• Ahead of a batch of crucial US economic data, the Japanese Yen traded around 144 Yen against the US Dollar, hovering near its strongest levels in three weeks.
• This comes as the prospect of interest rate cuts by the Federal Reserve continues to weigh on the US Dollar while other major currencies have benefited.
• Federal Reserve officials have sounded the alarm about Labor market risks while expressing confidence that US inflation will return to the target level, indicating a readiness to cut borrowing costs soon.

In contrast, Bank of Japan Governor Kazuo Ueda told parliament last week that the BOJ could adjust monetary policy if its economic outlook holds, signaling a willingness to raise interest rates again. BOJ Deputy Governor Ryozo Himeno echoed that sentiment this week, saying the central bank would raise rates if the economy and prices continued on their current path.

On the stock trading front, Japanese stocks rose as Nvidia earnings awaited. The Nikkei 225 index of Japanese shares rose 0.22% to close at 38,372, while the broader TOPIX index rose 0.42% to close at 2,692 on Wednesday. Furthermore, Japanese stocks rose for a second straight session as investors looked ahead to Nvidia’s earnings report that could fuel a further rise in technology and artificial intelligence. Also, local stocks benefited from a weaker yen as investors continued to assess the Bank of Japan’s monetary policy outlook. Recently, BOJ Deputy Governor Ryozo Himino said the central bank would adjust the degree of monetary easing if the outlook for economic activity and prices improves. Strong performances were seen from index heavyweights Toyota Motor Corp (3.9%), Disco Corp (1.4%), Advantest (4.2%), Sony Group (2.3%) and Hitachi (2.5%). Additionally, Rakuten Group shares rose 9.2% after Morgan Stanley and Citi raised their price targets for the Japanese technology company.

On the economic front, Japan’s index of coincident economic indicators, which covers a range of data such as factory output, employment and retail sales, was revised down to 113.2 in June 2024 from a preliminary reading of 113.7. The figures followed May’s reading of 117.1, indicating the lowest level since February while maintaining a “stop falling” assessment, as the economy continues to recover moderately despite growing global headwinds, particularly from China, the US and Europe.

Meanwhile, Japanese consumer prices are expected to rise after energy subsidies were fully ended in May while the Bank of Japan has begun to consider policy normalization amid a weaker currency.

USD/JPY Technical Analysis and Expectations Today

According to the performance on the daily chart, the general trend of the USD/JPY price is still bearish. Also, investors do not care about the technical indicators moving towards strong oversold levels as much as they care about what is being said by global central bank officials regarding the future of raising interest rates or not. Currently, the closest important support levels for trading the USD/JPY are 142.60 and 141.00 respectively. Today’s US economic data: GDP growth and weekly jobless claims.

Ready to trade our USD/JPY Forex analysis? We’ve made a list of the best forex demo accounts worth trading with. 

• Tensions in the Middle East had investors rushing for the greenback.

• Incoming data might alter expectations for the size of Fed rate cuts.

• ECB policymakers are ready to start lowering borrowing costs in September.

The EUR/USD forecast points south as the dollar rallies ahead of GDP and inflation data. As Middle East tensions escalate, the dollar has recovered from recent lows due to safe-haven demand. Meanwhile, ECB policymakers are getting comfortable with a rate cut in September.

-Are you interested in learning about forex live calendar? Click here for details-

The dollar was initially weak after Powell’s speech on Friday, which solidified bets for a September Fed rate cut. However, the trend reversed this week as tensions in the Middle East had investors rushing for the greenback. The Gaza war has grown, and prospects of a ceasefire agreement have dimmed. The dollar tends to rise in times of global uncertainty. 

However, downward pressure remains as investors fully price a Fed pivot in September. Incoming data might alter expectations for the size of rate cuts. Currently, there is a higher chance of a 25-bps rate cut. However, further economic weakness and easing price pressure could lead to a more significant rate cut. 

Market participants expect GDP data today to show the economy’s state. Recent GDP figures have shown resilience, so an unexpectedly poor figure could boost rate-cut expectations. At the same time, the US will release its PCE price index on Friday, showing the state of inflation. 

Meanwhile, ECB policymakers are ready to start lowering borrowing costs in September. However, some, like Klaas Knot, remain cautious, saying more data is needed to confirm the rate cut.

EUR/USD key events today

• US prelim GDP q/q
• US unemployment claims

EUR/USD technical forecast: Bears eye the 1.1050 support after reversal

On the technical side, the EUR/USD price is collapsing after breaking below and retesting the 30-SMA. This is a sign that bears have taken charge and reversed the trend. The previous bullish trend peaked at the 1.1201 resistance level, where bullish momentum weakened.

