After attaining short term highs late last week, the USD/BRL has reversed lower and yesterday’s depths have it within sight of important support.

The USD/BRL closed near the 5.1037 level yesterday and a low of nearly 5.0700 was achieved. The depth of value tested yesterday touched values last seen on the 12^th and 15^th of August. Intriguingly after testing the lower marks in the second week of August, the USD/BRL currency pair then began to climb higher reaching a short term result of nearly 5.2190 on the 19^th.

The moves of the USD/BRL have mirrored the results of many major currency pairs, but traders should remember that transactional volumes remains choppy at times and volatile spikes can develop which seem to follow no correlation to global Forex momentarily. The opening for the USD/BRL today as always should be monitored, because current values are within sight of rather important technical support, which if tested could prove to be a dynamic lynchpin and cause price action turbulence.

Support near the 5.1000 USD/BRL should be monitored for Implications

If the 5.1000 support level is penetrated lower and the price is sustained beneath, this could cause speculators to believe the USD/BRL has the capability to test values seen the 10^th of August through the 16^th.  However, while trading near lows of around 5.0340 to 5.0950 the USD/BRL also saw strong moves higher which tested the fortitude of speculators. Risk management remains essential while wagering on the USD/BRL because tranquil days can turn into sudden storms.

• The price range of 5.0975 to 5.1140 should be watched as the USD/BRL opens because the pair often produces gaps which can prove troubling for speculators without risk tactics in place.
• Short term traders should be ready for choppy conditions as the USD/BRL tests lows and global Forex conditions remain within a nervous behavioral sentiment cloud.

Reversals are certain to occur in the USD/BRL as the Trading Range is Tested Short Term

Traders may be tempted to look for upside in the USD/BRL if the 5.0950 to 5.1025 support levels hold for short term wagers looking for quick hitting results.  Traders of the USD/BRL in the near time should be ready for a test of the current range and not be overly ambitious, meaning they should be willing to cash out winning trades if they develop and then wait for other technical ratios to develop.

The USD/BRL will certainly react to policy speeches which come from the Jackson Hole meetings over the next few days in Wyoming. Strong hawkish Federal Reserve policy will likely serve as counterweight for the USD/BRL as it tests support levels. If U.S central bank policy speeches in the next few days suggest more interest rate hikes beyond what is expected in September, the USD/BRL could find reason to be bought again and produce a test of resistance levels.

Brazilian Real Short Term Outlook:

Current Resistance:  5.1149

Current Support:  5.0929

High Target: 5.1726

Low Target:  5.0445

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The GBP/USD continues to lose ground in early trading today and the depths of the forex pair are bringing into view long term perspectives.

The GBP/USD is traversing near the 1.17500 level as of this writing.  Yesterday’s high of nearly 1.18310 began to wave early and support levels have continued to prove vulnerable. On the 17^th and 18^th of August the GBP/USD was still above the 1.20000 level and some speculators may have thought support lines could be held at those ratios. However, selling of the GBP/USD continues to grow and its pace downwards yesterday certainly quickened.

Long term charts and historical perspective will be debated as the value of the GBP/USD currency pair is challenged.  During coronavirus and the days of the Brexit chaos the GBP/USD did test low depths, but both those events were overcome. The forex pair was able to climb and reached what many financial houses – particularly in the U.K – believe was a more ‘reasonable’ equilibrium between 1.30000 and 1.40000 with outliers being seen on occasion. The price of the GBP/USD is now lower than it was during the worst of Brexit fears, when the 1.19000 ratio came into sight.

Coronavirus, Brexit and Ronal Reagan Topics of Discussion with GBP/USD

During coronavirus the GBP/USD sank below the 1.15000 level in March of 2020, but by September 2020 the currency pair was again above 1.30000. Traders and financial houses this time around may not believe a quick turnaround should be expected. Putting aside Brexit and coronavirus, the last time the GBP/USD traded this low was when Ronald Reagan was President of the U.S and Margaret Thatcher was leading the U.K. The USD was strong at that time due to massive growth created by Reagan’s economic policy. The GBP/USD touched the 1.05000 level in January of 1985.

• Decision on U.K Prime Minister will be known on September the 5^th.
• Can the BoE keep pace with the Fed to safeguard value of the GBP/USD?

