The pair will likely continue falling as sellers target the next key support at 1.1650.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.1650.
• Add a stop-loss at 1.1850.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.1800 and a take-profit at 1.1900.
• Add a stop-loss at 1.1700.

The GBP/USD exchange rate is hovering near its lowest level since March 2020 as the US dollar makes a strong comeback. The pair dropped to a low of 1.1745 on Monday, which was about 17.80% below the highest point this year.

US dollar makes a comeback

The GBP/USD price has come under intense pressure in the past few weeks because of the substantially strong US dollar. The dollar index rose to $109, which is a few points below its highest point in more than 20 years.

This rally accelerated after the latest hawkish statement by Jerome Powell and other Fed officials like Neel Kashkari, Charles Evans, and Mary Daly insisted that it was too early to declare victory on inflation.

Most Fed officials who talked at the Jackson Hole Symposium noted that the bank will continue hiking interest rates in the coming months. Analysts expect that the bank will hike by 0.50% after rising by 150 basis points in the past two meetings. Also, they also believe that rates will stay at high levels for some time.

The GBP/USD pair also remained under pressure as concerns about the UK economy continued. Last week, the country’s energy regulator decided to increase the energy price cap by 80% to 3,549 pounds as natural gas prices soared. Sadly, analysts expect that prices will continue rising in the coming months.

In a statement last week, analysts at Citigroup warned that the country’s inflation will rise to 18.3% in January. The Bank of England sees inflation rising to over 13% while Goldman Sachs expects that prices will rise to 15%.

Therefore, there is a likelihood that the UK will go through a recession soon, which will put the Bank of England in the difficult position of hiking during a recession.

GBP/USD forecast

The GBP/USD price continued its bearish trend as the US dollar continued gaining. It was trading at 1.1745 on Monday morning, which was slightly below the important support at 1.1769. This price was the lowest level on July 14. It has moved below the 25-day and 50-day moving averages.

The pair has also formed an inverted cup and handle pattern. In price action analysis, this pattern is usually a bearish sign. Therefore, the pair will likely continue falling as sellers target the next key support at 1.1650.

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The pair will likely continue falling 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 0.6953.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 0.6935 and a take-profit at 0.7025.
• Add a stop-loss at 0.6850.

The AUD/USD price retreated slightly ahead of the upcoming Jackson Hole Symposium in Wyoming and the second estimate of US GDP data. It was trading at 0.6900, which was slightly below this week’s high of 0.6966.

Jackson Hole and US GDP data

The AUD/USD price has been in a bearish trend in the past two weeks because of the substantially strong US dollar. The dollar index managed to recover from this month’s low of about $104 to $109 after the mixed minutes by the Federal Reserve.

The minutes showed that the bank’s officials were still concerned about the soaring inflation being entrenched permanently in the economy. At the same time, some members worried that the bank was possibly hiking too fast.

Therefore, investors will focus on the upcoming Jackson Hole Symposium where Jerome Powell will be the headline speaker. His statement will be notable since it will be the first one since the US published July’s consumer inflation data.

The data showed that inflation dropped from 9.1% in June to about 8.7% in July this year as gasoline prices dropped. Prices moved below $4 for the first time in months, signaling that inflation will also drop in August.

Fed officials usually use the Jackson Hole event to reset expectations. Therefore, there is a likelihood that the AUD/USD pair will show some volatility as it goes on.

The pair will also react mildly to the second estimate of US GDP data for the second quarter. In July, data by the statistics agency showed that the country’s economy contracted by 0.8% in Q2, after slowing by 0.9% in the previous quarter. As a result, the country moved into a technical recession in the quarter. The data will not have a major impact on the pair.

AUD/USD forecast

The AUD/USD pair has been in a bearish trend in the past few days. In this period, it has moved below the standard pivot point and the 25-day and 50-day exponential moving averages. At the same time, it has formed what looks like a head and shoulders (H&S) pattern, which is usually a bearish sign. The pair has moved slightly below the 38.2% Fibonacci Retracement level.

