The EUR/USD has been very noisy during the trading session on Wednesday as we continue to hover just below the parity level. This is a particularly interesting pair because it is going to be highly driven by speculation on what the Federal Reserve is about to do. With the Jackson Hole Symposium going on at the moment, there is a lot of waiting around on Jerome Powell.

If the speech at 10 AM Eastern Standard Time on Friday is extraordinarily hawkish, that will probably send the Euro much lower, as the US dollar will strengthen. Even if we do rally after that speech, I suspect it is probably only a matter of time before we see sellers jump back into the market and punish the Euro. After all, the interest rate differential between the 2 is rather wide and is almost big enough to drive a truck through. Beyond that, there is a whole host of other issues in the European Union that you would have to be cognizant of.

Winter is Coming

• The most obvious issue is going to be the energy situation in the European Union, due to the fact that the Russians are holding natural gas hostage.
• At this point, it looks like it’s going to be a very brutal winter for the European Union, so it’s not a huge surprise to see the traders jumping all over the currency.
• Every time this market rallies, it’s likely that we will see plenty of sellers. The 50-Day EMA is just above the 1.02 level and is dropping quite significantly.

Even if we were to break above that level, then we have the 1.04 level to offer resistance, and then it’s possible that we could see the 1.05 level offer resistance as well. In fact, it’s not until we break the role that I would even consider buying the Euro, but really at this point in time I think that any rally at this point in time is going to be begging to see sellers come in and take advantage of “cheap US dollars.” On the downside, I anticipate that the market is going to go down to the 0.98 level, which is an area that historically has been important. Ultimately, this is a market that I think continues to see a lot of noise, and at this point, I hope it bounces so that I can start shorting.

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The NASDAQ 100 initially tried to rally on Tuesday but continues to see a bit of trouble. The 13,000 level has offered resistance, and at this point, it’s likely that we will continue to see a lot of “market memory” in this area, as it has been an area of both support and resistance multiple times over the last several years.

Now the market is sitting on the 50-Day EMA, and if we break down below the 50-Day EMA, then we could see a continuation to the downside, reaching the 12,500 level, possibly even the 12,000 level after that. Keep in mind that the NASDAQ 100 is only driven by a handful of stocks, so we will have to pay close attention to the company such as Tesla, Amazon, Alphabet, Microsoft, and the like. It’s also worth noting that the NASDAQ 100 is highly sensitive to interest rates, so pay close attention to the 10-year note. If interest rates continue to rally, that will have a negative effect on this market given enough time.

Market Waiting for Central Bankers Symposium

• Central bankers are speaking to Jackson Hole this week, and that could give market participants a bit of a “heads up” as to where monetary policy is going.
• That’s a bit surprising to say because the Federal Reserve and other central bankers have discussed the need to type monetary policy in order to fight inflation repeatedly.  However, it’s worth noting that Wall Street is currently at the end of a 14-year stretch of easy money, as the Federal Reserve has done everything it can to prop up its friends on Wall Street.
• The Federal Reserve officials don’t day trade anymore, so perhaps they will actually let it go.

It’s not until we make a fresh, new high that we would see this market go higher, perhaps reaching the 15,000 level. That would take quite a bit of momentum, so at this point in time I suspect is easier for this market to pull back in the short term. However, we will have to see where we end up at the end of the week before we get any type of serious clarity. In the meantime, keep very calm, and make sure that you are not overtrading nor are you using huge positions.

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We don’t see any major moves in sterling against the dollar until September.

The free collapse of the GBP/USD currency pair continues, and its losses reached the 1.1742 lowest support level for the currency pair in nearly 30 months. It is settling around the 1.1765 level at the time of writing the analysis. Despite the crash, it still has a chance of more downward pressure, especially if the busy US economic calendar or comments from Federal Reserve (Fed) officials allow US bond yields and the dollar to add to the gains.

The British pound was not helped by better-than-expected UK economic data and a sharp increase in market expectations for interest rates at the Bank of England (BoE) last week, often appearing to be the most vulnerable among the major currencies to a rebound in US bond yields and the US dollar. This was after a chorus of votes from the Federal Reserve’s rate-setting committee reminded the market in public comments that there was still a risk that the bank would opt for a straight 0.75% increase in US interest rates next month, stimulating US bond yields and the dollar.

With UK economic numbers ignoring and sterling losses mounting despite increases in UK bond yields that might normally have been supportive of the currency, this week’s S&P Global Purchasing Managers’ Index surveys may now be less important than risks emerging from the busy US economic calendar. Rising US bond yields and a stronger dollar dented risk appetite in the market on Friday and seemed to exacerbate losses for GBP/USD, which came close to revising multi-year lows under 1.18 support ahead of the weekend.