Traders Looking for Reversals Higher Short Term in the GBP/USD need to be Careful

The GBP/USD does appear to be oversold from a historical perspective.  The GBP/USD has a long track record of trading at much higher values. However, short term traders who believe the forex pair is suddenly going to turn around and march higher need to keep their ambitions in check. Economic events are turbulent. U.S Federal Reserve policy remains unclear, but will likely remain hawkish over the next few months. And the decision regarding who will be the next Prime Minister of the U.K will be decided in a little less than two weeks.

Coming events this week via the central bankers meeting in Jackson Hole, Wyoming will factor into Forex via speeches made. The long term lows being tested by the GBP/USD are certainly attractive as speculative wagers, but traders should remain conservative. Psychological marks like the 1.17000 level may become a factor. If the 1.17300 mark is suddenly tested and the 1.172500 level were to prove weak, this could set off additional alarm bells. Traders need to use total risk management and keep their targets realistic. Looking for upside movement via natural reversals higher may seem tempting, but in the short term should be done with extreme caution.

GBP/USD Short Term Outlook:

Current Resistance: 1.17500

Current Support: 1.17400

High Target: 1.18240

Low Target: 1.16900

Rallies should continue to be a selling opportunity, especially as the 1.20 level above is a large, round, psychologically significant figure, 

• The GBP/USD pair has fallen significantly during the trading session on Friday as we ended the week.
• The market now looks likely to continue dropping given enough time, but ultimately, it’s a question of how quickly it’s going to happen. 
• The US dollar has been like a wrecking ball against almost everything, the British pound won’t be any different.
• The Bank of England has recently admitted that the British economy is almost certainly going into recession.

When you look at this chart, it’s obvious that the downtrend is very strong, and it will more likely than not continue. If we break down to a fresh, new low, then it’s likely we go down to the 1.15 level. The 1.15 level opens up the possibility of a move down the parity over the longer term. I think that’s a bit of a stretch, but I would also have said that 1.18 would be a stretch just a year ago. Rallies at this point in time should continue to be a selling opportunity, especially as the 1.20 level above is a large, round, psychologically significant figure, and an area that previously had a certain amount of support. That could bring in a certain amount of “market memory” in a market that continues to see a lot of reasons to drop.

How do interest rates affect the GBP/USD pair?

Keep in mind that the interest rates in America continue to climb in relation to other ones, so even if it does see a little bit of a pullback, the reality is that the spread between the United States and other economies should continue to cause downward pressure. In fact, it’s not until we can break above the 1.25 level, maybe even the 1.26 level that I would consider this a market that you can buy. Obviously, you need to see a little bit of a bounce in order to show signs of exhaustion or a continuation to start shorting yet again. I would not chase the trade in this area but would follow other traders. Ironically, one of the most obvious signals would be if the EUR/USD pair closes below parity on a daily close, even though it has nothing to do with this pair whatsoever. Either way, I have no interest in buying anytime soon and I would like to fade any signs of a bounce that fails.

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The USD/BRL has reacted to Monday’s early lower depths with a rather swift punch upwards which essentially creates more speculative opportunities.

The USD/BRL is situated near the 5.2778 realm as of this writing, but this is before the currency pair opens for trading today. Having hit a low of 5.1216 on Monday the USD/BRL has fought its way higher. The depths explored earlier this week last traded sincerely around the same values during the third week of June.

Traders of the USD/BLR as always should be ready for some type of opening spike and should wait until the market has initiated to pursue the currency pair in order to let things calm down for a moment.

Entry prices orders should be used when trading the USD/BRL to make sure price fills are within reason. Trading volumes in the USD/BRL currency pair are sometimes light which can lead to expectations not being met while opening a position. The USD/BRL is now close to perceived technical resistance. Intriguingly, the current value of the Forex pair is near important lows generated the day before last week’s U.S Fed interest rate hike.

USD/BRL resting near Important Resistance which should be watched

It may come as a surprise if the USD/BRL were to break current resistance with a sustained effort, but if this occurs it is likely a sign that large financial houses are acting on transactions the public is not aware of regarding business enterprises. Speculators’ who have the courage to step in and sell the USD/BRL at its current levels, after the currency pair opens today, may be making a bold but wise choice. If current resistance is proven to be rather durable it may serve as a solid launching point for short positions. 

Traders however need to be careful because although the USD/BRL did test significant support on Monday, the move upwards also highlighted questions which remain about the global economic picture. The U.S Fed is likely to continue raising interest rates, the lack of clarity regarding U.S inflation data and growth numbers could continue to foster dynamic trading conditions which cause volatility.

