• The USD/JPY outlook points to a stronger dollar as traders await the outcome of a meeting between Trump and Zelensky.

• Traders are preparing for the Jackson Hole symposium.

• Powell might not give a clear rate cut signal.

The USD/JPY outlook points to a stronger dollar as traders await the outcome of a meeting between Trump and Zelensky. At the same time, market participants were gearing up for the Jackson Hole symposium.

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Market participants are anticipating a crucial meeting between Trump and Zelensky that could mean progress towards peace in Ukraine. The US president met Russian President Putin on Friday to talk about the war. Putin is ready for a peace deal if Ukraine will agree to the terms. Therefore, Trump will try to get Zelensky to agree to the terms and quickly end the war. 

Meanwhile, Powell will speak at the Jackson Hole Symposium and might drop clues about future policy moves. However, experts believe he might not give a clear signal of the next rate cut.

“The US central bank might cut rates in September, but it’s unlikely that the Fed chair will give a clear signal towards that later this week,” said Lee Hardman, senior currency analyst at MUFG Bank.

“It’s probably too early for them (the Fed) to have complete confidence that they can cut rates again,” he said.

USD/JPY key events today

Market participants do not expect any key releases from the US or Japan. All focus will remain on the meeting between Trump and Zelensky.

USD/JPY technical outlook: Bulls face the 30-SMA resistance

On the technical side, the USD/JPY price is challenging the 30-SMA resistance line. Meanwhile, the RSI has broken above 50, showing stronger bullish momentum. However, there is no clear direction, as the price has maintained a sideways move since its impulsive bearish leg.

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In this time, the price has chopped through the 30-SMA with no clear pattern for the highs and the lows. Therefore, it is a corrective move that might soon lead to an impulsive one. 

At the moment, the nearest resistance is at the 148.00 level. Meanwhile, the nearest support is at the 146.00 level. If bulls regain momentum, the price will likely break above the SMA and the nearest resistance. This would allow USD/JPY to retest the 150.01 level. On the other hand, if bears win, the price will challenge and break below the 146.00 level.

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• The EUR/USD forecast indicates a pullback in the euro at the start of the week.

• Trump met Russia’s Putin on Friday and said the leader is more willing to work on a peace deal.

• The dollar recovered as Fed rate cut bets eased.

The EUR/USD forecast indicates a pullback in the euro as market participants anticipate the meeting between Trump and Ukraine’s Zelensky. At the same time, the dollar recovered slightly as Fed rate cut bets eased after more data last week. 

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Trump met Russia’s Putin on Friday and said the leader is more willing to work on a peace deal rather than a ceasefire deal. However, Ukraine has to agree to Russia’s terms. Trump will meet Zelensky on Monday to try and convince him to agree to Russia’s terms and work to end the war. A peace deal would boost the euro. However, the opposite might weaken the currency. 

Meanwhile, the dollar recovered as Fed rate cut bets eased. Data last week revealed a surge in wholesale inflation and solid sales, erasing bets of a massive cut in September.

“While the data don’t all point in the same direction, the US economy looks to be in okay shape in the third quarter,” said Bill Adams, chief economist at Comerica Bank.

“The Fed is likely to cut interest rates by year-end, either in September, when markets now price in a cut, or a few months later, when Comerica forecasts a cut.”

EUR/USD key events today

Market participants do not expect key releases from the US or the Eurozone. Therefore, they will focus on geopolitical developments.

EUR/USD technical forecast: Weak momentum in bullish channel

On the technical side, the EUR/USD price trades above the 30-SMA, with the RSI above 50, suggesting a bullish bias. At the same time, the price trades within a bullish channel, respecting clear support and resistance lines. Bulls have made higher highs and lows within the channel. 

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However, since bulls broke above the SMA, they have failed to respect it as support. This means the price has punctured the line several times, showing bears are strong. At the same time, while the price has made higher highs, the RSI has made lower ones, indicating a bearish divergence. This shows that bulls have lost the enthusiasm to reach new highs. 