-Are you interested in learning about forex signals? Click here for details-

Notably, the RSI made a bearish divergence, showing fading momentum as the price made higher highs. Eventually, bears overpowered bulls, pushing the price below the 30-SMA. At the same time, the RSI dipped below 50 to trade in bearish territory. The price might soon reach the 1.1050 support level due to the strong bearish bias.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Important DisclaimersThe content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party’s services, and does not assume responsibility for your use of any such third party’s website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.Risk DisclaimersThis website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.

• The EUR/USD exchange rate is in an undeniably bullish trend, and while it looks overbought, it would take a brave bet to bet against further gains this week.
• At the same time, we would caution against any volatility at the end of the month.
• The EUR/USD gains have stabilized around the 1.1200 resistance level, the highest level for the currency pair in more than a year. 

EUR/USD Technical analysis and forecast: 

Overall, the EUR/USD pair rally makes it overbought according to the Relative Strength Index (RSI), which is now at 70. Technically, the exchange rate was certainly overbought last week. Also, the relatively flat trading in the EUR/USD pair on Monday and into Tuesday allowed some overbought conditions to ease. 

Consequently, this serves as a reminder that the RSI can reverse from overbought at a stable exchange rate and does not necessarily signal a pullback. The overarching theme we’re looking for at the end of the month is a more subdued EUR/USD price action, with recent highs likely to be out of reach for now. 

Commenting on the performance of the most traded pair in the forex market, analyst Sean Osborne at Scotia Bank sees another technical signal indicating near-term exhaustion. Although his thesis is that the near-term weakness will prove limited. The analyst said, “Short-term trading patterns suggest that the euro price may have peaked in overnight trading after forming a bearish ‘evening star’ pattern on the 6-hour charts. Minor losses through quiet European trading tend to confirm this development. But losses are likely to remain limited in the near term at least.” 

According to reliable trading platforms, the Euro rose sharply against the US Dollar on Friday after Federal Reserve Chairman Jerome Powell effectively gave the green light to cut US interest rates in September: Powell said in a speech at the Jackson Hole symposium, “The time has come to adjust policy.” 

The speech was a surprise because it repeatedly pointed to concerns that the Labor market was at risk of deterioration, suggesting that the Fed needed to cut US interest rates to protect jobs. Furthermore, Financial markets had raised expectations that the Fed could start the US rate-cutting cycle with a large 50 basis point cut. 

Overall, the US dollar’s ​​trading this week will be determined by the evolution of expectations for a 50-basis point rate cut: if expectations increase, the euro could rise against the US dollar (EUR/USD). If expectations fade, the exchange rate could fall again. The highlight of the economic data will be the release of the personal consumption expenditures deflator on Friday, a measure of inflation that affects consumers. The US Federal Reserve tends to watch it closely, but we think there is limited opportunity for some kind of surprise that could change the broader narrative. 

In his speech at Jackson Hole, Jerome Powell added that he is confident that US inflation will not return suddenly and that it is now more focused on the Labor market. Obviously, this suggests that the release of the US Non-Farm Payrolls report in early September will be the next major event for the US dollar. 

The next major data release in the US will be the US jobs report on Friday. However, be aware that we are also approaching the end of the month. This can lead to some unusual non-news Forex market movements, and we will not see any unusual moves as a sign that current trends are changing. 

On the stock exchanges front, European stocks were generally higher on Tuesday, recovering from yesterday’s subdued session as financial markets continued to assess the latest economic data and gauge potential responses from major central banks. According to trading, the euro zone’s STOXX 50 index rose 0.2% to more than 4,900, while the pan-European STOXX 600 index added 0.3% to approach the 520 thresholds, its highest level in more than a month. Recently, it has been supported by major mining stocks in the broader index as the London Stock Exchange reopened after a longer weekend. 

According to an economic announcement, German consumer confidence as measured by GfK unexpectedly fell to its lowest level since May, underscoring the weak sentiment in the currency bloc’s largest economy after yesterday’s poor Ifo results. However, financial stocks rebounded with Santander, BNP Paribas, Munich Re and Allianz adding between 1.3% and 0.5%. Automakers also rose, led by Stellantis, BMW and Mercedes. Elsewhere, technology stocks continued to fall, with ASML down 0.5% ahead of Nvidia earnings today. 

Ready to trade our daily Forex forecast? Here’s a list of some of the top forex brokers in Europe to check out. 

• Market focus is squarely on the rate cut outlook in the US and the UK.

• The UK economy is doing better than expected, boosting the pound.

• The US will release GDP and PCE data this week. 

The GBP/USD forecast shows a slight pullback in a bullish trend, with the pound near a two-year high hit in the previous session. The rally to this peak came as markets bet on more rate cuts by the Fed than the Bank of England. Meanwhile, markets awaited US GDP and inflation data.

