It’s going to be another muted day as most of the economic events listed on the calendar as low impacted and may not drive price action in the market. Therefore, traders will be pricing in previous fundamentals to predict market moves. Whereas technical indicators are going to be our friends today.
Earlier today, during the Asian markets, the U.S. dollar held near a three-week high, as projections from the global economies unleash fresh stimulus and growth in desire for riskier assets boosted yields on U.S. government bonds.
Finally, the yields on benchmark U.S. Treasuries dragged away from three-year lows as traders are heading back into riskier assets such as stock markets and indices while taking sell positions in gold and Japanese yen.
Economic Events to Watch Today
Let’s took at these fundamentals…
DXY – Dollar Index – Daily Analysis
The dollar floated near a three-week high around 98.33, as expectations policymakers around the world would unleash fresh stimulus drove an improvement in appetite for riskier assets and lifted U.S. government bond yields.
On the technical side, the DXY has violated the weekly resistance at 97.72, which has exposed dollar index towards the 98.92 July 29 high as the first port of resistance, closely shadowed by weekly resistance at 99.62.
On the lower side, resistance continues to stay at 98.10 and 98. Bullish channel and series of EMA on 4-hour timeframe as suggesting a bullish bias for the dollar.
EUR/USD – Daily Analysis
Today in the early Asian market, the EUR/USD is trading at 1.1087, showing 0.10% gains. But as we now the EUR/USD currency pair hit the bearish track of the 5th straight trading day on Monday despite the upward movement in the German bond yields.
The EUR/USD currency pair fell 0.10%, having recorded 0.38%, 0.29%, 0.28% and 0.15% declines on last week.
The German ten-year bond yield increased more than 6-basis points to -0.64% yesterday due to German willingness to increase fiscal spending to support the struggling economy.
The EUR/USD currency pair increased above 1.11 in the European credit hour yesterday, due to an increase in the yields, only to finish the day with the negative figures of 1.1078.
Therefore, the track of minium resistance still to the downside, the EUR currency may end up closing the 5-day declining streak with modest gains if the German yields will again found on a bullish track. As of writing, EUR/USD is trading at 1.1087, showing 0.10% gains today.
On the 2 hour timeframe, the EUR/USD has violated the support level of 1.1169 as this level was extended by descending triangle pattern. Below 1.1110 resistance, the direct currency pair is very likely to fall further until 1.1030.
Daily Support and Resistance
S3 1.1007
S2 1.1047
S1 1.1069
Pivot Point 1.1088
R1 1.111
R2 1.1129
R3 1.1169
EUR/USD – Trading Tips
Since we don’t have much volatility in the market, consider staying bearish below 1.1095 to target 1.1065 and 1.1030.
GBP/USD – Daily Analysis
The GBP/USD currency pair found on a recovery track due to United Kingdom Gov.t is appreciated by the United States and Malaysia. Today in the early Asian session, the GBP/USD currency pair recovers to 1.2133, despite the European Union and Ireland refused the United Kingdom plan to change Irish backstop deal.
As of writing, during the Asian market, the United Kingdom President Boris Johnson’s 4-page letter regarding the new way for Irish backstop and scope for Brexit agreement renegotiation was firmly rejected by the Europan Union and Ireland. Moreover, the news also stated that Prime Minister Boris Johnson gave some time talking with his Irish counterpart to convince them for the agreement, but he didn’t get any positive response.
On the flip side, the United States President Donald Trump and Malaysian PM Mahathir Bin Mohamad represented a highly positive response for their future trade relations with the United Kingdom after Brexit.
Whereas, the market condition still stable due to all traders expecting fresh hint from the week’s key events while the same old situation regarding trade, Brexit and monetary policy rate cut are gaining less audience now.
Probably the economic calendar represents another slow day. All investors will support the United Kingdom Prime Ministers 2-days survey to Germany and France while the US Federal Reserve policymakers look at the Jackson Hole Symposium will also give fresh inspiration.
The cable may continue to trade choppy within a range of 1.2145 – 1.2100 due to lack of fundamentals. The trading sentiment is neutral so that sideways trading may be experienced today.
Daily Support and Resistance
S3 1.1956
S2 1.2046
S1 1.2096
Pivot Point 1.2136
R1 1.2186
R2 1.2226
R3 1.2316
GBP/USD – Trading Tips
Consider staying bearish below 1.2130 in GBP/USD with a target of 1.2080 and 1.2060. All the best!