• Technically it will prove interesting to see if the 5.2000 to 5.2900 ratios can develop as a solid trading range for the USD/BRL.
• If current resistance proves weak this could mean financial houses are not comfortable regarding economic outlook and remain skeptical, which could produce additional buying of the USD/BRL.

Final Thoughts about Current Trading Perceptions:

The range the USD/BRL is now within should be watched carefully.  If current resistance levels prove adequate this could be a solid bearish signal for the USD/BRL. However, nervous sentiment is still strong within the global markets and volatility may continue to be seen near term. Risk management is essential. Traders looking for lower prices via selling positions should use realistic targets and not be overly ambitious.

Brazilian Real Short-Term Outlook

Current Resistance:  5.2885

Current Support:  5.2575

High Target: 5.3217

Low Target:  5.1859

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The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to record losses for the second day in a row, by -1.23%. It lost about -402.230 points and settled at the end of trading at the level of 32,396.171, after it fell slightly during Monday’s trading by a rate of -0.14%.

Stocks opened lower as geopolitical tensions heightened due to US House Speaker Nancy Pelosi’s visit to Taiwan, defying Chinese authorities who have warned of dire consequences if the trip occurs.

The Dow Jones index led the decline in Wall Street, the profit-related decline in Caterpillar Inc. put pressure on the Dow Jones index. Visa shares also affected the performance of the index, after it fell on the negative statements by the great investor Bill Ackman, who called while speaking, credit card giant Visa is offering payment services to Pornhub.

CNN reported that US House Speaker Nancy Pelosi’s visit to Taipei is the first time a US House speaker has visited Taiwan in 25 years. The news report said her trip comes at a low point in US-China relations and despite the Biden administration’s warnings of pause, China considers Taiwan part of its territory and has warned against responding to the visit.

US Economic News

San Francisco Fed President Mary Daly reportedly said on Tuesday that inflation figures are “too high” and that the Fed’s work to ease price pressures in the US economy is “not yet complete.” Speaking on the same day, Chicago Fed President Charles said Evans said a 50 basis point increase in the target rate at the September meeting was reasonable and had not hesitated to support another 75 basis point increase.

Cleveland Federal Reserve President Loretta Meester said Tuesday in a live interview with The Washington Post Live that the decline in second-quarter gross domestic product reported last week, the second consecutive quarterly decline, does not mean the US economy is in a recession. Meester said the recent moderation in consumer demand is what the Fed wants to see, and that bringing demand back in line with supply is key to slowing inflation.

US job opportunities fell to 10.7 million in June from 11.3 million in the previous month, according to the Bureau of Labor Statistics. The estimate in a survey compiled by Bloomberg was about 11 million. Employment fell to 6.4 million from 6.5 million bringing the employment rate down to 4.2% from 4.3%. At the same time, the number of people leaving their jobs decreased but remained above the level a year ago as workers were confident of finding another job.

Dow Jones Technical Outlook

Technically, the index faced some pressure as a result of the relative strength indicators reaching overbought areas. The beginning of the emergence of a negative crossover in them, especially amid its trading along a corrective bearish slope line in the short term. This comes despite the continuation of the positive support for its trading above its simple moving average for the previous 50 days.

Therefore, our expectations indicate more decline for the index during its upcoming trading, as long as the resistance 33,240 remains intact, to target the support level 31,885.

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In early trading this morning the USD/JPY hit a low around the 134.782 area temporarily, but since touching this ratio the Forex pair has reversed higher. The long term bullish run of the USD/JPY touched values not seen since 1998 recently and speculators may not want to give up on this higher territory quite yet. While the lower move the past handful of days maybe enticing, short term traders need to acknowledge a few considerations.

The USD/JPY was trading near 137.000 on the 29^th of June and this morning’s low was a healthy dose lower with a recorded value of nearly 134.782 as written above previously.  However, traders need to know that U.S financial institutions are on holiday today, and many of the American financial houses began shuttering their doors last Friday. While such a simple reason for a lack of buying from the U.S side may sound too easy, it is often the evident things that prove worthwhile.

Yes, the USD/JPY does look absurdly high and overbought, and speculative traders cannot be blamed for wanting to attempt contrarian positions which sell the USD/JPY. However, the long term trend cannot be merely ignored. Technical traders do have a reason to suspect the Japanese Yen is far too weak and will eventually begin to get stronger and make the USD/JPY move lower, but when this will take place is still an open question.