Joseph Caporso, an analyst at the Commonwealth Bank of Australia, said: “FOMC Chairman Powell is due to speak on Friday (midnight Sydney time). His speech was the first since the Federal Open Market Committee’s policy meeting in late July. We expect Powell to deliver an upbeat message on inflation in line with recent comments from FOMC officials. There is room for market pricing to raise the money rate, and to support the US dollar.”

Focus on Jackson Hole Symposium

The highlight of this week is Fed Chairman Jerome Powell’s speech at Jackson Hole’s annual symposium next Friday due to its potential to influence market expectations of US interest rates in September and beyond. However, before then, a number of US economic figures are due, and each will help determine market appetite for the dollar in the coming days.

This includes the second estimate of US GDP for the fourth quarter and the July reading of the Fed’s preferred measure of US inflation, the core PCE price index, which markets will be scrutinizing closely for anything to support signs of the mild inflation pressure recently noted in official actions. With financial markets recently expected to cut the September rate hike to 0.50% for the Federal Reserve, GBP/USD will be at risk this week from anything that pushes market rates back in favor of a larger 0.75% increase.

Anything could lead the market to abandon recent bets that the Federal Reserve may rush to cut US interest rates next year. At the same time, Flash PMI releases will provide a glimpse into how the UK economy is holding up. While sterling short positions have been cleared this week, we don’t see any major moves in sterling against the dollar until September.

Sterling dollar forecast:

• The recent losses of the GBP/USD currency pair pushed the technical indicators towards oversold levels.
• Forex traders will be in a cautious position to buy the currency pair as the strength of the US dollar continues.
• Currently, the closest support levels for the currency pair are 1.1720, 1.1650 and 1.1580, respectively, and from the last two levels, you can consider buying the currency pair with no risk.

On the other hand, breaking the resistance 1.2100 will be important to form an opposite channel for the current sharp bearish situation. The sterling will be affected by the announcement of the PMI readings for the manufacturing and services sectors in Britain.

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The ETH/USD markets have fallen significantly during the trading session on Friday to lose almost 7% and test the 50-Day EMA. In other words, the rally in Ethereum suddenly finds itself under extreme pressure. This furthermore will confirm the possibility of the risk appetite fading rather quickly, as the stock markets have seen similar moves over the last couple of days.

Ethereum has been rallying quite hard due to the idea of the network upgrade moving forward. Ethereum has led the cryptocurrency markets in general, but at this point in time, I think it’s worth noting that Bitcoin has also fallen rather hard, so it’s all taking a bit of a beating during the day. The fact that Ethereum led the market is probably not a huge surprise, but it’s also worth noting that the $2000 level has been like a hard top in this market.

Will there be explosive moves?

The 50-Day EMA does cause quite a bit of technical support, but at this point, there’s no real reason to think that the markets can bounce just because we’re there. It’s probably worth noting that the 50 Day EMA underneath and the 200 Day EMA above causes a bit of a squeeze as well, so I think we are about to get some type of explosive move. If I had to bet, it would more likely than not end up being a move to the downside. This will be especially true if we start to see a lot of risk appetite disappear in other markets as well.

On the other hand, if we do get a sudden “risk on move” around the world, that could probably help Ethereum as well.

• If Ethereum can break above the $2000 level, that would obviously be a major victory, and it most certainly would be positive if we can break above the 200 Day EMA, sitting right around the $2100 level.
• Any move above there has a lot of technical analysts looking at this as a technical uptrend. We have to assume that the theory would have quite a bit of follow-through at that point.
• I think we have a rather noisy move ahead of us, and more likely than not it’s going to be to the downside. $1200 could be targeted on the move lower, perhaps even all the way down to the $900 level.

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If we do break down below the 1.18 level, it’s likely that we can look towards 1.16 level next.

The GBP/USD currency pair has fallen again during trading on Thursday as we continue to see a lot of negativity when it comes to anything against the US dollar. Whether or not the British pound breaks down to a fresh, new low is a completely different story, but the fact that we have broken through the 1.20 level is of course an event worth paying attention to.

• Short-term rallies will almost certainly be selling opportunities in the market that has been negative for a while.
• We are more likely than not going to see a lot of noisy behavior, as choppiness has been one of the biggest problems in markets overall.
• As long as this is going to be the case, you need to be cautious with your position size as there has been a lot to chew through over the last several weeks.

