• The EUR/USD rate remains stable under downward pressure below the parity rate though, there is little hope that even a significant hike in interest rates might rescue it.
•  The euro-dollar pair’s losses this week reached the support level of 0.9900, the lowest in 20 years, and it is settling around the 0.9970 level at the time of writing the analysis.
• The currency pair may remain stable around its losses until important and influential events, led by the announcement of the US economic growth rate today, and then the Jackson Hole symposium.

Rather than monetary policy, it is the interrelated threats of a recession and a Russian energy halt that are weighing on the single European currency – the euro -, according to analysts. Although traders are now preparing for a one-percentage point rate hike by October, such dynamics are difficult for the ECB to contend with, even if it uses the kind of massive moves in borrowing costs that the Federal Reserve recently enacted.

Investors are boosting the European Central Bank’s bets and are pricing in one point of the gains by October. “Price has not been in the driving seat in the forex markets, particularly in the last month – and it really is about the dynamics of global growth,” said Sam Ziv, FX analyst at JPMorgan Private Bank. They are not supportive of currencies when they are made to keep inflation expectations steady and hurt growth expectations at the same time.”

Borrowing Costs are Raised

Facing the fastest rate of inflation since the introduction of the euro, the European Central Bank raised borrowing costs for the first time in more than a decade last month, raising its deposit rate by half a point to 0%. As investors anticipate another move of this magnitude on Sept. 8, storm clouds are converging over the 19-nation eurozone economy, as the cost-of-living crisis and Russia’s invasion of Ukraine put pressure on households and businesses.

Business surveys released Tuesday by S&P Global showed activity contracting for a second month, with the pandemic rebounding in areas like tourism almost to a halt. Meanwhile, a weak euro, which hit a two-decade low against the dollar this week, is boosting inflation by making imports more expensive – a particular concern when most of the region’s inflation is driven by energy that is largely priced in dollars. The bleak background means that even an unprecedented three-quarters of a point rate hike will not beneficially boost the euro, according to Dirk Schumacher, economist at Natixis in Frankfurt.

Indeed, ECB Executive Board Member Fabio Panetta on Tuesday urged caution in planning next steps as the prospect of a downturn in the eurozone becomes more likely than ever. “If we had a big slowdown or even a recession, that would ease inflationary pressures,” he added at a panel discussion in Milan. However, colleague Isabel Schnabel acknowledged the negative impact of a weak currency on inflation expectations, telling Reuters that it is all the more important when the economy faces an energy price shock. Money markets priced a half-point increase next month and put odds of 20% at 75 basis points. Moreover, traders are betting 130 basis points to tighten by the end of the year, with the deposit rate eventually rising to 2% by September 2023.

Euro forecast against the dollar:

I still see that the EUR/USD may hold on to its recent losses until the reaction from the Jackson Hole symposium. It is clear that he is ignoring the results of the US economic data and focusing more heavily on that seminar. The general trend of the EUR/USD pair is still bearish and stability below the parity price will move the bears towards stronger support levels, the closest to them currently are 0.9920, 0.9855 and 0.9790, respectively.

On the upside and according to the performance on the daily chart, breaking the resistance 1.0200 will be important to breach the sharp bearish channel recently. Today, the euro will be affected by the announcement of the growth rate of the German economy, along with the reading of the Ifo index, and the US dollar will be affected by the announcement of the growth rate of the US economy and the number of jobless claims.

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Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at a decrease in the recent trading at the intraday levels, to record slight daily losses until the moment of writing this report, by -0.01%. It settled at the price of $9.279 per million British thermal units, after its decline during yesterday’s trading by -0.03%.

September gas futures contracts in Nymex settled at $9,330 per million British thermal units, an estimated increase of 13.7 cents from Tuesday’s close, while October futures contracts rose 14.5 cents to $9,300.

NGI’s Spot Gas National Avg. Spot gas prices fell in most areas of the US, even as hot weather continued on the West Coast by 31.0 cents to $8.935.

Prices stabilized after a volatile session on Tuesday when they hit $10 per million British thermal units for the first time since 2008, before pulling back on news of a delay in the Freeport LNG plant’s return to operation, which will continue to affect demand by hurting the ability to Sending fuel abroad.

The US Energy Information Administration (EIA) is set to provide its weekly update on domestic inventories later Thursday, with the market anticipating above-average storage that may ease some concerns.

Natural Gas Technical Outlook

• The price is trying to gain positive momentum that might help it breach the pivotal resistance level 9.600.
• The resistance caused the price to rebound from its recent highs.
• It is trying to drain some of its clear overbought by the relative strength indicators, especially with the influx of negative signals from them.