Short term support levels this morning seemed to cause a bounce higher, producing purchasing of the USD/JPY.  With the absence of the U.S financial institutions until tomorrow, trading conditions are likely to remain choppy over the next twenty four hours. However, upon the return of full market volume to Forex, the USD/JPY is likely to search for equilibrium. If the USD/JPY is languishing below the 135.250 mark as of tomorrow, this may be considered a place to attempt buying positions and search for upside momentum.

The USD/JPY has shown a strong ability to trend and betting against this long term move to suddenly disappear in the near term may prove an expensive wager.  The U.S Federal Reserve is maintaining its hawkish interest rate rhetoric while the Bank of Japan continues to remain dovish. These viewpoints are unlikely to change within the next couple of weeks. Support levels in the near term for the USD/JPY may prove to be intriguing places to ignite buying positions, which seek moves towards technical resistance the next couple of days as speculative wagers.

USD/JPY Short Term Outlook

Current Resistance: 135.610

Current Support: 135.130

High Target: 136.020

Low Target: 134.600

A fall in value early this weekend to new long term depths did put AVAX/USD under 14.0000 briefly, a slight reversal higher has occurred but lows remain in sight.

As of this morning, AVAX/USD is trading near 15.6500, this after being able to reach a high of nearly 16.3400 late on Sunday. Avalanche has suffered a severe fall in value like its major counterparts, but its low water marks on Saturday which went below the 14.0000 still managed to float above prices seen in mid-August and late July of 2021. The broad cryptocurrency market remains extremely fragile, and technically while reversals higher have been achieved in the past half day, lows are clearly within sight and threatening.

AVAX/USD produces fast trading and price velocity has been dangerous the past few days. Speculators brave enough to participate in cryptocurrencies, should certainly use stop loss and take profit orders while engaging in trading. If current support levels of 15.2000 begin to see a flirtation and start to appear vulnerable, speculators may believe that further lows will rapidly be demonstrated. A fall below the 15.1000 mark could stir additional selling in AVAX/USD.

While broad market conditions remain extremely nervous and Avalanche is in sight of long term lows, technical traders may be intrigued that AVAX/USD still has lower depths to explore.  If the bearish trend stays intact and the slight bounce higher produced yesterday and early today fade, AVAX/USD could begin to test lower depths below the 15.0000 which may attract the attention of more bearish speculators.

Yes, AVAX/USD could certainly move higher and reversals upwards should always be expected, because no asset moves in one direction when trading. However, the long term downward trajectory within the cryptocurrency market and Avalanche are self-evident, and betting against this trend should be done only with extreme caution and great risk taking tactics. Being a contrarian under the current market conditions may prove to be extremely dangerous, thus maintaining a selling stance appears to be the logical choice for most traders.

If AVAX/USD does traverse slightly higher and challenges resistance near the 15.7000 to 15.8500 ratios, speculators may want to consider short positions.  If Avalanche cannot maintain a price above the 16.0000 juncture and continues to keep its lower depths within sight, traders may want to prepare for the potential of the lower trajectory to stay in effect. Selling AVAX/USD remains the seemingly worthwhile wager for speculators in the near term.

Avalanche Short-Term Outlook

Current Resistance: 16.09000000

Current Support: 15.18000000

High Target: 17.12000000

Low Target: 13.98000000

The British pound has fallen significantly during the Monday session as the 1.22 level has been pierced, just as the recent lows have been broken. The interest rates in the 10-year note continue to rise in America, which will make the US dollar much more attractive. At this point, the Federal Reserve is backed into a corner, and therefore will be forced to tighten monetary policy going forward. This makes the US dollar much more attractive, especially when it is looked at through the prism of a safety asset.

At this point, I would anticipate that the British pound should go lower, reaching the 1.20 handle. The 1.20 handle is an area that has been important more than once, so therefore it’s very likely that we will continue to see a lot of fighting in that area. If we can break down below there, then it’s likely that we will continue to see even further losses, and I just don’t see how the British pound turn things around.

More likely than not, we may get a short-term rally, but that rally for me is going to be an opportunity to pick up “cheap US dollars.” The 1.24 level is what I think could be the ceiling right now, but this remains to be seen. I don’t think that we have enough momentum to continue to go higher, and therefore we need to see signs of exhaustion and therefore we can jump on them. I just don’t see how the Federal Reserve has the ability to change its trajectory or a now, due to the fact that inflation in America is raging at levels not seen in over 40 years. Because of this, we will continue to see the Federal Reserve have to tighten, and therefore we will continue to see the US dollar strengthen.