Bank of England VS Federal Reserve

After all, the Bank of England has stated that they fully anticipate that the British economy is about to head into a recession. At the same time, there are a lot of questions as to whether or not the Federal Reserve is going to continue tightening at the pace they have been, which obviously would have a major influence on where things go next. Either way, we are in a downtrend so I don’t think there’s any reason to change the approach, as it is still a market that you are looking to fade on rallies. Furthermore, the 50 Day EMA above is more likely than not going to offer a bit of dynamic resistance, so it’s probably worth noting that area as a potential ceiling. If we do break down below the 1.18 level, it’s likely that we can look towards 1.16 level next. Ultimately, the only thing I think you can count on is a lot of noise, but that’s the same thing that you could have said about the last several weeks.

The US dollar is still the world’s favorite currency at the moment, so that’s the one thing that you need to keep in the back of your mind. It’s not until we break above the 1.25 level that I would consider going long of the British pound, even though we are pretty long in the tooth when it comes to this downtrend.

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It’s not until we clear the 1.06 level that I would consider buying the Euro.

The Euro bounced ever so slightly during the trading session on Wednesday as the FOMC Meeting Minutes came out. There are a few comments in that release that could suggest a bit of hesitation, but we are still playing the same game of trying to determine what people on the FOMC are going to do when they don’t seem to have any idea themselves.

This sets up for more noise and chop, which has been the case for most of the year. The EUR/USD pair is like a slow-moving train wreck, as the European Union seems to be a bug looking for a windshield at this point. Nonetheless, we still must deal with the market we are dealt. I think at this point it’s likely to remain somewhat sideways as we try to figure out what we’re going to do.

We have the 50 Day EMA sitting right around the 1.03 level. One would have to think that is a relatively good sign for resistance, and even if we were to break above there, it’s likely that we will see plenty of resistance at the 1.04 level as well. In other words, this is a market that I think given enough time will probably have to bust through a lot of selling pressure to go anywhere. However, in the short term it looks like we are due for a little bit of a bounce, perhaps back to the top of the overall range.

• Underneath, I see the 1.01 level as a major support level.
• If we were to break down below that level, it’s likely that the market would see another attempt to get to the parity level given enough time.
• The period level attracts a lot of attention from a psychological standpoint, so it certainly makes sense that it makes a nice target. · If we were to break down below the parity level, then we could see the Euro get absolutely pummeled.

On the upside, it’s not until we clear the 1.06 level that I would consider buying the Euro, and it would almost certainly have to do with interest rates tanking in the United States if that does in fact happen. That does not seem to be very likely, at least not in relation to the EU.

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Given enough time, I do think we will have a wicked pullback, but if we break above the 13,500 level, that opens up the gates for even more rallies.

• The NASDAQ 100 Index rallied a bit again on Friday as we continue to see the market “climb the wall of worry.” 
• After all, the market will continue to see a lot of noisy behavior, and therefore volatility. It is a difficult market to hold onto, but for those that have, they have been rewarded.

The 13,500 level above is likely to be a significant barrier, just as we had seen during the trading session on Thursday. Ultimately, if the market were to struggle in this area, then it’s likely that the market would struggle a bit of the time to try to get above there. On the other hand, if we break down below the massive red candlestick from the trading session on Thursday, then I think we have a pullback to the 13,000 level just waiting to happen.

Federal Reserve at the Center

Unfortunately, this will have nothing to do with the companies or the economy. Everything is going to be about the Federal Reserve and the idea of what they will be doing as far as interest rates. The Federal Reserve still swears up and down that they are going to do whatever they can to fight inflation, which is the same thing as saying they are going to keep monetary policy tight. However, Wall Street has run with the narrative that they are going to have to be less restrictive with monetary policy due to the fact that inflation has slowed a bit. However, it’s unfortunately still much above the Federal Reserve target rate, which is 2%. In fact, inflation is still roaring at 8.5% year-over-year, so it does make a certain amount of sense that we would see tight monetary policy going forward.

At this point, you can take a look at the 10-year yield in the United States to see how things play out for the stock market overall. If we see a sudden sharpening in rates, that would be negative for stocks. At the moment, the falling rates have propelled the market to the upside, but the reality is that the rates are falling because a lot of bond buyers are preparing for a recession. That obviously is not good for the market as well. Given enough time, I do think we will have a wicked pullback, but if we break above the 13,500 level, that opens up the gates for even more rallies. The average bear market rally is roughly 21%, which is just where we happen to be at.

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Keep an eye on the 10 year note yields more than anything else, as it could guide you as to whether or not the dollar or the pound becomes more attractive in the short term.

• The GBP/USD currency pair fell a bit on Friday to close out the week on its back foot.
• Ultimately, we should take a look at this through the prism of fading every short-term rally that we can.
• The 1.20 level underneath is an area where we see a lot of interest, due to the fact that it is a large, round, psychologically significant figure.
• If we break down below there, then it’s likely that we could go back down to the lows of the 1.18 level.

