GBP/USD Below 1.2500, EUR/USD’s Risky Highs, AUD/USD’s Inflation Anxiety, and USD/JPY’s Surprising Strength.

Introduction:

The GBP/USD pair tests 1.2450 amid conflicting UK data, with selling pressure returning after mixed announcements of UK GDP and Industrial Production figures. The US dollar remains stable ahead of US CPI data. The EUR/USD pair struggles to rise above 1.0740 as investors await Eurozone statistics and US CPI. AUD/USD declines towards 0.6400 on US CPI Day, while USD/JPY reaches a weekly high above 147.00. The Bank of Japan’s bond purchases seem to be impacting the yen, and market attention is focused on US inflation numbers.

GBP/USD:

GBP/USD tests 1.2450 amid conflicting UK data.

Following the mixed announcements of the UK GDP and Industrial Production figures, selling pressure on the GBP/USD has returned, and the currency pair is currently testing 1.2450. The US dollar maintains its stability amid the usual market jitters before the US CPI data.

The GBP/USD pair encounters new supply on Tuesday and retreats under the psychological level of 1.2500 in the early European session, wiping out most of the day’s small gains. The US Dollar (USD) draws some dip-buying after the overnight strong decline, and this turns out to be a crucial element pushing the major under pressure. The USD Index (DXY), which measures the value of the dollar against a basket of currencies, appears to have stopped falling after reaching a six-month high last Friday. It continues to be supported by the likelihood that the Federal Reserve (Fed) will continue to tighten policy.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.2477 | Negative Crossover | Bearish
• MA 20: 1.2515 | Negative Crossover | Bearish
• MA 50: 1.2582 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2488 | Negative Crossover | Bearish
• MA 20: 1.2509 | Negative Crossover | Bearish
• MA 50: 1.2596 | Negative Crossover | Bearish

RSI (Relative Strength Index): 36.65 | Sell Zone | Negative

Stochastic Oscillator: 70.43| Buy Zone | Neutral

Resistance And Support Levels:

• R1: 1.2532 | R2: 1.2641
• S1: 1.2435 | S2: 1.2323

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2393 | Take Profit: 1.2323 | Stop Loss: 1.2444

EUR/USD:

Investors are awaiting Eurozone statistics and US CPI as the EUR/USD fails to rise above 1.0740.

In the early hours of the European session on Wednesday, the EUR/USD pair battles to move lower and remain above the mid-1.0700s. Before the ECB decides on its interest rate, investors await the US Consumer Price Index (CPI).

On Tuesday, there was a slight decrease in the EUR/USD. During the Asian session, it soared to 1.0769, the highest level in a week, but later reversed course and held above 1.0700. Markets are anticipating the European Central Bank meeting as well as US consumer inflation data.

A mixed German ZEW survey was revealed by data made public on Tuesday. The expected index came in at -11.4, above the estimate of -15.0, while the current condition index dropped further to -79.4 (lowest since August 2020) down from -71.3. More indications of a future recession in Germany and the Eurozone are provided by the paper. These elements influence the likelihood of a rate hike by the European Central Bank.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0738 | Negative Crossover | Bearish
• MA 20: 1.0744 | Negative Crossover | Bearish
• MA 50: 1.0791 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0736 | Negative Crossover | Bearish
• MA 20: 1.0728 | Negative Crossover | Bearish
• MA 50: 1.0794 | Positive Crossover | Bullish

RSI (Relative Strength Index): 44.09 | Neutral Zone | Neutral

Stochastic Oscillator: 92.86 | Buying Zone | Positive

Resistance And Support Levels:

• R1: 1.0778| R2: 1.0843
• S1: 1.0725 | S2: 1.0653

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0703 | Take Profit: 1.0653 | Stop Loss: 1.0740

AUD/USD:

AUD/USD declines toward 0.6400 on US CPI Day.

The AUD/USD exchange rate is getting close to 0.6400 after experiencing further selling pressure on Wednesday during the Asian session. Even as markets become cautious due to rising oil prices and ahead of the important US inflation report, the US Dollar is still licking its wounds.

