The US Dollar aimed higher against its major counterparts this past week, fulfilling a move that markets had been building up since the beginning of August. Throughout June and July, the markets priced in a pivot narrative for the Federal Reserve despite the highest inflation in 40 years and the most aggressive tightening in decades.
The US nonfarm payrolls report will take center stage next week as speculation about the size of the Fed’s next rate hike goes into overdrive. Investors will also be keeping a close eye on the latest inflation readings in the euro area ahead of the September rate decision amid growing gloom about the bloc’s economic outlook. PMI indicators out of China and as well as quarterly data from Australia and Canada will be important too in helping to gauge the health of the big economies.
Three high-frequency economic prints next week will likely move the markets whether they meet expectations or not: China’s PMI, the eurozone’s CPI, and the US employment report.
Major Currencies Performance and Signals
The EUR/USD currency pair went back and forth last week as we continue to see a significant amount of noisy behaviour between the 1.00 level, and the 1.01 level. On the pair we are Bearish this week.
Resistance: 1.0200, 1.0250, 1.0300
Support: 1.0150, 1.0100, 1.0050
The GBP/USD currency pair initially rallied during the trading week but gave bank gains as we slammed into the 1.20 level. We remain bearish on the pair.
Resistance: 1.2100, 1.2150, 1.2200
Support: 1.2050, 1.2000, 1.1950
The AUDUSD pair edged higher to 0.7045 last week but retreated since then. Initial bias is neutral this week first. On the downside, break of 0.6858 minor support will argue that the rebound is over. We remain bearish on the pair.
Resistance: 0.6950, 0.7000, 0.7050
Support: 0.6900, 0.6850, 0.6800
The USDJPY pair fell initially during the trading week but then turned around near the ¥1.31 level to show signs of life. We are bullish on the USDJPY pair.
Resistance: 135.00, 134.00, 134.50,
Support: 133.00, 132.50, 132.00
The pair closed the week higher as the dollar strengthened and the Loonie weakened. Our weekly USDCAD forecast is bullish as the upbeat US jobs report gives the Federal Reserve room to be more aggressive.
Resistance: 1.2950, 1.3000, 1.3050
Support: 1.2900 1.2850, 1.2800
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