Forex News Analysis by LiteForex

Morning Market Review

EUR/USD

EUR is again showing gains against USD during today's Asian session, returning to previous record highs, updated at the end of last week. Market activity remains moderate as investors are in no rush ahead of the publication of minutes from the US Federal Reserve's two-day meeting on Wednesday. Analysts do not expect any significant changes in the vector of monetary policy; however, the comments of officials are more important today than ever. There is a possibility that the Fed representatives will speak out on adjusting the target levels for inflation, given the alarming situation in the economy, as well as touch on the prospects for programs to support the economy, which are now being actively discussed in the Senate. Interesting statistics from Europe will appear only on Thursday, when Germany will report on the dynamics of GDP for Q2 2020, as well as publish the July statistics on unemployment and consumer inflation.

GBP/USD

GBP is showing ambiguous trading during today's morning session, close to the highs updated the day before. GBP retains a fairly confident "bullish" trend; however investors prefer to wait for the publication of the minutes of the Fed meeting. During the day, a block of macroeconomic statistics will be released in the UK, which, however, is unlikely to have a noticeable impact on the instrument's dynamics. One way or another, analysts expect the publication of the number of Mortgage Approvals in June (their number should increase by 33.9K). In addition, Consumer Credit data will be presented, as well as Net Lending to Individuals, which in May showed a decrease of 3.4B pounds.

AUD/USD

AUD has seen marginally gains against USD during today's Asian session, trading near record highs revised a week ago. Buying activity on the instrument is constrained by expectations of the publication of the minutes of the two-day Fed meeting, which, as analysts hope, will clarify the prospects for monetary policy in the near future. The macroeconomic statistics released in Australia today puts additional pressure on the instrument. Trimmed Mean CPI in Q2 2020 decreased by 0.1% QoQ after growing by 0.5% QoQ over the previous period. Analysts had expected an increase of 0.1% QoQ. At the same time, Consumer Price Index in Q2 2020 collapsed by 1.9% QoQ after rising by 0.3% QoQ earlier. Analysts expected a decrease of 2% QoQ.

USD/JPY

USD shows flat dynamics of trading during today's morning session, remaining near the local lows since mid-March, updated the day before. USD remains under significant pressure amid growing uncertainty associated with increased political risks, as well as the further spread of the COVID-19 epidemic in the country. Today, the activity of "bears" is somewhat reduced, which is associated with the expectation of the publication of the Fed meeting minutes. Analysts do not expect changes in the key interest rate, but they are eager to hear the comments of officials, since at present the country is clearly not coping with the number of economic challenges it faces. Interesting statistics from Japan will appear only on Thursday, when June data on the dynamics of Retail Sales and the volume of investments in the Japanese economy over the past few weeks are released.

XAU/USD

Gold prices are consolidating during today's Asian trading, retreating from record highs, updated the day before. The emergence of corrective dynamics from historical highs is associated with the expectation of the publication of the results of the US Federal Reserve meeting on Wednesday. In addition, technical factors also contribute to the development of the "bearish" trend, as the instrument has been actively increasing for eight trading sessions in a row. In turn, gold is still feeling significant support in the market. The increasing geopolitical risks, the unstable state of the American economy, as well as high uncertainty about the COVID-19 epidemic are pushing the asset to become a new reserve currency.

EUR/USD: EUR is corrected

Current trend

EUR is showing flat dynamics against USD during today's Asian session, trading near record highs updated the day before. The positions of USD came under pressure again yesterday after the publication of the minutes of the US Federal Reserve meeting. As expected, the regulator did not change the parameters of monetary policy, and at the follow-up press conference, the Chair of the Fed, Jerome Powell, promised to continue using the full range of available instruments to support the national economy. In his speech, Powell also mentioned the volatile labor market, noting that many Americans have yet to lose their jobs.

European investors are focused on macroeconomic statistics from Germany and the eurozone today. Among other things, analysts expect the release of July data on the labor market and the dynamics of consumer inflation in Germany. In addition, data on German GDP for Q2 2020 will be published.

Support and resistance

Bollinger Bands in D1 chart show stable growth. The price range expands, freeing a path to new record highs for the "bulls". MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic, having approached its highs, is trying to reverse downwards, signaling in favor of the development of corrective decline in the ultra-short term.

The "bearish" trend is likely to appear at the end of the trading week.

Resistance levels: 1.1804, 1.1850, 1.1900.
Support levels: 1.1723, 1.1657, 1.1600, 1.1546.

