EURUSD 1.1860 Resistance

The euro currency is searching for direction against the US dollar after the pair rallied back towards the 1.1960 resistance level. The EURUSD pair will encourage technical buying next week if bulls can close the weekly candle above the 1.1860 level. EURUSD traders are expected to buy any dips towards the 1.1770 support area in anticipation of a counter-rally towards the 1.2000 level.

The EURUSD pair is only bearish while trading below the 1.1770 level, key support is found at the 1.1730 and 1.1685 levels.

The EURUSD pair is only bullish while trading above the 1.1770 level, key resistance is found at the 1.1860 and 1.1960 levels.

GBPUSD Bearish Under 1.3130

The British pound has reversed sharply against the US dollar currency, following a major technical sell-off from the 1.3250 area. The medium-term technical show that the GBPUSD pair could decline towards the 1.2900 level if a breakout below the 1.3040 level takes place. Overall, the GBPUSD pair has a strong negative bias while price continues to trade below the 1.3130 level.

The GBPUSD pair is only bearish while trading below the 1.3130 level, key support is found at the 1.3040 and 1.2900 levels.

The GBPUSD pair is only bullish while trading above the 1.3130 level, key resistance is found at the 1.3120 and 1.3260 levels.

UK’s Consumer Price Index Rose To A 4-Month High In July

For the 24 hours to 23:00 GMT, the GBP declined 1.01% against the USD and closed at 1.3112, amid concerns over Brexit and rising inflation.

On the data front, UK’s consumer price index rose 1.0% on a yearly basis in July, marking its highest level in 4-months and driven by higher prices of clothing and petrol. In the earlier month, the index had recorded a rise of 0.6%. Additionally, the retail price index rose more-than-expected by 0.5% on a monthly basis in July, compared to a rise of 0.2% in the previous month. Meanwhile, the output producer price index fell 0.9% on an annual basis in July, in line with market forecast and compared to a similar drop in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3096, with the GBP trading 0.12% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.3034, and a fall through could take it to the next support level of 1.2971. The pair is expected to find its first resistance at 1.3213, and a rise through could take it to the next resistance level of 1.3329.

Moving ahead, traders would keep a watch on UK’s GfK consumer confidence for August, slated to release overnight.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Euro-Zone’s Consumer Price Index Climbed In July

For the 24 hours to 23:00 GMT, the EUR declined 0.76% against the USD and closed at 1.1849.

On the macro front, Euro-zone’s consumer price index climbed 0.4% on a yearly basis in July, compared to a rise of 0.3% in the prior month. The preliminary figures had recorded a rise of 0.4%. Additionally, current account surplus widened to €20.7 billion in June, compared to a surplus of €11.3 billion in the earlier month.

In the US, the MBA mortgage applications dropped 3.3% on a weekly basis in the week ended 14 August 2020, compared to a rise of 6.8% in the previous week.

Separately, the Federal Open Market Committee (FOMC), in its July meeting minutes, stated that the official staff member lowered its forecast for economic growth over the rest of year. Further, minutes revealed that policymakers expect to hold the key interest rates to a range of 0%-0.25% until the economy had weathered recent events and was on track to achieve the Committee’s maximum employment and price stability goals. Further, the officials agreed that the ongoing public health crisis would weigh heavily on economic activity, employment and inflation in the near term and posed considerable risks to the economic outlook over the medium term.

In the Asian session, at GMT0300, the pair is trading at 1.1845, with the EUR trading marginally lower against the USD from yesterday’s close.

The pair is expected to find support at 1.1800, and a fall through could take it to the next support level of 1.1756. The pair is expected to find its first resistance at 1.1920, and a rise through could take it to the next resistance level of 1.1996.