All of this comes in light of the dominance of the main bullish trend over the medium and short term along with major and minor slope lines, as shown in the attached chart for a (daily) period, with the positive pressure continuing to trade above its simple moving average for the previous 50 days.

Therefore, our expectations indicate that the scenario of a rise in natural gas during its upcoming trading is likely, but on condition that it first overcome the obstacle of the resistance level 9.600, and then target the resistance level of 10.70.

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Today’s recommendation on the lira against the dollar

Risk 0.50%.

None of yesterday’s buy or sell transactions were activated

Best selling entry points

• Entering a short position with a pending order from levels of 18.33
• Set a stop-loss point to close the lowest support levels at 18.55.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 17.70.

Best entry points buy

• Entering a buy position with a pending order from levels of 17.85
• The best points for setting stop-loss are closing the highest levels of 17.54.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 18.31

Turkish lira analysis

According to Vid data, Turkey’s total revenues in July were about 196.98 billion Turkish liras, while expenditures were about 260.999 billion liras, bringing the total deficit in July to 64 billion liras. During 2022, the revenues of the general budget in the country were recorded at about 1.642 trillion pounds, compared to the expenditures of 1.432 trillion pounds, as the general budget surplus recorded about 29.5 billion pounds. The lira was not significantly affected, as it quietly traded near its lowest levels during 2022. It is an image that reflects the extent of the Turkish Central Bank’s control over setting a ceiling for the lira price.

Technical Outlook for Turkish Lira

The USD/TRY currency pair settled within the same narrow trading range shown on the chart. The pair traded the highest support levels, which are concentrated at 17.85 and 17.75 levels, respectively. The lira is trading below the resistance levels at 18.00 and 18.07, respectively. The pair is also trading above the 50, 100 and 200 moving averages, on the four-hour time frame as well as on the 60-minute time frame, indicating the long-term bullish trend. The chance of the lira rising against the dollar is still slim as the pair is heading in an overall bullish trend. As each decline of the pair represents a good buying opportunity, please adhere to the numbers in the recommendation, with the need to maintain capital management.

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The EUR/USD pair experienced near and far setbacks during last week’s trading, but the risk of a long-term rise in US government bond yields would threaten to push it to July lows if US inflation figures further tighten the Fed. With the start of this week’s trading, the EUR/USD pair settled in tight surroundings between the level of 1.0160 and the level of 1.0222 and settled around the level of 1.0190 in the beginning of trading today, Tuesday.

During last week’s trading, the Euro-dollar approached the resistance 1.0300, but its attempts to recover were halted again due to the seemingly increasing risks to energy supplies in Germany and some other European countries. But the Russian government’s continued attempt to use gas supplies to force it out of European sanctions over its war in Ukraine aborted the euro’s early attempt to recover last week and could remain a headwind for the single European currency in the coming days.

Influencing Factors:

 Jordan Rochester, Nomura Strategist says. Electricity prices in Europe are setting new record highs this week, and while it’s strange that this alone didn’t push the EUR/USD lower, it’s only a matter of time, in our view. This week, a drought in Germany may cause the water level on the Rhine to drop below 40 cm (the shallower part of the central part of the river), making the river almost impassable for cargo,” he added. “About 30% of the coal is transported Germany’s iron ore and natural gas are along the river, with drought levels in 2018 dropping 0.4-0.7% of 2018 GDP. If this happens, Rochester and colleagues warned Friday, it would add further delays in the supply chain, but also make production Coal electricity is more difficult at a time when Germany is trying to move away from Russian gas.”

It wasn’t just energy supply risks that weighed on the euro’s ankles, as the message coming from the latest US economic data was also a mounting headwind after reviving a previously stalled rally in US bond yields and the dollar last week. It comes after the Institute for Supply Management’s Purchasing Managers’ Index (ISM) surveys of the US manufacturing and services sectors rose for July in contrast to their more dismal peers in Standard & Poor’s Global, which suggested late last month that the all-important services sector contracted in July.

Meanwhile, last Friday’s US non-farm payrolls report offered an open mockery of the notion that the US economy may be close to recession and was most notable for the strong increase in average hourly wage growth, which could have implications for the Fed’s policy outlook.

Pooja Sriram, an economist at Barclays, wrote in a research briefing Friday: “Along with signs of a weak labor supply, risks to sustained wages and inflationary pressures appear to be rising.”

