Introduction:

In the dynamic world of currency markets, several major currency pairs are currently experiencing significant movements. GBP/USD is grappling with challenges driven by the Bank of England’s rate hike uncertainty, while EUR/USD is facing its longest losing streak in years, impacted by dovish ECB decisions. Meanwhile, AUD/USD is buoyed by positive data from China, and USD/JPY maintains a bullish stance as investors await crucial US economic indicators. Let’s delve deeper into these currency pairs and their implications in today’s financial landscape.

GBP/USD:

GBP/USD continues to trade around 1.2400, with no advantage from the DXY decline.

After hitting a new multi-month low of 1.2385, the GBP/USD exchange rate is now circling around 1.2400. Due to dwindling anticipation of additional rate increases by the BoE, the British Pound is underperforming on Friday. The US Dollar Index’s drop has not been of any use to the pair.

On the final day of the week, the GBP/USD pair regained some upward momentum and partially retraced the previous day’s decline to sub-1.2400 levels, or its lowest level since June 7. Spot prices take support from a small US Dollar (USD) depreciation and maintain modest intraday gains during the early European session.

In addition, figures released on Wednesday revealed that Britain’s GDP contracted by 0.5% in July, which was the fastest rate of decline in seven months, reigniting recession fears. The BoE is under pressure to halt its cycle of rate hikes because of this and indications that the UK labor market is softening. As a result, the GBP/USD bears are now in the driver’s seat, and it appears that any further increase in price could potentially present a buying opportunity.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.2411 | Negative Crossover | Bearish
• MA 20: 1.2471 | Negative Crossover | Bearish
• MA 50: 1.2545 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2408 | Negative Crossover | Bearish
• MA 20: 2.2468 | Negative Crossover | Bearish
• MA 50: 1.2556 | Negative Crossover | Bearish

RSI (Relative Strength Index): 31.27 | Selling Zone | Bearish

Stochastic Oscillator: 10.81 | Selling Zone | Negative

Resistance And Support Levels: 

• R1: 1.2458 | R2: 1.2603
• S1: 1.2323 | S2: 1.2169

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2300 | Take Profit: 1.2169 | Stop Loss: 1.2393

EUR/USD:

Despite Friday’s recovery, EUR/USD is headed for its lowest weekly finish since March.

Despite Friday’s recovery from multi-month lows, the EUR/USD is still on track to lose money for the week. The longest losing sequence since the Euro’s inception is about to occur when it records its ninth straight week of losses versus the US Dollar.

On the final day of a new week, the EUR/USD pair sees some buying and partially undoes the previous day’s decline to a nearly six-month low reached in the wake of the dovish European Central Bank (ECB) rate decision.

Given the fundamental context, it appears that the EUR/USD pair will encounter the least amount of difficulty on the downside, and any rise upward may still be viewed as a buying opportunity. Currently, market investors are anticipating ECB President Christine Lagarde’s speech for a new impetus. In addition, the US economic calendar, which includes the publication of the Empire State Manufacturing Index and the Prelim Michigan Consumer Sentiment Index, may have an impact on the USD price dynamics and create possibilities for short-term trading in the major.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0699 | Negative Crossover | Bearish
• MA 20: 1.0733 | Negative Crossover | Bearish
• MA 50: 1.0851 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0707 | Negative Crossover | Bearish
• MA 20: 1.0788 | Negative Crossover | Bearish
• MA 50: 1.0929 | Negative Crossover | Bearish

RSI (Relative Strength Index): 34.29| Selling Zone | Bearish

Stochastic Oscillator: 15.11 | Selling Zone | Negative

Resistance And Support Levels: 

• R1: 1.0762 | R2: 1.0908
• S1: 1.0633 | S2: 1.0487

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0584 | Take Profit: 1.0487 | Stop Loss: 1.0660

AUD/USD:

AUD/USD extends gains above 0.6450 due to positive data from China and impending US data.