Going forward, traders would keep a watch on Euro-zone’s construction output for June along with Germany’s producer price index for July, slated to release in a few hours. Later in the day, the US Philadelphia Fed manufacturing survey for August and initial jobless claims, would keep investors on their toes.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Gold Price Showing Signs Of Fresh Decrease Below $1,950

Key Highlights

  • Gold price corrected higher, but it failed to settle above the $2,000 resistance.
  • There was a break below a major bullish trend line at $1,980 on the 4-hours chart of XAU/USD.
  • Both EUR/USD and GBP/USD traded to a new monthly high before correcting lower.
  • The US Initial Jobless Claims in the week ending August 15, 2020 could decline from 963K to 925K.

Gold Price Technical Analysis

After declining sharply to $1,863, gold price started an upside correction against the US Dollar. The price recovered nicely above $1,900 and $1,950, but it struggled to gain strength above the $2,000 level.

The 4-hours chart of XAU/USD indicates that the price traded as high as $2,015 before starting a fresh decrease. There was a break below the $2,000 support level and the 100 simple moving average (red, 4-hours).

Moreover, there was a break below a major bullish trend line at $1,980 on the same chart. The price traded below the 50% Fib retracement level of the recent increase from the $1,862 low to $2,015 high.

If the price continues to move down, the price might decline towards the $1,920 support. It is close to the 61.8% Fib retracement level of the recent increase from the $1,862 low to $2,015 high.

Any further losses could lead the price towards the $1,900 support or the 200 simple moving average (green, 4-hours). Conversely, the price could bounce back from $1,920 or $1,900.

On the upside, the price is facing hurdles near $1,980 and $2,000. A successful daily close above $2,000 is needed for a sustained upward move. The next key resistance is near $2,025 and $2,032.

Looking at EUR/USD and GBP/USD, both started a short-term downside correction after trading to a new multi-week high.

Economic Releases to Watch Today

  • US Initial Jobless Claims – Forecast 925K, versus 963K previous.

Eurozone PMIs may point to slowing recovery; will the soaring euro care?

The flash PMI readings for August will be the sole economic highlight for the euro area this week as investors try to get a better sense of where Europe’s recovery is headed amid a spike in coronavirus cases over the summer. The data, due at 08:00 GMT on Friday, might point to the recovery losing some steam in the past couple of weeks as businesses face challenging trading conditions. However, unless the PMIs widely undershoot expectations, the euro will likely maintain its upward charge against the faltering US dollar.

European recovery faces new virus threat

It’s been so far so V for Europe’s climb out of the pandemic slump. The closely watched Purchasing Managers’ Index (PMI) reports by IHS Markit are indicating a strong rebound in the third quarter after a record collapse in GDP in the second quarter. Higher confidence in the ability of European leaders to manage both the health crisis and the ensuing economic shock compared to other regions has cast the euro under a more attractive light. That, combined with the broad dollar selloff, has put an end to the euro’s protracted downtrend once and for all.

However, as the single currency approaches the psychologically important $1.20 level for the first time in more than two years, Europe may be losing its virus and economic edge over the United States. The easing of lockdown restrictions across the continent has led to a jump in new COVID-19 cases in most Eurozone countries, with the summer tourism season exacerbating the spread. Although, so far, authorities have only announced limited new restrictions to enforce social distancing, a continued acceleration in the infection rate could necessitate tougher measures. Signs that the virus resurgence in the US is not only slowing but didn’t significantly hurt the recovery pose another question mark for the euro/dollar rally.

Can PMIs stay on a V-path?

That makes it all the more important for the Eurozone recovery to prove sustainable if the euro is to maintain its bullish posture. However, those hoping to see a faster bounce in business activity in August may get disappointed. The Eurozone composite PMI is forecast to stay unchanged at 54.9, which – while that would still signal a healthy growth rate – wouldn’t go far enough to compensate for the steep plunge posted in Spring.

A moderation in services activity is likely to be the main drag on the composite reading. The services PMI is expected to slip from 54.7 to 54.5 in August. But the manufacturing PMI might provide a bright spot as it is forecast to jump from 51.8 to 52.9.