Tuesday’s market was quiet, as the AUD/USD had a little drop before trading sideways all day long near 0.6420. The pair fell as low as 0.6408 before soon rising to around 0.6420.

In a constrained range, the AUD/USD traded relatively quietly on Tuesday as market players awaited the publication of US consumer inflation data on Wednesday. The annual rate is predicted to rise from 3.2% to 3.6% and the core rate to fall from 4.7% to 4.3% in the Consumer Price Index (CPI). Currently, the market is waiting and watching for these figures.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6414 | Negative Crossover | Bearish
• MA 20: 0.6417 | Negative Crossover | Bearish
• MA 50: 0.6435 | Negative Crossover | Bearish

Simple:

• MA 5: 0.6416 | Negative Crossover | Bearish
• MA 20: 0.6402 | Negative Crossover | Bearish
• MA 50: 0.6429 | Positive Crossover | Bullish

RSI (Relative Strength Index): 47.59 | Buying Zone | Bullish

Stochastic Oscillator: 71.29 | Buy Zone | Negative

Resistance And Support Levels:

• R1: 0.6447 | R2: 0.6523
• S1: 0.6385 | S2: 0.6268

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Sell: 0.6353 | Take Profit: 0.6268 | Stop Loss: 0.6412

USD/JPY:

With the US CPI in focus, USD/JPY is at a weekly high above 147.00.

Trading near 147.50, the USD/JPY has filled Monday’s bearish opening gap and is reaching weekly highs. Despite the US Dollar being generally weak and the risk mood being muted, the BoJ’s bond purchases appear to be hurting the Yen. The US inflation numbers continue to draw attention.

Market investors appear to be confident that the Bank of Japan (BoJ) will preserve the status quo until next summer, so the first market reaction to Governor Kazuo Ueda’s hawkish remarks rapidly fades. Ueda stated that removing negative interest rates is one of the alternatives open if the BoJ gains confidence that prices and wages will continue to rise sustainably in an interview with the Yomiuri newspaper that was published on Saturday.

However, Hiroshige Seko, the secretary-general of the Upper House of the ruling Liberal Democratic Party (LDP) of Japan, made it clear that he preferred an extremely loose monetary policy. Seko said that BoJ Governor Ueda had stated that the end of the easy policy would come after the goal inflation rate of 2% was reached.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 147.13 | Positive Crossover | Bullish
• MA 20: 146.94 | Positive Crossover | Bullish
• MA 50: 146.36 | Positive Crossover | Bullish

Simple:

• MA 5: 147.10 | Positive Crossover | Bullish
• MA 20: 147.15 | Positive Crossover | Bullish
• MA 50: 146.43 | Positive Crossover | Bullish

RSI (Relative Strength Index): 55.81 | Buy Zone | Positive

Stochastic Oscillator: 58.33| Buy Zone | Positive

Resistance And Support Levels:

• R1: 147.45 | R2: 149.52
• S1: 146.42 | S2: 144.95

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 147.81 | Take Profit: 149.54 | Stop Loss: 146.60

Elsewhere in the Forex Market:

• NZD/USD down 0.07% to 0.5897.
• The EUR/JPY up 0.01% to 158.19.
• The USDCHF is up 0.04% at 0.8916.
• USD/CAD is up 0.09% at 1.3564, and EUR/GBP is up 0.25% at 0.8696.
• The USD/CNY is down 0.08% at 7.2854, and AUD/SEK is down 0.26% at 7.1149, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) GDP (YoY) (Jul) Actual 0.0%, Forecast 0.4%, Previous 0.9% at 11:30.

(GBP) GDP (MoM) (Jul) Actual –0.5%, Forecast –0.2%, Previous 0.5% at 11:30.

(GBP) Manufacturing Production (MoM) (Jul) Actual –0.8%, Forecast –1.0%, Previous 2.4% at 11:30

(EUR) Industrial Production (MoM) (Jul) Forecast –0.7%, Previous 0.5% at 14:30.

(USD) Core CPI (MoM) (Aug) Forecast 0.2%, Previous 0.2% at 18:00.

(USD) CPI (MoM) (Aug) Forecast 0.6%, Previous 0.2% at 18:00.