Due to China’s encouraging economic data and RRR reductions, the AUD/USD appreciates. The US dollar (USD) has retreated from its six-month peak, and further loss is limited. US data showed that production prices had moderated slightly, but consumer spending had been steady.

The National Bureau of Statistics (NBS) in China has released data that shows positive economic trends. Retail Sales increased by 4.6% in August year over year, above forecasts of a 3.0% increase and showing progress from the 2.5% number in July.

Trading in the AUD/USD pair is likely to be restrained by the belief that the Fed would stick to a more restrained monetary policy, which may include additional interest rate hikes or tightening measures.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6425| positive Crossover | Bullish
• MA 20: 0.644 | Negative Crossover | Bearish
• MA 50: 0.6514 | Negative Crossover | Bearish

Simple:

• MA 5: 0.6428 | positive Crossover | Bullish
• MA 20: 0.6428 | positive Crossover | Bullish
• MA 50: 0.6555 | Negative Crossover | Bearish

RSI (Relative Strength Index): 44.01| Neutral Zone | Neutral

Stochastic Oscillator: 88.33 | Buy Zone | Positive

Resistance And Support Levels :

• R1: 0.6488 | R2: 0.6602
• S1: 0.6402 | S2: 0.6268

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6361 | Take Profit: 0.6268 | Stop Loss: 0.6440

USD/JPY:

Investors are awaiting US data as USD/JPY remains bullish near 147.50.

USD/JPY maintains its position close to 147.50, up 0.02% for the day. Positive US data released on Thursday show that the US economy is still strong and that inflation increased in August. If wage and inflation figures fall short of expectations, the BoJ stated that a pivot would not be considered.

In regard to the Japanese Yen, a policymaker for the Bank of Japan (BoJ) warned that the JPY will remain sensitive to its competitors as long as wage and inflation indicators do not match expectations.

The US Empire State Manufacturing Index, Industrial Production, and the University of Michigan Consumer Confidence survey will all be released, and market participants will be watching these numbers closely. In advance of the Fed meeting next week, these numbers may provide clues regarding the Federal Reserve’s (Fed) peak interest rate for the remainder of the year.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 147.45 | Positive Crossover | Bullish
• MA 20: 146.54 | Positive Crossover | Bullish
• MA 50: 144.63 | Positive Crossover | Bullish

Simple:

• MA 5: 147.26 | Positive Crossover | Bullish
• MA 20: 146.63 | Positive Crossover | Bullish
• MA 50: 143.84 | Positive Crossover | Bullish

RSI (Relative Strength Index): 62.38 | Buying Zone | Bullish

Stochastic Oscillator: 50.38 | Buy Zone | Positive

Resistance And Support Levels: 

• R1: 148.21 | R2: 150.45
• S1: 146.66 | S2: 144.77

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 148.90| Take Profit: 150.45 | Stop Loss: 147.87

Elsewhere in the Forex Market

NZD/USD down 0.26% to 0.5896. The EUR/JPY up 0.37% to 157.53. The USDCHF is up 0.23% at 0.8976. USD/CAD up 0.14% at 1.3525, EUR/GBP up 0.31% at 0.8603. The USD/CNY was down 0.03% at 7.2749, AUD/SEK was down 0.01% at 7.2019, and CHF/SGD was down 0.26% at 1.5186 at the time of writing.

Key Economic Events & Data Release for Upcoming Week:

(AUD) RBA Meeting Minutes (Tuesday).

(EUR) CPI (YoY) (Aug) (Tuesday).

(CAD) Core CPI (MoM) (Aug) (Tuesday).

(USD) Fed Interest Rate Decision (Wednesday).

(USD) FOMC Press Conference (Thursday).

(NZD) GDP (QoQ) (Q2) (Thursday).

(USD) Initial Jobless Claims (Thursday).

(GBP) BoE Interest Rate Decision (Thursday).