XAU/USD: general review

Current trend

Gold prices are showing moderate gains again in trading in today's Asian session, recovering from the correctional decline the day before. On Thursday, the instrument retreated from its record highs and interrupted the historic rally to the level of 2000.00 amid technical factors and corrective sentiment on the US stock markets. In turn, with the opening of the American trading session on Thursday, the pressure on USD began to increase after the publication of disappointing statistics on the annual dynamics of US GDP for Q2 2020. Political risks also intensified after Donald Trump posted a proposal on his Twitter to postpone the presidential elections in the USA due to the difficult epidemiological situation in the country.

Support and resistance

Bollinger Bands in D1 chart show stable growth. The price range is widening from above, clearing the way for the "bulls" to new all-time highs and the target level of 2000.00. MACD indicator is growing preserving a weak buy signal (located above the signal line). For a long time now, Stochastic has been near its highs, trying to reverse into a downward plane. As before, the indicator points at the greatly overbought instrument in the ultra-short term.

It is necessary to wait for clarification of the situation in the market to open new positions. Some of the long positions should be kept for some time.

Resistance levels: 1980.84, 2000.00.

Support levels: 1955.00, 1935.00, 1910.00, 1895.06.

Morning Market Review

EUR/USD

EUR shows flat dynamics of trading during today's Asian session, consolidating after the corrective decline in the instrument at the end of last week. On Friday, after updating record highs since May 2018, EUR fell sharply, which was mainly due to technical factors of taking long profits ahead of the weekend. Additional pressure on EUR positions was exerted by weak macroeconomic statistics on the dynamics of GDP in the euro zone for Q2 2020. In quarterly terms, GDP showed a 12.1% QoQ decline after a 3.6% QoQ contraction in the prior period. The indicator came out close to its forecasts at –12% QoQ. In annual terms, the decline in GDP in the euro area amounted to 15% YoY, which turned out to be slightly worse than analysts' expectations at the level of –14.5% YoY. In turn, data on consumer inflation in the euro area for July contributed to the strengthening of EUR. Consumer Price Index rose by 0.4% YoY, accelerating from the previous value of 0.3% YoY. Experts expected a slowdown to 0.2% YoY.

GBP/USD

GBP demonstrates moderate gains against USD again during today's morning session, returning to the local highs, updated at the end of last week. The instrument adds about 0.10% and is testing the level of 1.3100 for a breakout. The "bullish" activity for the instrument is supported by the weakness of USD, while the fundamental picture for GBP remains unchanged. Investors remain concerned about the uncertainty surrounding the conclusion of a trade agreement between the EU and the UK before the transition deadline at the end of the year. In addition, the UK is showing alarming statistics on the incidence of coronavirus, which puts plans to lift quarantine restrictions in the country into question. At the end of last week, Prime Minister Boris Johnson noted that further lifting of restrictions will inevitably lead to an increase of incidence. Today, investors expect the publication of statistics on business activity in the US and UK Manufacturing sector for July.

AUD/USD

AUD is marginally strengthening against USD during today's Asian session, recovering from a strong decline late last week as the instrument retreated from its record highs since February 2019. A certain support for AUD is provided by the macroeconomic statistics from Australia, published today. AiG Manufacturing index went up from 51.5 to 53.5 points in July. In the manufacturing sector, according to the Commonwealth Bank, activity rose from 53.4 to 54 points, better than the neutral forecasts. Inflation data from TD Securities in July showed an increase of 0.9% MoM and 1.3% YoY, which turned out to be significantly better than the data for the previous period: +0.6% MoM and +0.7% YoY. Chinese statistics also provided additional support to the instrument. Caixin Manufacturing PMI rose from 51.2 to 52.8 in July, beating market forecasts of 51.3.

USD/JPY

USD is showing ambiguous trading dynamics against JPY during today's Asian session, trying to develop corrective growth, the momentum for which was formed at the end of last week. Strengthening of USD positions is associated with technical factors, while there are still not many fundamental reasons for USD growth. Friday's statistics from the US again turned out to be heterogeneous, and the greatest support for USD was provided only by the Chicago PMI, which in July rose sharply from 36.6 to 51.9 points, which turned out to be better than expected by 43.9 points. JPY finds some support among macroeconomic publications from Japan. Jibun Bank Manufacturing PMI in July rose from 42.6 to 45.2 points with a neutral forecast. At the same time, the data also reflected the fall of the Japanese economy by 0.6% QoQ and 2.2% YoY in Q2 2020, which, however, did not come as a surprise.