-Are you interested in learning about forex live calendar? Click here for details-

Sterling eased slightly on Wednesday after reaching a new peak. Market focus is squarely on the rate cut outlook in the US and the UK. According to bets, the Fed might implement 100 bps in cuts this year. Meanwhile, the Bank of England might cut by 40 bps after a 25 bps cut in August. At the same time, the UK economy is doing better than expected, boosting the pound.

On Friday, the BoE Governor and Fed Chair spoke about rate cuts. Powell indicated it was time for the Fed to start lowering borrowing costs because the labor market had shown weakness. As a result, bets for a September cut rose, sinking the dollar. 

On the other hand, Andrew Bailey cautioned against rushing to cut rates. He noted that it was too early to know if the fight to tame inflation was done. Consequently, rate cut expectations fell, and the pound rose. 

However, incoming data might shift the outlook for UK and US policy. The US will release GDP and PCE data this week, which might alter expectations. 

GBP/USD key events today

Trading will likely remain this as neither Britain nor the US will release major reports. 

GBP/USD technical forecast: Bears take over as bulls show exhaustion

On the technical side, the GBP/USD price is retreating after making a higher high. Nevertheless, the bias remains bullish, with the price above the 30-SMA and the RSI over 50. Bulls have maintained a steep price trend above the SMA. It recently broke above the 1.3150 resistance level and was heading for the 1.3301 critical level. However, the journey to the 1.3150 level was difficult.

-Are you interested in learning about forex signals? Click here for details-

The RSI showed a slight bearish divergence, indicating exhaustion. As a result, bears have taken over. However, the bullish trend will continue if the price stays above the SMA.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

• Market focus is squarely on the rate cut outlook in the US and the UK.

• The UK economy is doing better than expected, boosting the pound.

• The US will release GDP and PCE data this week. 

The GBP/USD forecast shows a slight pullback in a bullish trend, with the pound near a two-year high hit in the previous session. The rally to this peak came as markets bet on more rate cuts by the Fed than the Bank of England. Meanwhile, markets awaited US GDP and inflation data.

-Are you interested in learning about forex live calendar? Click here for details-

Sterling eased slightly on Wednesday after reaching a new peak. Market focus is squarely on the rate cut outlook in the US and the UK. According to bets, the Fed might implement 100 bps in cuts this year. Meanwhile, the Bank of England might cut by 40 bps after a 25 bps cut in August. At the same time, the UK economy is doing better than expected, boosting the pound.

On Friday, the BoE Governor and Fed Chair spoke about rate cuts. Powell indicated it was time for the Fed to start lowering borrowing costs because the labor market had shown weakness. As a result, bets for a September cut rose, sinking the dollar. 

On the other hand, Andrew Bailey cautioned against rushing to cut rates. He noted that it was too early to know if the fight to tame inflation was done. Consequently, rate cut expectations fell, and the pound rose. 

However, incoming data might shift the outlook for UK and US policy. The US will release GDP and PCE data this week, which might alter expectations. 

GBP/USD key events today

Trading will likely remain this as neither Britain nor the US will release major reports. 

GBP/USD technical forecast: Bears take over as bulls show exhaustion

On the technical side, the GBP/USD price is retreating after making a higher high. Nevertheless, the bias remains bullish, with the price above the 30-SMA and the RSI over 50. Bulls have maintained a steep price trend above the SMA. It recently broke above the 1.3150 resistance level and was heading for the 1.3301 critical level. However, the journey to the 1.3150 level was difficult.

-Are you interested in learning about forex signals? Click here for details-

The RSI showed a slight bearish divergence, indicating exhaustion. As a result, bears have taken over. However, the bullish trend will continue if the price stays above the SMA.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

• The USD/JPY currency pair failed to rebound upwards during yesterday’s trading, failing to exceed the 145.17 level.
• Also, the Japanese Yen soon resumed its gains, stabilizing around the 143.95 level at the beginning of today’s Wednesday session.
• Furthermore, the pair’s movements came despite geopolitical risks in the Middle East driving demand for safe-haven assets for both currencies.
• Likewise, the Japanese yen continued to receive support from the divergent monetary policies between Japan and the United States.

Last week, Bank of Japan Governor Kazuo Ueda told parliament that the Japanese central bank may adjust monetary policy if its economic forecasts prove correct, indicating its readiness to raise interest rates again. On the other hand, US Federal Reserve Chairman Jerome Powell said in his speech in Jackson Hole that it is time to adjust policy amid increasing risks to the Labor market, while expressing confidence that inflation will return to the US central bank’s 2% target.

According to economic analysts, investors are now looking to July industrial production, retail sales, and unemployment figures, as well as August Tokyo inflation figures to guide economic and interest rate expectations in Japan.