After the strong July employment report, a 75 basis point rise at the September FOMC meeting is still on the table, with the potential to lift that volume. However, we maintain our baseline forecast for a 50bp rise, given that the Fed will have a wide range of data to consider in the extended meeting period (~7 weeks), including the print of July CPI this week and a set other data from employment and consumer price index in September”.

In general, the dollar has fallen with the euro benefiting since mid-July after a series of bad economic data that indicated that the US economy is slowing down faster than expected by the Federal Reserve, which also indicated late last month that it is likely to slow the pace of rate hikes.

Economic data released last week raised expectations about the Federal Reserve’s interest rate in September and gave a new lease of life to US bond yields and the dollar, which could rise further in the coming days if Wednesday’s US inflation numbers provide more incitement to Fed hawks.

Forecast for EUR/USD:

On the daily chart below, the EUR/USD is in a neutral position with a bearish bias, and a break of the 1.0130 support over the same time period will bring the bears enough momentum to move below the parity price and more. On the upside, moving towards the 1.0330 and 1.0400 resistance levels will be important for the upside trend to hold and in general I still prefer to sell EURUSD from every upside level.

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We expect the price to rise from the current levels or the closest levels of support.

Today’s recommendation on the lira against the dollar

Risk 0.50%.

None of the buy or sell trades of the recommendation were activated yesterday

Best selling entry points

• Entering a short position with a pending order from levels 17.45
• Set a stop loss point to close the lowest support levels 17.65.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 16.40.

Best entry points buy

• Entering a long position with a pending order from 16.63 levels
• The best points for setting the stop loss are closing the highest levels of 16.28.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 16.99

The lira fell in the day’s trading after two days of recording strong gains, investors followed the statements of Turkish President Recep Tayyip Erdogan during yesterday, Monday, in which he promised that the country will try to reduce the spiraling inflation to “reasonable” levels by February or March 2023. He also called Erdogan Turkish citizens to “more patience” during these fluctuations in price changes. “Despite the stability of the system, it is clear that we will bear the burden of inflation for some time,” the president of Turkey emphasized. Erdogan stated that the extra budget proposal is currently under discussion in the Turkish Grand National Assembly, as “the discrepancy caused by high inflation in income and expenditure figures revealed the need for “. Analysts believe that the Turkish president’s statements aim to add some stability to the price of the lira, which has compensated part of its losses during the current year

On the technical front, the Turkish lira fell against the US dollar, as the pair returned to the general upward trend, with the pair trading above the support levels that are concentrated at 16.40 and 16.00 levels, respectively. At the same time, the lira is trading below the resistance levels at 16.77 and 17.10, respectively. The pair also traded below the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame, indicating a decline in the medium term. The pair bounced from the moving average 50 on the daily time frame. At the same time, the pair bounced from strong support levels represented in the 50 Fibonacci levels on the ascending wave that started from 05-03-2022 until the top recorded on 06-21-2022. We expect the price to rise from the current levels or the closest levels of support shown through the recommendation numbers. Please adhere to the numbers in the recommendation with the need to maintain capital management.

The Governor of the US Central Bank, Jerome Powell, reiterated his bank’s intention to raise the pace of increasing US interest rates at any rates in order to control the bank’s goal in US inflation. It reached its highest level in 40 years and is likely to increase. What Powell mentioned is a confirmation of what he mentioned previously, and accordingly, the price of the currency pair EUR/USD remained stable in its recent trading range. The price of the euro dollar is now around the 1.0582 level, and yesterday it jumped to the highest resistance 1.0605 for the currency pair since the start of trading this week.

Eurozone consumer confidence is nearing its lowest level since the pandemic’s early months, as high inflation weighs on purchasing power and households fear the spillover effects of the Russian war in Ukraine. Accordingly, a monthly gauge from the European Commission showed a reading of confidence at -23.6 in June down from 21.1 in May and worse than a reading of -20.5, the median estimate in a Bloomberg survey of economists.

This was below an all-time low in April 2020 as Covid-19 swept the continent.

The war on the borders of the currency bloc and the renewed pressure on global supply chains have severely affected the Eurozone. Therefore, economic growth is expected to slow later this year – with some banks warning of a possible recession, while inflation has accelerated to more than four times the European Central Bank’s 2% target. Consumer spending has held up so far, as wasteful vacations after two years of coronavirus shutdowns offset cuts elsewhere. However, there is doubt that the impulse can continue, especially as the European Central Bank prepares to raise interest rates for the first time in more than a decade.