XAU/USD

Gold prices are showing ambiguous dynamics during today's morning session, trading near record highs and a psychological level of 2000.00. The demand for the asset remains high against the background of continuing uncertainty in the market, as well as the progressive weakness of USD. The risks associated with the coronavirus pandemic are not going away and are likely to remain relevant until a resistant vaccine emerges and a widespread vaccination campaign begins. There are also geopolitical tensions on the market associated with the aggravation of relations between the United States and China. The parties continue to exchange mutual sanctions complicating the process of global economic recovery. Domestic political situation in the United States should be taken into account as well. In November, the US presidential election is to take place, which will have to be held in an environment of increased epidemiological risks.

WTI Crude Oil: oil prices show flat dynamics

Current trend

WTI crude oil prices are trading flat after a moderate increase at the beginning of the week. The growth of quotations on Monday was caused by rather positive statistics on the corresponding sectors of the economy in Europe and Asia Pacific region. In turn, the further rising of the instrument was restrained by fears of an increase in the incidence of COVID-19, as well as growing supply of oil at the market. Since August, the volume of oil production cuts by OPEC+ members has been decreasing from the previously determined 9.7M barrels per day to the current 7.7M barrels.

Today, investors are focused on the publication of the API report on oil reserves for the week ending July 31. The previous report showed a sharp decline of 6.829M barrels.

Support and resistance

Bollinger Bands on the daily chart have been showing lateral trend for a long time. The price range almost does not change; however, it is quite consistent with the observed dynamics in the market. The MACD indicator is going down, maintaining a weak sell signal (located below the signal line). Stochastic, on the other hand, is showing moderate growth in response to the emergence of “bullish” trend on Monday.

To open new trading positions, one should wait until the signals from technical indicators are clarified.

Resistance levels: 41.00, 41.41, 42.00, 42.31.
Support levels: 40.00, 39.15, 38.47, 38.00.

Brent Crude Oil: general review

Current trend

Oil prices are trading within a narrow range around $44 per barrel.

Quotes have been at the same levels for over a month, ignoring external events. They were not affected by the data on the next significant reduction in energy reserves from the API Institute. According to the report, the figure fell by –8.857M against an expected decrease of –3.300M. Today, EIA will provide its statistics, and its forecast is –3.001M.

In the main arbitrage position of the spread between Brent Crude Oil and WTI Crude Oil, the corridor has been a little more than $3 for a long time, which indicates a formed position. Its last change was observed in early June when quotes grew. It is not known when this position will be implemented but according to the Commodity Futures Trading Commission, the number of pure speculative positions on the asset began to fall, reaching 532.6K from 548.9K in the previous week. This is a fairly high rate of decline but not sufficient for asset price fluctuations.

Support and resistance

Quotes move within a narrow range of 5%. Alligator indicators’ EMA fluctuation range narrows and the fast EMAs crossed. AO oscillator’s histogram is above the zero line but has almost approached the transition level. Most of the markers indicate a possible beginning of a downward correction.

Resistance levels: 45.20, 51.60.
Support levels: 39.00, 31.20.

XAG/USD: prices update record highs

Current trend

Silver prices are actively climbing during today's morning trading, updating record highs since April 2013 and trying to consolidate above the level of 27.00. A new rally for the instrument was due to the weak macroeconomic publications from ADP on employment in the US, which could lead to a slowdown in the recovery of the American economy.

In turn, some support for USD is provided by positive expectations regarding the formation of a new package of measures to support the US economy in Congress by the end of this week. A vote for the introduction of new stimulus measures may take place as early as next week. Another support factor for USD is noticeable improvement in the situation with the dynamics of the coronavirus incidence in the USA, as well as a number of promising forecasts for the development of a vaccine against COVID-19 in the near future.

Support and resistance

Bollinger Bands in D1 chart show stable growth. The price range is expanding; however, it fails to catch the development of "bullish" sentiments. MACD indicator is growing preserving a stable buy signal (located above the signal line). Stochastic retains steady upward direction, but is located near its highs, which indicates overbought instrument in the ultra-short term.

Existing long positions should be kept until technical indicators are clarified.
Resistance levels: 28.00, 28.70.

Support levels: 27.00, 26.17, 24.92, 24.00.

XAU/USD: gold rises

Current trend

Gold quotes are actively growing, setting a new record around $2074 per ounce during yesterday's trading session.

The positive dynamics of the precious metals market attracts more and more new investors who continue to push quotes up. The explosive growth was catalyzed by the fall of the US dollar: traders began to convert assets into gold and oil, and the volumes were distributed in approximately equal shares. The weakening of the US currency has slowed down recently, while the growth of gold continues: investments in oil have not been profitable for more than a month, and investors began to look for a more promising shelter, thereby provoking a flow of cash liquidity into gold from oil.