Shorting Opportunities Likely Ahead

The market breaking above the 1.2250 level could open up the possibility of a move to the 1.24 level. Ultimately, the market is likely to see a lot of noisy behavior, but that should be expected due to the fact that the interest rate markets are all over the place as well. Keep in mind that the market is in a longer-term downturn, so one would have to assume that sooner or later we get an opportunity to start shorting again.

The 1.24 level is a major resistance barrier from intermediate time frames, so breaking above that does make a statement. However, I need to see this market take out the 1.26 level to change the overall attitude, and I think it is probably a scenario where any rally gets looked at with suspicion, and I’d be more than willing to pay those rallies as the opportunity to pick up US dollars “on the cheap.” Remember, it was not long ago that the Bank of England raised interest rates by 50 basis points, but then also stated that the UK was more likely than not going to end up in a recession.

The 50-day EMA offers a little bit of intrigue to this area, but we have sliced through it enough times in the last couple of weeks that I think it’s just more or less showing that the market is confused. This is a scenario where the interest rates in America will continue to outperform the United Kingdom, so I think it’s probably wise to keep an eye on the 10 year note yields more than anything else, as it could guide you as to whether or not the dollar or the pound becomes more attractive in the short term.

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The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to record losses in its last sessions, by -0.18%, to lose about -58.13 points. It settled at the end of trading at the level of 32,774.42, after rising during trading at the beginning of the week on Monday by a rate of 0.09%.

Investors now see a 68.5% chance that the Fed will raise rates by 75 basis points at its next meeting in September, which would be the third big increase in a row.

Given the importance of the July CPI release which is due later Wednesday and will be watched closely by traders, economists anticipate that the decline in energy prices could help slow the pace of consumer price increases, which are at their highest levels in decades. YoY headline CPI rose 9.1% in June, the highest level in four decades. Economists polled by FactSet expect the core CPI to slow to 8.7%, but analysts warned that a hotter-than-expected reading on the headline or core number – which excludes volatile food and energy prices could rattle markets.

Analysts said a drop in the New York Fed’s gauge of consumer inflation expectations on Monday was a positive sign, but strong wage growth data in the July jobs report released on Friday and a sharp rise in unit labor costs in data released on Tuesday were a concern.

Dow Jones Technical Outlook

The index found some negative pressure after testing the ceiling of that bearish corrective price channel that limits its recent trading in the short term. It is shown in the attached chart for a period of time (daily), especially with the influx of negative signals on the relative strength indicators, after their arrival earlier. Overbought areas, all of this comes in light of the continuation of positive support for its trading above its simple moving average for the previous 50 days, which curbed the index’s recent losses.

Therefore, our expectations indicate a decline in the index during its upcoming trading, throughout the stability of the resistance 33,240, to target the support level 31,885.

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Over the longer run, I do think that Ethereum will take off, but I think we have a long way to go before we are “all clear.”

• The Ethereum market rallied a bit again during the trading session, but as you can see, we continue to hear a lot of noise just above current pricing.
• There is a major resistance barrier between the $1800 level and the $2000 level.
• If we can break through all that, then it would be a very bullish sign, but I just don’t see how that happens without some type of massive momentum-building exercise going on.

Pay Attention to Risk Appetite

Signs of exhaustion coming into the picture could get things going to the downside, in a bid to pull back to the 50-day EMA. The 50 Day EMA is currently near the $1380 level, so it’s likely that could be a target for a serious breakdown. Pay close attention to the risk appetite of traders around the world, as it could give you an idea as to how Ethereum plays out. After all, crypto is pretty far out on the risk spectrum, so traders need to feel fairly comfortable putting money to work in these riskier assets.

If we were to break above the $2000 level, it could be a severe change of trend, perhaps opening up this move to a much bigger run. This could be due to the merge coming, as well as quite a bit in the way of upgrades throughout the year. There seems to be good news on that front, but we have not been able to break out seriously at this point, so you have to keep that in mind as well. I think more likely than not, we are in the process of trying to build up a bit of an accumulation phase. That being said, the market is very noisy, so you have to be cautious about that as well.

On the downside, if we break down below the $1200 level, that could send Ethereum much lower. At that point, it’s likely that we could go down to the $900 level. The $900 level getting broken through could open up a move down to the $400 level for Ethereum. Ultimately, I think this noisiness will continue, so you should be cautious about putting too much into the market at one time, especially as the market has to worry about so many external influences as well. Over the longer run, I do think that Ethereum will take off, but I think we have a long way to go before we are “all clear.”

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