EUR/USD analysis today:

There is no change in my technical view of the price performance of the EUR/USD currency pair. The general trend is still the closest to the continuation of the decline, especially if the bears move in prices below the support level of 1.0500. I still see that the clear contrast between the future of raising interest rates by the European Central Bank and the Bank of The US Federal Reserve, as well as the continuation of the Russian-Ukrainian war, are factors that negatively affect any gains achieved by the euro-dollar pair in the coming days.

The closest targets for the bulls are currently 1.0635, 1.0700 and 1.0785, respectively. The euro dollar will be affected today by the announcement of the readings of the manufacturing and services PMI for the economies of the euro zone. From the United States, the same data, along with the number of weekly jobless claims and current account numbers, as well as the second testimony of US Federal Reserve Governor Jerome Powell.

We expect the lira’s decline to continue.

Today’s recommendation on the lira against the dollar

Risk 0.50%.

None of the buying or selling transactions of yesterday were activated.

Best selling entry points

Entering a sell position with a pending order from 17.41 levels

Set a stop-loss point to close the lowest support levels 17.65.

Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.

Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 16.40.

Best entry points buy

• Entering a buy position with a pending order from 17.00 levels
• The best points for setting the stop loss are closing the highest levels of 16.88.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 17.40

The Turkish lira stabilized against the US dollar during today’s early trading Wednesday. Investors followed reports published via Bloomberg that showed government plans to gradually raise the price of electricity throughout the year to avoid a strong rise like what happened at the beginning of this year. This shows that inflation in the country will not decrease in the short term. The rise in energy imports led to raising the inflation rate in the country to record levels not recorded in 24 years. Erdogan’s government is facing difficulties about before the elections scheduled for next year. The Turkish lira lost about 22 percent, compared to a 44 percent loss of its value last year. This prompted the government to ask Parliament for a supplementary budget.

On the technical level, the Turkish lira traded unchanged against the dollar. It traded within a narrow range shown on the chart. The pair maintained the general upward trend, with the pair trading the highest support levels, which are concentrated at 17.00 and 16.80 levels, respectively. The pair also continued trading above the 50, 100 and 200 moving averages, respectively, on the four-hour time frame, while the price traded between the same averages on the 60-minute time frame, indicating a divergence in the short term. At the same time, the lira is trading below the resistance levels at 17.40 and 17.80, respectively. The level of 17.41 represents a strong resistance level. We expect the lira’s decline to continue, as every decline on the pair represents an opportunity to repurchase, especially if it crosses the mentioned resistance levels. Please adhere to the numbers in the recommendation with the need to maintain capital management.

Fed officials agreed at their meeting this month that they need to raise US interest rates by half a point in their next two meetings and continue with a set of aggressive moves that would leave them the flexibility to change gears later if necessary. Despite that, the price of the USD/JPY currency pair remained stable bearishly around the support level 127.25 after lower losses to the support level 126.35 this week, amid strong selling to correct from its highest level in 20 years.

Highlighting the “strong commitment and determination” of all policy makers to restore price stability, the minutes of the May 3-4 meeting, released yesterday, showed that officials are concerned about financial conditions as they prepare to raise US interest rates further. In the weeks since the meeting, financial market volatility has increased as investors fret about recession risks, though investors cheered as they digested the report’s less hawkish tone than feared.

The minutes point to uncertainty about potential fault lines in financial markets as well as the price level that would hamper demand as officials battle the hottest price pressures in 40 years. Signs of a possible move to restrictive policy also suggest that officials will not stop until inflation is on a compelling path back to their 2 per cent target. It is a strategy that indicates that policy will be more data dependent after the Fed meetings in June and July.

US stocks rose after the minutes’ announcement, while Treasury yields fluctuated, and the dollar pared its gains. Markets continued to show investors seeking 100 basis points for rate hikes over the next two meetings. According to the meeting minutes, “most participants felt that 50 basis point increases in the target range were likely appropriate in the next two meetings” and “many participants felt that expediting the removal of policy consensus would leave the committee in good standing later in the year to assess Effects of policy constancy and the extent to which economic developments justify policy adjustments.

The minutes stated that Fed officials “indicated that a restrictive policy stance may become appropriate depending on the evolving economic outlook and risks to the outlook.” They added that the demand for labor continued to exceed the available supply.

Concern about the outlook for corporate earnings and higher interest rates has also caused turmoil in financial markets. The S&P 500 is down about 17 percent year-to-date, while the two-year US Treasury is at 2.5 percent versus about 0.8 percent in early January.

At the meeting, officials finalized plans to allow their $8.9 trillion balance sheet to begin to shrink, putting additional upward pressure on borrowing costs. As of June 1, Treasury holdings will be allowed to decline by $30 billion per month, with increases rising to $60 billion per month in September, while mortgage-backed securities holdings will shrink by $17.5 billion per month, rising to $35 billion.