Therefore, the pair will likely continue falling as sellers target the next key psychological level at 0.6800. A move above the pivot point at 0.6955 will invalidate the bearish view.

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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 have a bearish breakout in the coming days.

Bearish View

• Set a sell-stop at 1.2025 and a take-profit at 1.1950.
• Add a stop-loss at 1.2160.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2145 and a take-profit at 1.2250.
• Add a stop-loss at 1.2050.

The GBP/USD price moved sideways on Wednesday as investors continued reacting to the upcoming US inflation data. The pair dropped to a low of 1.2067, which was lower than this month’s high of 1.3000.

US Inflation Data

The GBP/USD pair retreated slightly on Wednesday morning as the market refocused on the upcoming US inflation data. Inflation is an important part of the economy since it forms part of the Federal Reserve’s dual mandate.

Consumer and producer prices have been in a strong upward trend in the past few months. This growth was attributed to the rising price of fuel and the ongoing supply shortages. The lockdowns in China and the ongoing flight chaos have fueled higher prices.

Recently, however, there are signs that inflation has eased slightly in the past few weeks. For example, the price of gasoline has dropped to about $4 in most parts of the country. At the same time, many retailers like Target and Walmart have expressed concerns about their inventories.

Further, commodities like copper and iron ore have declined while house inventories has risen. It is against this backdrop that analysts expect that US inflation dropped modestly in July even though they expect it to remain above the Fed’s target of 2.0%.

Economists expect that the headline CPI dropped from 9.1% to 8.7% in July. Excluding the volatile food and energy prices, they believe that inflation rose slightly. American bond yields retreated slightly ahead of these numbers. Yield of the 10-year government bonds declined to 2.7%.

Meanwhile, there are concerns about the cost of living in the UK. British households are expected to spend more than 4.4k pounds a year on energy, according to Cornwall Insight. This will be a major shock to households that have seen wages grow at a slower pace.

GBP/USD Forecast

The GBP/USD pair declined slightly ahead of the latest US inflation data. It has moved slightly below the 25-day and 50-day moving averages while the MACD has moved below the neutral point. The pair has also moved substantially below the important resistance point at 1.2291.

At the same time, it has formed a small head and shoulders pattern. Therefore, the pair will likely have a bearish breakout in the coming days. If this happens, the next key support point to watch will be at 1.1950.

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There is a sense that Bitcoin and other cryptocurrency prices have seen their worst period this year.

Bullish view

• Set a buy-stop at 23,200 and a take-profit at 24,500.
• Add a stop-loss at 21,200.

Bearish view

• Sell the BTC/USD pair and set a take-profit at 21,000.
• Add a stop-loss at 23,500.

The BTC/USD crawled back during the American and Asian sessions even after the hawkish decision by the Federal Reserve. Bitcoin retested the important resistance level at $23,000, which was still about 10% below the highest point last week.

Fed rate decision and US earnings

The Federal Reserve concluded its two-day meeting on Wednesday and did what most analysts were expecting. The bank decided to hike interest rate by another 0.75%, bringing its year-to-date hike increase to 225 basis points. The dot plot revealed most officials expect the rate hike cycle will continue in the coming months.

The Fed is facing the challenge of lowering inflation without causing a recession. Data published this month showed that the headline consumer price index (CPI) rose to 9.1% in July, which was the highest point in over 4 decades.

Excluding the volatile food and energy products, inflation rose by almost 6%. Historically, risky assets like Bitcoin and stocks tend to underperform in a period when the Fed is extremely hawkish.

The BTC/USD pair rebound coincided with the cautious comeback of American stocks. The Dow Jones, Nasdaq 100, and S&P 500 indices rose even after earnings by big-tech companies like Alphabet and Microsoft missed analysts’ forecasts.

