Introduction:

The U.S. dollar dipped slightly in early Friday European trading, but it is still on course for an eighth straight week of gains as the U.S. economy’s resiliency calls into question further Federal Reserve rate increases.

The EUR/USD pair increased 0.2% to 1.0715 after falling to a three-month low of 1.0686 on Thursday. The GBP/USD pair also increased 0.1% to 1.2483 after hitting a three-month low in the previous session.

The yuan fell to its lowest level against the dollar since February 2008 in Asia, because of escalating diplomatic tensions between Beijing and Washington as well as worries over a slowing Chinese economy. USD/CNY increased by 0.3% to 7.3487.

GBP/USD:

Prior to the weekend, GBP/USD struggled to retake 1.2500.

GBP/USD struggled to rise above 1.2500 on Friday despite holding onto modest daily gains. The USD is unable to continue to outperform its competitors due to Wall Street’s bullish opening, which aids in the pair’s stability going into the weekend. The GBP/USD currency pair reversed higher in the Asian session on Friday after dropping more than 100 pips over the previous three days. However, the pair lost steam near 1.2500, underscoring the significance of this technical level.

The USD’s gains on Friday during Asian trading hours were constrained by declining US Treasury bond yields and the uptick in risk sentiment, which allowed the GBP/USD to partially reverse its weekly losses.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.2513 | Negative Crossover | Bearish
• MA 20: 1.2622 | Negative Crossover | Bearish
• MA 50: 1.2675 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2524 | Negative Crossover | Bearish
• MA 20: 2.2641 | Negative Crossover | Bearish
• MA 50: 1.2759 | Negative Crossover | Bearish
  
  

RSI (Relative Strength Index): 36.09 | Selling Zone | Bearish

Stochastic Oscillator: 2.28| Selling Zone | Negative

Resistance And Support Levels:

• R1: 1.2576 | R2: 1.2785
• S1: 1.2403 | S2: 1.2180

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2340 | Take Profit: 1.2180 | Stop Loss: 1.2465

EUR/USD:

The EUR/USD holds above 1.0700 and is expected to post weekly losses.

In the American session on Friday, the EUR/USD maintained its current level above 1.0700 as the cheerful market sentiment indicated by increasing US stocks prevented the USD from gaining strength. However, the partnership is still on course to end the eighth consecutive week in the red.

After falling on Thursday to a fresh multi-month low below 1.0700, the EUR/USD made a slight recovery. The pair’s bearish tendency is still present, although profit-taking and an uptick in risk appetite may offer support before the weekend.

Investors will closely monitor Federal Reserve (Fed) officials’ remarks as well. On Saturday, the Fed’s blackout period begins, and decision-makers may make some closing words on the outlook.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0728 | Negative Crossover | Bearish
• MA 20: 1.0822 | Negative Crossover | Bearish
• MA 50: 1.0884 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0727 | Negative Crossover | Bearish
• MA 20: 1.0825 | Negative Crossover | Bearish
• MA 50: 1.0948 | Negative Crossover | Bearish
  
  

RSI (Relative Strength Index): 33.63 | Selling Zone | Bearish

Stochastic Oscillator: 7.22| Selling Zone | Negative

Resistance And Support Levels:

• R1: 1.0798 | R2: 1.0944
• S1: 1.0681 | S2: 1.0524

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0641 | Take Profit: 1.0524 | Stop Loss: 1.0730

AUD/USD:

AUD/USD fluctuates near 0.6400 as attention turns to China’s inflation.

AUD/USD moves in a range around 0.6400, moving in sync with the US Dollar. Fed officials spoke in favor of maintaining the same interest rates in the September monetary policy. This week, the Australian Dollar remained active due to the RBA’s steady interest rate stance.

The Reserve Bank of Australia (RBA) maintained its interest rate policy this week, keeping the Australian Dollar active. RBA Governor Philip Lowe noted that the wage growth is solid and that the unemployment rate can continue to be close to 40-year lows when discussing the labor market outlook.

Investors are currently waiting for the Consumer Price Index (CPI) for China for August, which will be released on Saturday. The monthly rate of economic growth is projected to be 0.3%, which is faster than the 0.2% rate that was observed in July. Annual inflation is estimated to be 0.1% compared to a 0.3% deflation.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6382| Negative Crossover | Bearish
• MA 20: 0.6406 | Negative Crossover | Bearish
• MA 50: 0.6479 | Negative Crossover | Bearish

Simple:

• MA 5: 0.6383 | Negative Crossover | Bearish
• MA 20: 0.6422 | Negative Crossover | Bearish
• MA 50: 0.6427 | Negative Crossover | Bearish
  
  

RSI (Relative Strength Index): 39.07| Selling Zone | Bearish

Stochastic Oscillator: 35.89 | Selling Zone | Negative

Resistance And Support Levels :

• R1: 0.6475 | R2: 0.6595
• S1: 0.6354 | S2: 0.6199

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6320 | Take Profit: 0.6206 | Stop Loss: 0.6402

USD/JPY:

Early losses are made up for in the USD/JPY, but intervention fears limit the upside as the USD declines.

Following the release of Japan’s final GDP data, USD/JPY sees renewed buying. Despite a minor USD decline, bulls are hesitant to place new wagers because of intervention fears. The path of least resistance appears to be upward, according to the Fed-BoJ policy difference.

Kanda warned against the recent decline in the value of the Japanese Yen (JPY) and said that if speculative movements in the currency market persist, authorities won’t rule out any possibilities. The USD/JPY pair has fallen because of this announcement.

Investors are likely to pay close attention to the impending US data releases. Later in the North American session, the US S&P Global PMIs and the US ISM Services PMI for August are expected to be released. These data releases will provide insightful information on the US economy now and may help to clarify the direction of the USD/JPY pair.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 147.31 | Positive Crossover | Bullish
• MA 20: 146.03 | Positive Crossover | Bullish
• MA 50: 144.05 | Positive Crossover | Bullish

Simple:

• MA 5: 147.37 | Positive Crossover | Bullish
• MA 20: 146.24 | Positive Crossover | Bullish
• MA 50: 143.51 | Positive Crossover | Bullish
  
  

RSI (Relative Strength Index): 64.94| Buying Zone | Bullish

Stochastic Oscillator: 82.86 | Buy Zone | Positive

Resistance And Support Levels :

• R1: 148.75 | R2: 152.02
• S1: 146.95 | S2: 143.57

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 149.35 | Take Profit: 152.02 | Stop Loss: 147.54

Elsewhere in the Forex Market

NZD/USD up 0.13% to 0.5882. The EUR/JPY up 0.33% to 158.05. The USDCHF is up 0.03% at 0.8928. USD/CAD down 0.33% at 1.3640, EUR/GBP up 0.04% at 0.8578. The USD/CNY is up 0.21% at 7.3440, AUD/SEK is down 0.16% at 7.0932, and CHF/SGD is down 0.06% at 1.5290 at the time of writing.

Key Economic Events & Data Release for Upcoming Week:

(GDP) Average Earning Index + Bonus (Jul) on (Tuesday).

(GBP) Manufacturing Production (MoM) (Jul) on (Wednesday).

(GBP) GDP (MoM) (Jul) on (Wednesday).

(USD) CPI (MoM) (Aug) on (Wednesday).

(AUD) Employment Change (Aug) on (Thursday).

(EUR) ECB Interest Rate Decision (Sep) on (Friday).

(USD) Retail Sales (MoM) (Aug) on (Friday).

(USD) Initial Jobless Claims on (Friday).