On the stock trading front, Japanese stocks rose in a broad-based advance. According to trading, the Nikkei 225 index of Japanese stocks rose by 0.47% to close at 38,289 points. Meanwhile the broader TOPIX index rose by 0.73% to close at 2,681 points on Tuesday, erasing losses incurred earlier in the session, with all sectors participating in the advance. In general, the decline in the yen helped Japanese stocks as investors continued to assess the divergent monetary policies between the Bank of Japan and the Federal Reserve.

Also, hopes that Nvidia’s earnings this week will boost AI helped. Index heavyweights such as Mitsubishi Heavy Industries (4%), Mitsui E&S (8.7%), Seven & I Holdings (4.1%), Toyota Motor (1.8%) and Sony Group (2.8%) were strong performers. Meanwhile, technology stocks were mostly lower including LaserTech (-4.3%), Disco Corp (-2.1%) and Tokyo Electron (-0.9%).

USD/JPY Technical analysis and Expectations Today

Based on the daily chart, the USD/JPY exchange rate is still in its broader downtrend and the next support levels will be 141.65 and 140.00 respectively which will move the technical indicators towards strong oversold levels. On the other hand, and for the same time frame, the psychological resistance of 150.00 will remain the most important for bulls to regain control of the trend. Obviously, the USD/JPY rate will continue to be influenced by the path of global central bank policies as well as investors’ appetite for risk or lack thereof.

Ready to trade our USD/JPY Forex forecast? Here’s a list of some of the best regulated forex brokers to check out. 

EUR/USD Current price: 1.1112

• Upcoming first-tier data and earnings results exacerbate caution on Wednesday.
• The US Dollar found demand after reaching a fresh YTD low at 100.52.
• EUR/USD could extend its slide in the near term, but buyers will likely return at lower levels.

The EUR/USD pair is in retreat mode on Wednesday, as the US Dollar finally found some near-term demand, approaching the 1.1100 threshold ahead of Wall Street’s opening. The USD advance seems to be the result of some profit-taking after the Dollar Index (DYX) neared the 100 level for the first time in over a year.

Market players are turning more cautious ahead of first-tier data and upcoming earnings reports. Both the Eurozone and the United States (US) will release inflation updates by the end of the week, while NVIDIA, the AI giant, will unveil its results after the closing bell.

Meanwhile, the macroeconomic calendar had nothing relevant to offer. The EU released M3 Money Supply figures, which rose 2.3% YoY in July, missing the 2.7% expected. Across the pond, the US published MBA Mortgage Applications for the week ended August 23, up 0.5% after declining 10.1% in the previous week.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for EUR/USD shows the bearish momentum is building up, although given that the pair has already lost roughly 100 pips, the odds for additional slides seem limited. Technical indicators head firmly south within positive levels, retreating from overbought readings but still above their midlines, supporting a downward extension but far from indicating the pair has set an interim top. Finally, EUR/USD keeps developing far above a bullish 20 Simple Moving Average (SMA), while the 100 and 200 SMAs offer modest upward slopes well below the shorter one, suggesting bulls are still dominating the wider perspective.

In the near term, and according to the 4-hour chart, the risk skews to the downside. Technical indicators have pierced their midlines with strength and are currently approaching oversold readings. At the same time, the pair has broken below a flat 20 SMA, while the longer ones are losing their upward momentum far below the current level.  A clear break below the 1.1100 mark could spur additional selling, although it is possible bulls will take their chances around the level.

Support levels:   1.1100 1.1065 1.1020

Resistance levels: 1.1150 1.1190 1.1240

• The euro initially did rally against the yen during the trading session on Tuesday but has been completely wiped out at this point.
• Late in the day in New York, we are trading near the 161 yen level, and I am watching the 160 yen level because a breach of that to the downside could end up being a very negative turn of events.
• In that environment, I imagine the Japanese Yen is probably picking up strength against most things.

On the other hand, if we turn around and break above the 164 Yen level then we would not only clear the most recent consolidation, but we would also clear the 200 day EMA both of which would capture a lot of attention. Keep in mind that this is more or less about the Japanese Yen.

With that being the case, I think you’ve got a situation where you need to watch other pairs such as the US dollar against the Japanese yen or the New Zealand dollar against the Japanese yen. Granted, I think the euro’s overbought against several currencies right now. So, it may not be the big mover when it comes to a reverse the Japanese yen’s fortunes. But really, at this point, it should move in the same direction.

Back and Forth is the Norm?

All things being equal, this is a market that I think continues to see a lot of back and forth and choppiness and this 400 point range. Keep in mind we recently sold a massive number of positions in the market. So, I think it makes a lot of sense that we have to stabilize and probably see a lot of trouble between now and any type of recovery as far as hanging on to a position. This is a very noisy thing to go through. That being said, if we break down below the 160 yen level, then it’s likely that we go to the 155 yen level underneath.

Ready to trade our daily Forex analysis? We’ve made a list of the best forex demo accounts worth trading with.