Most companies have published weak results. According to FactSet, companies have published the slowest earnings growth since 2020. Still, investors believe that the earnings are not as bad as expected. In the past few weeks, there have been a close correlation between stocks and cryptocurrencies.

Meanwhile, on-chain data show that exchanges are seeing higher demand in the past few days as investors buy the dip. There is a sense that Bitcoin and other cryptocurrency prices have seen their worst period this year.

BTC/USD forecast

The four-hour chart shows that the BTC/USD pair rose to a high of 24,318 last week. This was the highest point since June 13th. This week, the situation faded, which saw the price drop to about 20,733. It has moved above the 25-day and 50-day moving averages and is slightly above the lower side of the ascending channel. It has also formed a head and shoulders pattern.

The Relative Strength Index (RSI) has moved from the oversold level to 62. The pair will likely continue rebounding as buyers target last week’s high of 24,320.

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The pair will likely keep rising as buyers target the key resistance at 0.9800.

Bullish View

• Buy the USD/CHF pair and a take-profit at 0.9800.
• Add a stop-loss at 0.9660.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 0.9670 and a take-profit at 0.9600.
• Add a stop-loss at 0.9750.

The USD/CHF price has continued its upside as the US dollar continued its strong rally and after the latest Switzerland unemployment rate data. It is trading at 0.9711, which is the highest it has been since June 17th. It has risen by 2.31% above the lowest level in June.

SNB and Fed Divergence

The USD/CHF pair rallied as investors reacted to the rising risks of a recession. Most analysts believe that the world economy is heading towards its worst financial crisis since the Covid-19 pandemic. According to Wall Street Journal, odds of a recession have risen from 20% in January to 40% in June.

In periods of turmoil, investors rush to the safety of the US dollar. This explains why the dollar index has risen to a two-decade high of over $106. The currency has risen to a 20-year high against the euro and to a 24-year high against the yen.

The Swiss franc has done relatively better than other peers because of the surprise actions by the Swiss National Bank. In June, the bank surprised the market when it decided to hike interest rates by 0.50%. Most analysts were expecting that the bank would leave rates unchanged. The rate hike was the first time that the bank did so in more than a decade.

The USD/CHF pair held steady as investors reacted to the latest Swiss unemployment rate data. Data by the country’s statistics agency showed that the rate declined from 2.1% to 2.0%. This means that the country has one of the lowest unemployment rate globally.

The Swiss economic data came on the same day that the ADP is expected to publish its estimate of the latest private jobs data. Analysts expect the numbers to show that the sector created 200k jobs. The US will also publish the latest NFP data on Friday.

USD/CHF Forecast

The USD/CHF price declined sharply in June after the hawkish SNB decision. The pair dropped to a low of 0.9495. Since June 29th, the pair has been in a strong bullish trend. It has managed to move to the second resistance of the standard pivot point.

The pair moved above the 25-day moving average while the MACD has continued rising. It has formed a rounded bottom pattern. Therefore, the pair will likely keep rising as buyers target the key resistance at 0.9800.

The outlook for the pair is still bearish because of the hawkish Fed and the ongoing challenges in Europe.

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0300.
• Add a stop-loss at 1.0522.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 1.0522 and a take-profit at 1.0600.
• Add a stop-loss at 1.035.

The EUR/USD pair rose in the overnight session as the European energy crisis escalated and after the Fed made its rate decision. The pair rose to a high of 1.0460, which was sharply higher than the intraday low of 1.035.

Fed and ECB Meetings

The ECB held an emergency meeting to address the recent volatility in the European bond market. After last week’s monetary meeting, bond yields of vulnerable countries like Italy and Greece surged. Bond yields usually move inversely to prices. As a result, the spread between the safer German bonds and riskier Italian bonds surged to 2.34%.

In its meeting, the ECB decided to create a new “anti-fragmentation instrument” to address the crisis. While the bank did not offer more details about the instrument, analysts believe that the ECB will continue buying bonds from distressed countries. This will be similar to what it did between 2010 and 2012 when it bought bonds worth 220 billion euros.

