• For the second consecutive day, the EUR/USD currency pair has been under selling pressure as profit-taking emerged following the pair’s break above the 1.1000 psychological resistance level, its highest in seven months, at the beginning of this shortened trading week.
• Selling pressure pushed the pair towards the 1.0903 level before stabilizing around 1.0920 at the time of writing this analysis, awaiting any new developments.
• Recently, the EUR/USD has been strongly influenced by signals from global central banks regarding the future of tightening, as well as concerns about a US economic recession.
• The euro is somewhat vulnerable, but it has made relative gains. Last Friday’s US jobs data raised concerns about the US economy slipping into recession. 

On the stock trading platforms front, German stocks rose. Germany’s DAX rose 0.8% to 17,485 points on Wednesday, tracking gains in its European peers as traders try to shake off concerns about the global economy and as Bank of Japan Deputy Governor Uchida offers investors some confidence by saying the central bank will not raise interest rates when financial markets are unstable. Meanwhile, earnings season continues with Continental up about 5% after the company delivered better-than-expected results despite cutting its full-year sales guidance due to lower car production.

On the other hand, Siemens Energy shares fell about 0.5% despite reporting a smaller net profit loss in the second quarter. Commerzbank lost about 4.6% after reporting a drop in profits and Puma fell more than 12% after reporting a drop in sales and narrowing its full-year operating profit forecast.

In the same context, French stocks break a 4-day losing streak. The CAC 40 index rose 0.8% to 7,189 points on Wednesday, snapping a four-session losing streak, supported by improved investor sentiment as concerns over the global economy eased. Also, sentiment was boosted by Bank of Japan Deputy Governor Uchida’s assurance that the central bank would not raise interest rates amid market volatility. The banking sector was among the best performers, with BNP Paribas, Societe Generale and Credit Agricole adding between 2.2% and 2.3%. Other notable gainers included Carrefour, Saint-Gobain, Schneider Electric, Renault and Legrand, which rose between 1.6% and 2.7%.

On the domestic front, France’s trade deficit narrowed to €6.1 billion in June 2024 from €7.7 billion the previous month and better than expected €7.5 billion. This was the smallest trade deficit in three months, with exports up 3.4% month-on-month to €51.7 billion, while imports fell 0.2% to €57.8 billion.

According to the economic calendar, German import growth below expectations. Imports to Germany rose 0.3% month-on-month to €107.3 billion in June 2024, after a 5.5% decline in the previous period. The latest reading was below expectations of 2.8% growth, as purchases from outside the EU fell by 0.4%, mainly from China (-4.9%), the US (-6.5%) and Russia (-1.5%), while those from the UK (-11.1%) increased. Imports from the EU, meanwhile, grew by 1.0%, supported by purchases from non-EU regions (3.7%). Looking at the January-July 2014 period, purchases contracted by 6.0% compared to the same period last year to €658.9 billion.

Also, exports from Germany fell by 3.4% month-on-month to a six-month low of €127.7 billion in June 2024, worse than market expectations of a 1.5% decline, following a 3.1% decline in the previous month, the sharpest decline since last December. According to the announcement, shipments to the European Union fell by 3.4%, driven by exports from the eurozone (-3.2%) and the non-eurozone area (-3.7%). Exports to third countries also declined by 3.5%, with exports to the United States contracting by 7.7%, while exports to Britain and Russia fell by 0.6% and 3.2%, respectively.

In contrast, exports to China rose by 3.4%. During the first seven months of 2024, exports decreased by 1.1% compared to the same period last year to 798.8 billion euros.

EUR/USD Technical analysis and forecast:

The neutrality of the EUR/USD price performance continues, and the bullish bias will be stronger if it returns to stability above the psychological resistance of 1.1000 again. On the other hand, according to the performance on the daily chart, returning to the support area of ​​1.0820 will be important for the bears to control the trend again. Therefore, we still prefer to sell the EUR/USD from every upward level.

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

• GBP/USD continues to edge higher after posting strong gains on Thursday.
• The pair could face next technical resistance at 1.2780.
• Improving risk mood could help the pair extend its recovery heading into the weekend.

After falling to its weakest level since early July below 1.2700 on Thursday, GBP/USD gained traction and closed the day in positive territory. The pair preserves its recovery momentum and continues to stretch higher toward 1.2800 in the European session on Friday.

The US Department of Labor reported on Thursday that the number of first-time applications for unemployment benefits dropped to 233,000 in the week ending August 3 from 250,000 in the previous week. The immediate market reaction to this data helped the US Dollar (USD) gather strength and dragged GBP/USD lower.

Later in the session, the USD lost its footing as risk flows started to dominate the action in financial markets. Reflecting the upbeat mood, Wall Street’s main indexes registered impressive gains, with the Nasdaq Composite leading the rally with a 3% upsurge.

At the time of press, US stock index futures were up between 0.2% and 0.6% on the day. In case the mood remains upbeat in the American session on Friday, the USD could struggle to find demand and allow GBP/USD to extend its recovery.

On the other hand, investors could look to move to the sidelines in case they see a possibility of geopolitical tensions escalating again over the weekend. In this scenario, week-end flows could cause GBP/USD to lose its traction.

GBP/USD Technical Analysis

GBP/USD broke above the descending trend line and the Relative Strength Index (RSI) indicator on the 4-hour chart rose toward 60, reflecting a bullish tilt in the short term outlook.