Therefore, bears might try to breach the SMA again. Additionally, if momentum surges, the price might break out of the channel to retest the 1.1550 support level.

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The GBPJPY pair failed to resume the bearish correctional attack, affected by forming an obstacle at 66.8%Fibonacci correction level at 198.80, forcing it to provide mixed trading by its stability near 199.90.

Note that regaining bullish bias will be by breaching the resistance at 200.65, while holding below it and stochastic attempt to exit the overbought level confirms the dominance of the sideways bias in the current period, to expect the trading confinement between the mentioned main levels, to keep monitoring the price behavior to confirm the trend by surpassing these levels.

The expected trading range for today is between 198.85 and 200.60

Trend forecast: Sideways

The GBPJPY pair failed to resume the bearish correctional attack, affected by forming an obstacle at 66.8%Fibonacci correction level at 198.80, forcing it to provide mixed trading by its stability near 199.90.

Note that regaining bullish bias will be by breaching the resistance at 200.65, while holding below it and stochastic attempt to exit the overbought level confirms the dominance of the sideways bias in the current period, to expect the trading confinement between the mentioned main levels, to keep monitoring the price behavior to confirm the trend by surpassing these levels.

The expected trading range for today is between 198.85 and 200.60

Trend forecast: Sideways

– Written by


David Woodsmith

STORY LINK Euro to US Dollar Forecast: EUR/USD’s “Upward Momentum has Faded”

The Euro to Dollar exchange rate (EUR/USD) posted net gains on Friday, reversing the bulk of Thursday’s losses as the dollar was subjected to fresh selling.

Despite higher-than-expected inflation data on Thursday, markets remain confident that the Fed will cut rates next month, while pressure on the Fed continues.

The Trump-Putin talks will be monitored closely with some hopes for progress on the Ukraine situation helping to underpin the Euro.

UoB was not expecting a retreat below 1.1645, although there was only a brief excursion below this level.

It added; “The breach of the ‘strong support’ indicates that upward momentum has faded. The current price movements are likely part of a consolidation phase between 1.1585 and 1.1705.”

Scotiabank remains generally positive on the pair; “The EUR’s broader August rebound remains intact, with the market carving out a succession of higher highs and higher lows following the brief August 1 dip under 1.14. Support intraday is 1.1640, ahead of 1.1590/00. A push through this week’s high at 1.1730 should pave the way for a retest of the upper 1.17s.”

The dollar was helped in part by stronger-than-expected wholesale price inflation data on Thursday.

Headline prices increased 3.3% in the year to July from 2.4% previously and well above consensus forecasts of 2.5 while core inflation increased sharply to 3.7% from 2.6%.

Scotiabank commented; “Yesterday’s unexpectedly large US PPI gains indicated that business margins are increasing, which is perhaps not what would be expected if tariffs were being absorbed. That may mean that higher retail prices become more apparent shortly.”

MUFG added; “Overall, the report has provided support for the US dollar by dampening expectations for more aggressive Fed easing but is unlikely on its own to reverse the current weakening trend for the US dollar in the near-term.”

Markets are still extremely confident that the Fed will cut rates at the September meeting with traders still pricing in over a 90% chance of a cut, although talk of a larger 50 basis-point cut has faded dramatically.

The Fed still faces a tough underlying decision.

According to Joseph Carpuso, head of international economics at the Commonwealth Bank of Australia; “The combination of elevated inflation and weak growth in jobs is a conundrum for the Fed.”

Scotiabank added; “If the Fed does opt to ease amid intense political pressure for lower rates and stubborn inflation, investors may become more concerned that the Fed’s inflation anchor is slipping which can only weaken the appeal of the USD.”

Friday’s data recorded a 0.5% increase in retail sales for July, marginally below consensus forecasts of a 0.6% gain for the month while core sales met expectations with a 0.3% increase.

The New York Empire manufacturing survey improved to 11.9 for August from 5.5 previously and compared with expectations of a -1.

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TAGS: Euro Dollar Forecasts