The ECB meeting happened on the same day that Russia continued flexing its muscle in the region. The country’s energy company, Gazprom, decided to reduce the gas it pumps to Italy and Germany. The company attributed the decision to technical challenges caused by sanctions. Germany, on the other hand, accused it of being a political move.

This is a notable move since Russia is the biggest supplier of natural gas to Europe. At the same time, the bloc’s natural gas prices have helped push inflation to the highest level on record.

The EUR/USD pair also rose after the Federal Reserve decided to hike interest rates by 0.75% for the first time since 1994. In a press conference, Jerome Powell warned that the bank will likely deliver another 0.75% hike in July this year even after data showed that retail sales slumped in May.

EUR/USD Forecast

The EUR/USD pair pulled back after the hawkish Fed decision. It rose to a high of 1.045, which was higher than this week’s low of 1.035. It has formed an inverted cup and handle (C&P) pattern on the four-hour chart.

The pair also remains below the 25-day and 50-day moving averages. At the same time, the MACD has pointed upwards. The outlook for the pair is still bearish because of the hawkish Fed and the ongoing challenges in Europe. Therefore, the next key level to watch will be at 1.0300.

Because of the wedge pattern, the pair will likely retest the support at 1.0640.

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0640.
• Add a stop-loss at 1.0775.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0755 and a take-profit at 1.0800.
• Add a stop-loss at 1.0700.

The EUR/USD pair declined slightly as the outlook of the European economic outlook worsened. It dropped to a low of 1.0676, which was the lowest level since May 14th. It is still about 1% below the highest level in May.

EU Economic Outlook

The European Union’s economic outlook worsened on Tuesday after the bloc unveiled measures to gradually phase out Russian oil imports. The bloc’s countries will still receive Russian oil that flows using pipelines.

Perhaps, the most important restrictions were on oil shipping insurance since European companies have a strong market share in the industry. The bloc will ban its companies from insuring Russian cargo.

These announcements came on the same day that European countries published strong consumer inflation data. According to Eurostat, the bloc’s inflation surged to the highest level recorded. It blamed this trend to the soaring energy and food costs.

Therefore, the soaring inflation will put more pressure on the European Central Bank (ECB) as it considers rate hikes. Most economists expect the bank will hike interest rates by 0.25% in the July meeting and then exit negative rates in September.

The EUR/USD pair is also reacting to the relatively positive data from the United States. On Tuesday, data showed that home prices surged to a record level in March. The Case-Schiller house price index rose by 20% year-over-year in March. This signals that the housing market is still hot although signs of weakness have emerged.

Meanwhile, data by the Conference Board revealed that consumer confidence declined from 108.6 in April to 106.4 in May. This decline was better than the median estimate of 103.9. Focus now shifts to the upcoming jobs numbers that will come out in the next three days.

The US will release the JOLTs vacancies numbers on Wednesday followed by initial jobless claims and NFP on Thursday and Friday, respectively.

EUR/USD Forecast

The three-hour chart shows that the EUR/USD pair formed a rising wedge pattern that is shown in black. In price action analysis, this pattern is usually a bearish sign, which explains why it made a bearish breakout on Tuesday. The pair is still above the important support level at 1.0640, which was the highest point on May 5th.

The EUR/USD pair remains above the 50-period moving average. Therefore, because of the wedge pattern, the pair will likely retest the support at 1.0640.

There is a likelihood that Bitcoin will continue falling as bears target the important support level at $27,000.

Bearish View

• Sell the BTC/USD pair and set a take-profit at 27,000.
• Add a stop-loss at 31,000.
• Timeline: 2 days.

Bullish View

• Set a buy-stop at 30,500 and a take-profit at 32,000.
• Add a stop-loss at 28,000.

The BTC/USD pair is still in a consolidation mode in the past few days as demand for digital coins ease. Bitcoin is trading at $29,350, where it has been in the past few days. This price is about 15% above the lowest level this month.