Something is eventually going to break. I don’t necessarily think it will be the British pound, but there are a lot of candidates out there. We have already seen crypto completely collapse, and it’s probably only a matter of time before the credit markets do the same. At this point, the US dollar is just about the only asset that you want to own, so it won’t be any different here.

The EUR/USD pair found a strong resistance as investors refocus on the upcoming European Central Bank (ECB) decision and US consumer inflation data.

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0627.
• Add a stop-loss at 1.0791.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0746 and add a take-profit at 1.0800.
• Add a stop-loss at 1.0675.

The EUR/USD pair found a strong resistance as investors refocus on the upcoming European Central Bank (ECB) decision and US consumer inflation data. It is trading at 1.0697, which is slightly below last week’s high of 1.0787.

Focus on the ECB

The main catalyst for the EUR/USD pair this week will be the upcoming interest rate decision by the ECB. This will be a pivotal meeting because it will signal what the bank will do later this year.

Most analysts expect the data to show that the central bank will leave interest rates unchanged and provide signals that it will hike in July. It will be the first time that the bank has hiked interest rates in more than a decade.

At the same time, the ECB will likely commit itself to create a new bond-buying program to cushion vulnerable economies like Italy. The bank already has about 200 billion euros to spend on purchasing stressed government bonds. On Monday, the gap between Italy’s and German’s 10-year yield fell from last week’s high of 2.14% to 2.07%. The spread has been in a strong bullish trend in the past few weeks.

The ECB decision comes at a time when the Eurozone economy is in a crisis as inflation surges. Data published last week showed that the bloc’s inflation has surged to a record high of 8.1%. Analysts expect that the bloc’s inflation will keep rising in the coming months as the bloc moves to buy oil and natural gas from other countries.

The EUR/USD pair will also react to the upcoming Euro area GDP numbers that are scheduled for Wednesday. Analysts expect the data to show that the bloc’s economy expanded by 5.1% on a year-on-year basis.

EUR/USD Forecast

The EUR/USD pair has been in a strong bullish trend in the past few weeks. It rose to a high of 1.0791, which was the highest level on April 22. Now, it has formed what looks like a head and shoulders pattern.

The pair has moved slightly below the 25-period and 50-period moving averages while the MACD has moved to the neutral point. The pair has moved below the 50% Fibonacci Retracement level. Therefore, the pair will likely keep falling as bears target the key support level at 1.0640.

It seems like the bearish trend will continue as bears target the key support level at 1.2418, which was the 23.6% Fibonacci retracement level.

Bearish View

• Sell the GBP/USD and set a take-profit at 1.2418.
• Add a stop-loss at 1.2550.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 1.2540 and a take-profit at 1.2600.
• Add a stop-loss at 22450.

The GBP/USD pair is hovering near its lowest level since May 20th after the positive data from the UK. The pair is trading at 1.2488, which is about 2% below the highest level on May 27th ahead of the important US inflation data.

US Dollar Stages Comeback

The GBP/USD pair has retreated in the past few days as investors focus on the relatively strong US dollar. The closely-watched dollar index has risen in the past two straight days as investors continue pricing more risks in the market.

Last week, the market received key warning signs from corporate America. Jamie Dimon, the CEO of the biggest bank in the United States, warned that the situation was worsening. Tesla’s Elon Musk also issued a similar warning.

A few weeks before, important companies like Walmart and Target which employ a vast number of Americans warned that inflation was a major challenge. Therefore, investors are now anticipating a potential recession, which explains why stocks have retreated.

The GBP/USD retreated after the better-than-expected jobs numbers from the US made the case that the Federal Reserve will continue tightening in the coming months. The bank has already committed to delivering at least three more 0.50% hikes in the coming meetings.

Looking ahead, the pair will react to the upcoming US consumer inflation data that will come out on Friday. Analysts expect these numbers to show that the headline CPI declined from 8.3% in April to 8.1% in May. Excluding the volatile food and energy prices, analysts expect that inflation fell from 6.2% to 5.9%. This will be a sign that inflation is now stabilizing.

The GBP/USD pair will also react to the reopening of the UK after the country’s long public holiday in honor of Queen Elizabeth.

GBP/USD Forecast

The GBP/USD pair formed a rising wedge pattern that is shown in black. In price action analysis, this pattern is usually a bearish sign. This breakout happened last week when it move below the 25-day and 50-day moving averages. Now, the pair is approaching the important support at 1.2465, which was the lowest level on June 1.

Therefore, it seems like the bearish trend will continue as bears target the key support level at 1.2418, which was the 23.6% Fibonacci retracement level.