According to the technical analysis of the pair: The USD/JPY currency pair has breached the ascending channel, continuing its losses to the support level 124.95. Technical indicators will move towards oversold levels. I still prefer buying the currency pair from every descending level, as the variation in economic performance and the future of tightening central banks policy The world will be in favor of the US dollar in the end.

According to the performance on the daily chart, the resistance levels 128.20 and 130.00 will be important in returning strongly to the vicinity of the last bullish channel for the currency pair. The US dollar will interact strongly today with the announcement of the US economic growth rate, in addition to the announcement of the number of weekly jobless claims, and the reaction of investors to what was stated in the minutes of the last meeting of the Federal Reserve.

Today’s recommendation on the lira against the dollar

Risk 0.50%.

Please be careful during today’s trading due to the expected large movement.

None of the buy or sell trades of our recommendation were activated yesterday.

The recommendation was exited last Thursday with a profit, as half of the contracts were closed from the price movement in the direction of the target.

Best entry points buy

• Entering a long position with a pending order from 14.62 levels
• Set a stop-loss point to close the lowest support level 14.46.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the strong resistance levels at 14.85.

Best selling entry points

• Entering a short position with a pending order from 14.99 levels
• The best points for setting the stop loss are closing the highest levels of 14.98.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the support levels 14.40

The Turkish Lira rose slightly as investors await the US interest rate decision during today’s trading. Most analysts tend not to expect a strong movement on the dollar if the interest rate is raised according to expectations at 50 basis points. The market price had previously witnessed the expected positive movement of the dollar during the past month, after the dollar recorded its highest level in twenty years. If the Federal Reserve takes a more tightened approach to monetary policy, for example, raising the interest rate by about 75 basis points, we may witness a further rise of the US currency against the major currencies and currencies of emerging economies.  This is especially with the Turkish lira, which suffers from unstable economic conditions in the country, especially with decline in the country’s imports of foreign exchange and high inflation.

On the technical front, the Turkish lira rose slightly against the dollar during today’s trading, as the lira is still trading within the demand areas shown on the chart. The pair also rose above the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame. At the same time, the pair is based on the ascending trend line shown on the chart. With continued trading within a limited trading range. The pair is trading the highest support levels, which are concentrated at 14.82 and 14.74 levels, respectively. On the other hand, the lira is trading below the resistance levels at 14.90 and 14.99. We expect the lira to continue to decline, especially if the pair closed above the resistance levels of 14.91. Please adhere to the numbers in the recommendation with the need to maintain capital management.

Today’s USD/TRY Signal

Risk 0.50%.

None of the buy or sell transactions of yesterday were activated

Best entry points buy

• Entering a long position with a pending order from 14.62 مستويات levels
• Set a stop-loss point to close the lowest support level 14.46.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the strong resistance levels at 14.85.

Best selling entry points

• Entering a short position with a pending order from 14.85 levels
• The best points for setting the stop loss are closing the highest levels of 14.98.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the support levels 14.40

The lira recorded some gains, although it continued to trade within a limited range. Investors are looking forward to the upcoming visit of Turkish President Recep Tayyip Erdogan to the Kingdom of Saudi Arabia today, Thursday. It is expected that the visit will be the beginning of ending the political competition between the two regional powers. Turkey seeks to benefit from direct investments in the Gulf, which is what happened after the UAE supported the Turkish economy through direct investment agreements that exceeded ten billion dollars. It is noteworthy that the Turkish economy, which suffers from large rates of inflation, which contributed to pressure on the value of the Turkish currency, which has lost about half of its value since the end of last year. It is expected that the lira will continue to decline, especially with the dollar’s rise globally, amid the Fed’s insistence on raising the interest rate consecutively, starting from the expected meeting during the next month and successive meetings until the end of the year.

On the technical front, the Turkish lira stabilized, declining against the dollar, as it moved slightly during today’s trading. The lira is trading from the demand areas shown on the chart. At the same time, the pair is based on the ascending trend line shown on the chart. With continued trading within a limited trading range. The pair is trading above the resistance line at 14.76 on the 240-minute time frame, shown on the chart. The pair is trading the highest support levels that are concentrated at 14.76 and 14.60 levels, respectively. On the other hand, the lira is trading below the resistance levels at 14.85 and 14.89, respectively. The pair also rose around the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame. Please adhere to the numbers in the recommendation with the need to maintain capital management.