Bitcoin Demand Slows

The BTC/USD pair has been in a tight range in the past few days as its correlation with American stocks continued. For example, as stocks rose sharply on Monday, Bitcoin rose by more than 200 points.

Now, Bitcoin has retreated as American futures point to a weak open after Snap downgraded its growth forecast. American stocks have had a close correlation with Bitcoin in the past few weeks.

Meanwhile, data in the options market show that investors believe that Bitcoin could keep falling in the next few weeks. For example, the closely watched put/call ratio has risen to the highest level in more than 12 months. This is a signal that the options market is still pessimistic.

At the same time, on-chain data show that the volume of Bitcoin being traded every day has been in a strong downward trend. Worse, long-term holders have started to distribute their holdings since most of them are currently in the loss-making territory.

The next key event that will move Bitcoin will be a statement by Jerome Powell. In it, the Fed chair will provide his opinion about the state of the economy and what the bank plans to do. In his recent statement, he warned about the pain that the market will feel when this tightening continues. The pair will also react to the upcoming minutes by the Federal Reserve.

BTC/USD Forecast

Turning to the daily chart, we see that the BTC/USD pair has been in a strong bearish trend in the past few days. The sell-off saw the price drop below the important support level at $32,935, which was the lowest level on January 24th. The downward trend is also being supported by the 25-day and 50-day moving averages.

Notably, the pair has formed what looks like a bearish flag pattern. Therefore, there is a likelihood that Bitcoin will continue falling as bears target the important support level at $27,000. A move above the resistance level at $31,450 will invalidate the bearish view.

The BTC/USD pair has been in a strong bullish trend in the past few days. 

Bullish view

• Buy the BTC/USD pair and set a take-profit at 31,000.
• Add a stop-loss at 28,000.
• Timeline: 1 day.

Bearish view

• Set a sell-stop at 28,900 and a take-profit at 26,000.
• Add a stop-loss at 31,000.

The BTC/USD pair stabilized during the weekend as investors went bottom fishing in the cryptocurrencies and tech industries. The pair is trading at 30,000, which is higher than last week’s low of 25,304.

Buying the dip

Bitcoin and other cryptocurrencies had one of the most difficult weeks on record. Their prices declined sharply as panicked investors sold their holdings. The biggest catalyst for the crypto meltdown was the collapse of Terra, the blockchain platform that created Terra USD.

LUNA, which was recently trading above $120 dropped to below $0.0002. This made it the biggest collapse in the blockchain industry considering that it had a market cap of over $64 billion.

Behind the scenes, Terra’s technology was used to build multiple DeFi platforms like Anchor protocol and Lido that had over $30 billion in assets at their peak. Therefore, the BTC/USD pair declined as investors continued to fear about the risks of contagion in the industry.

The BTC/USD pair is now rising following the strong performance of American tech stocks last week. The Nasdaq 100 index outperformed the S&P 500 as investors bought the dip. Some of the top tech stocks that did extremely well were companies like Affirm and Robinhood. In the past few months, there have been a close correlation between tech stocks and Bitcoin.

Meanwhile, investors are continuing to invest in blockchain companies. For example, during the weekend, Goldman Sachs and Barclays announced that they had invested in Elwood Technologies, a company that was started by billionaire Allan Howard. Similarly, Sam Bankman of FTX decided to invest in Robinhood. This is a sign that the two companies could decide to partner or merge.

BTC/USD Forecast

The BTC/USD pair has been in a strong bullish trend in the past few days. A closer look at the chart shows that the pair formed a hammer pattern on May 12th. In price action analysis, this pattern is usually a bullish sign.

A closer look also shows that it has formed a small head and shoulders pattern. It is also slightly below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the neutral level at 50.

Therefore, the pair will likely continue this relief rally as investors target the key resistance level at 31,000. A move below the support at 28,000 will invalidate the bullish view.