidate the bearish view.

The pair will likely drop to 1.0473 and then resume the bullish trend.

Bullish View

• Set a buy-limit at 1.0473 and a take-profit at 1.0600.
• Add a stop-loss at 1.0400.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.0450 and a take-profit at 1.0350.
• Add a stop-loss at 1.0600.

The EUR/USD pair was little changed after the mixed economic data from the euro area and the upcoming interest rate decision by the Federal Reserve. It is trading at 1.0520, which is slightly below last Friday’s high of 1.0588.

Fed Decision Ahead

The EUR/USD pair declined slightly as investors react to the relatively weak consumer and business confidence data.

According to the European Commission, the bloc’s consumer confidence declined from -21.6 in March to -22.0 in April. This decline was worse than the median estimate of -16.9.

Additional data showed that service sentiment declined from 13.6 to 13.5 while industrial sentiment dropped to 9.0 to 7.9. These are important numbers because consumer and industrial confidence have an impact on spending.

Additional data showed that the manufacturing sector did relatively well in April. According to Markit, the German manufacturing PMI was at 55.5 in April, which was better than estimates. In Germany, the PMI dropped slightly to 54.6. Still, many manufacturers complained about the rising cost of doing business.

The EUR/USD pair declined as concerns about energy rose. EU members will conclude a meeting today where they are expected to place an embargo of Russian oil. The process will be phased and complete the process by end of the year. The decision accelerated after Berlin said that it had reduced its oil dependence to 12% and gas to 35%. The pair will react to the upcoming EU GDP and PPI data.

The next key mover for the pair will be the upcoming interest rate decision by the Federal Reserve. Economists expect that the Fed will start hiking interest rates by about 0.50%. The bank will also likely start its quantitative tightening (QT) policy. The rate hike will come at a time when data shows that the economy is weakening.

EUR/USD Forecast

The EUR/USD pair was little changed ahead of the upcoming interest rate decision. It is trading at 1.0515, which was slightly below last Friday’s high of 1.0600. On the four-hour chart, the pair moved slightly below the 25-day and 50-day moving averages while the Stochastic Oscillator has moved to the neutral level.

The pair has moved between the standard pivot point and and the first support. It also seems to be forming what looks like a double-bottom pattern whose upper chin is at 1.0600. The pair will likely drop to 1.0473 and then resume the bullish trend.