The macroeconomic indicators of China, the main importer of gold, also speak of the panic nature of growth. The volume of imports of physical gold in July fell to –1.4%, therefore, the growth is formed by the purchase of exchange contracts, which will only grow.

Support and resistance

After reaching the global maximum at 2074.0, the price began to correct downward. Technical indicators keep a global buy signal. The range of fluctuations of the EMA indicator Alligator expands, and the histogram of the AO oscillator forms upward bars.

Resistance levels: 2075.0, 2100.0.
Support levels: 2040.0, 1945.0.

GBP/USD: the pound is consolidating

Current trend

GBP is showing insignificant growth against USD during today's Asian session. After a noticeable correctional decline on August 7, the "bulls" are trying to recover again, although there are not many reasons for the return of the uptrend at the beginning of the week. The short-term strengthening of USD on Friday was facilitated by the publication of the US labor market report for July. The data turned out to be noticeably better than expectations, but they still could not reverse the global trend towards USD depreciation.

In turn, GBP was moderately supported on Friday by the news of the UK's readiness to conclude a trade agreement with Japan by the end of August. Investors are obviously more interested in a trade deal with the EU, but the establishment of other trade ties in one way or another strengthens the position of the UK after Brexit.

Support and resistance

Bollinger Bands in D1 chart show active growth. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD reversed into a descending plane, having formed a new sell signal (located below the signal line). Stochastic retains a steady downtrend and is currently at the center of its area.

The development of a full-fledged correctional decline is possible in the short and/or ultra-short term.

Resistance levels: 1.3100, 1.3200, 1.3300.
Support levels: 1.3000, 1.2900, 1.2812, 1.2766.

Morning Market Review

EUR/USD

EUR is showing insignificant growth against USD during today's Asian session, correcting after falling the day before. USD was supported on Monday by decrees signed by President Donald Trump last weekend. Among other things, Trump has temporarily extended the payment of increased unemployment benefits to American citizens while lawmakers in Congress fail to agree on a new stimulus package. At the same time, the new benefit was revised downward from USD 600 to USD 400, and a quarter of the amount will have to be covered from the state budgets. European investors are awaiting the publication of macroeconomic statistics on economic sentiment from ZEW today. The indicators are predicted to show a slight increase in August; however, noticeable growth of EUR because of these data is unlikely.

GBP/USD

GBP shows moderate growth against USD during today's Asian session, continuing the development of the "bullish" impulse formed yesterday. The instrument is still trying to win back the losses of last Friday; however, the buying activity for GBP remains at a rather low level, as investors expect new drivers to appear on the market. Today traders are focused on the data on the UK labor market for June and July. Claimant Count in July rose sharply by 94.4K after falling by 28.1K last month. ILO Unemployment Rate remained at the level of 3.9% (3M) with the forecast of growth to 4.2% (3M).

NZD/USD

NZD is strengthening against USD during today's Asian session, recovering from a sharp decline at the end of last trading week, when the instrument responded to the publication of the US labor market report for July. Macroeconomic statistics from China provide some support to the instrument, while the continuing geopolitical tensions between the USA and China, as well as the uncertain situation around the COVID-19 pandemic contribute to the development of multidirectional dynamics. Macroeconomic statistics from New Zealand released tonight did not have a noticeable effect on the instrument. Electronic Card Retail Sales in July decreased from 15.6% MoM to 1.1% MoM, which turned out to be significantly worse than the expected 13.8% MoM. At the same time, in annual terms, the indicator increased from 8% YoY to 11.4% YoY. New Zealand investors are focused on the RBNZ meeting on interest rates, which will take place on Wednesday. Analysts do not expect changes in the vector of monetary policy at the moment.

USD/JPY

USD has shown moderate gains against JPY during this morning session, trying to consolidate above 106.00 again. USD is supported by the initiatives of Donald Trump, who signed several decrees aimed at stimulating the economy, without waiting for the resolution of all controversial issues in the American Congress. According to the signed order, the government will resume the payment of increased unemployment benefits of USD 400, which will be partially funded from the budget of specific states. The move, according to analysts, will not only help ease the debt burden of American citizens, but will also allow Trump to increase his popularity among voters ahead of the presidential elections this fall.

XAU/USD

Gold prices are declining during today's Asian trading session, continuing the development of the corrective impulse that formed at the end of the last trading week, when the instrument retreated from its record highs. Moderate growth of USD in response to the signing by Donald Trump of a number of decrees, in particular, on the resumption of the payment of increased unemployment benefits, contributed to the maintenance of the "bearish" dynamics on the instrument yesterday. In turn, the further escalation of tensions between the USA and China contributed to the strengthening of gold, which remains in high demand as a safe-haven asset.