Euro rally eyes $1.20

If the PMI numbers are more or less in line with expectations or better, investors will probably stick with their existing views of the Eurozone outlook and continue to push the euro higher. Having just beaten the previous obstacle at the $1.19 mark, the next challenge for the euro bulls is the $1.20 target. Above that, buyers might meet resistance at the 361.8% Fibonacci extension of the June down leg at $1.2090.

But in the event of a negative surprise in the data, euro/dollar could reverse lower, with the 20-day moving average potentially being the first point of call just above $1.1790. A sharper correction could pull the pair all the way down to the 161.8% Fibonacci extension of $1.1580.

Bumps ahead

Beyond this week’s PMI data, a key factor to watch will be whether Eurozone governments will consider shutting down parts of the economy again to control what is increasingly looking like a second wave of the virus, and how this will influence policy at the European Central Bank. But even if a full blown second outbreak can be avoided, there’s a high risk the recovery stalls over the coming months amid the realization that there’s a limit to how far business life can return to normal during a global pandemic. A stronger exchange rate could also create headaches for the euro bloc as it would make exports more expensive, further straining the recovery.

WTI Futures Lacks Direction After The Jump To Almost 5-Month High

WTI crude oil futures have been on a sideline move after they reached an almost five-month peak around 42.50 in the preceding week. The price is flirting with the upper surface of the Ichimoku cloud and the short-term simple moving averages (SMAs) in the 4-hour chart.

Looking at the technical indicators, the RSI is holding near the 50 level, while the MACD is moving with weak momentum near its trigger and zero lines, both confirming the recent neutral trend.

In case the price remains above the 20- and 40-period SMAs, the market could hit the 42.50 resistance before edging higher towards the 43.60 barrier, taken from the high on February 28. Above that, the 48.80 obstacle registered on March 3 could next come in focus.

On the other hand, a downfall could find immediate support at the lower surface of the cloud at 40.74 and the 23.6% Fibonacci retracement level of the up leg from 34.45 to 42.50 at 40.58. Breaching these levels, the 40.15 support and the 200-period SMA at 39.80 could halt bearish movements before ahead of the 38.2% Fibo of 39.41.

Summarizing, WTI oil is in neutral mode in the very short-term, while in the bigger picture, the bullish tendency remains intact.

EUR/USD Rises To A Fresh 22-Month High

The euro currency rose to a new 22-month high after prices rose to intraday highs of 1.1781.

The rapid appreciation in the euro comes as the dollar turns weaker. EURUSD has been in a steady uptrend and has gained almost 3% in a matter of just seven days.

The parabolic rise in the euro however puts focus on a possible correction. If price can close above the 1.1750 handle, then we expect EURUSD to potentially target the 1.1800 level next.

But given the upcoming FOMC meeting later this week, the euro could be at risk in the event that the dollar rebounds.

GBPUSD Watching 1.3250

The British pound has rallied to a new multi-monthly high against the US dollar currency, with the pair trading towards the 1.3250 level. Technical analysis shows that the 1.3250 area offers the strongest form of technical support prior to the 1.3300 level. GBPUSD sellers need to move price under the 1.3170 level to encourage technical selling back under the 1.3100 level.

The GBPUSD pair is only bearish while trading below the 1.3170 level, key support is found at the 1.3100 and 1.3040 levels.

The GBPUSD pair is only bullish while trading above the 1.3170 level, key resistance is found at the 1.3250 and 1.3300 levels.

EURUSD 1.2000 Major Resistance

The euro currency has rallied to a new 2020 trading high against the US dollar after the pair broke through the 1.1915 resistance level. If the EURUSD pair breaks above the 1.1960 resistance level, then further upside advancement towards the psychological 1.2000 level is possible. To the downside, failure to hold the pair above the 1.1915 level could provoke EURUSD technical selling towards the 1.1800 area.

The EURUSD pair is only bearish while trading below the 1.1915 level, key support is found at the 1.1880 and 1.1840 levels.

The EURUSD pair is only bullish while trading above the 1.1915 level, key resistance is found at the 1.1960 and 1.2000 levels.