On the upside, 1.2780 (Fibonacci 61.8% retracement of the latest uptrend) aligns as first resistance before 1.2810 (200-period Simple Moving Average (SMA)) and 1.2830-1.2835 (Fibonacci 50% retracement, 100-period SMA). 

Supports could be seen at 1.2710 (Fibonacci 61.8% retracement), 1.2670 (static level) and 1.2620  (static level, beginning point of the latest uptrend).

• US unemployment claims figures revealed a drop to 233,000.

• Despite signs of weakness, the US labor market remains resilient.

• BoJ minutes on Thursday showed a more hawkish tone among policymakers.

The USD/JPY outlook leans bullish as the dollar recovers following upbeat US employment figures. Meanwhile, the yen extended declines as recent recession worries eased and risk appetite improved.

-Are you looking for automated trading? Check our detailed guide-

On Thursday, the US released unemployment claims figures showing a drop to 233,000, the most significant decline in nearly a year. Economists had expected 240,000 claims. The figures eased fears that the labor market was deteriorating rapidly. Last week, data showed a massive jump in the unemployment rate, sparking fears of a slowdown. This panic boosted the yen, considered a haven in times of uncertainty. 

However, calm later returned as data showed other sectors of the US economy remained resilient. The dollar traded near a four-month low as Fed rate cut expectations surged. However, this decline paused as the market turmoil eased. Despite signs of weakness, the labor market remains resilient. Nevertheless, last week’s report was a catalyst for the Fed to start lowering borrowing costs to avoid a new downtrend in the sector. 

Meanwhile, the yen has remained vulnerable since the Bank of Japan Deputy Governor dashed hopes for a near-term rate hike. He called for a pause because of recent volatility in the global markets. Meanwhile, BoJ minutes on Thursday showed a more hawkish tone, increasing the uncertainty on the central bank’s policy outlook. 

USD/JPY key events today

It might be a slow end to the week as investors do not expect key reports from Japan or the US. 

USD/JPY technical outlook: Bulls steady above the 30-SMA

On the technical side, the USD/JPY price trades above the 30-SMA, and the RSI is above 50, indicating a bullish bias. This shift comes after the price reversed at the 142.56 level. Here, the price got deeply oversold, allowing bulls to resurface.

-If you are interested in forex day trading then have a read of our guide to getting started-

The new direction above the SMA will allow the price to revisit the 150.03 resistance level. If it breaks above, it will reach the 155.01 resistance. However, there is also a chance that this is only a deep pullback before the price reverses to the downside. Still, bears will only return if the price breaks below the 30-SMA. Otherwise, USD/JPY will start making higher highs and lows.

Looking to trade forex now? Invest at eToro!

67% 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.

• Recently, the global risk-off sentiment has weighed on the British pound in global markets, with aggressive covering of short yen positions.
• Prior to this, the pound benefited from carry trade deals as global investors sold the yen to fund long positions in higher-yielding assets, including the pound.
• Recently, the GBP/USD currency pair plummeted to the 1.2662 support level, its lowest in over a month, and is currently stabilizing around the 1.2695 level at the time of writing this analysis, awaiting any new developments.

Recently, the US jobs data last Friday increased fears that the US economy is sliding into recession. There are also concerns about increasing tensions in the Middle East. According to reliable trading platforms, the British pound against the euro (GBP/EUR) exchange rate recorded further sharp losses to an 11-week low of 1.1660 before recovering slightly to 1.1690 amid increased volatility. The pound was also somewhat affected by the Bank of England’s interest rate cut last week, although the decline in global risk conditions was the main factor. As is well known, the British currency is closely linked to risk trends. When stock markets are strong and there is strong interest in the carry trade, the pound performs well.

However, when conditions deteriorate, the pound comes under pressure.

On the economic side, the Office for National Statistics data showed that the UK economy’s post-pandemic growth was stronger than previously expected. According to revised data from the Office for National Statistics (ONS), the UK economy emerged from the Covid-19 pandemic in a stronger state than previously thought. The new estimates put annual GDP growth for 2022 at 4.8%, up from the previous estimate of 4.3%.

Small revisions to 2020 and 2021 reflect economic adjustments.

The ONS update, released on Wednesday, also includes minor 0.1 percentage point revisions to GDP growth estimates for 2021 and 2020, with previous year figures remaining unchanged. Overall, these revisions reflect a more accurate representation of economic activity, taking into account the full range of administrative and survey data now available to the ONS.

Stronger growth in key sectors drives GDP revision

The updated estimate for 2022, a year marked by rising inflation and market turmoil following Liz Truss’s “mini budget”, is partly due to stronger growth in the transport, professional, scientific, and technical services industries. The ONS’s full dataset provided a clearer picture of the contributions of these sectors to the economy. In addition, the revised figures consider the changing economic structure after the pandemic. The health sector, which saw its share of the economy increase during the pandemic, remained larger in 2022 as the National Health Service worked to address the backlog of care. Analogously, the share of the energy sector in economic activity grew due to rising global oil and gas prices following Russia’s invasion of Ukraine.

Hospitality and manufacturing sectors remain affected

By contrast, the hospitality sector, which was severely impacted by Covid-19 lockdowns, remains smaller than it was before the pandemic. The manufacturing sector’s share of output has also fallen, impacted by higher energy prices. Also, the ONS has revised its assessment of the rail and air transport sectors during the pandemic. The rail industry, which received government subsidies to maintain operations, was found to be a bigger drag on growth in 2020 and 2021 than previously thought, as airlines largely ceased operations.

Annual revisions less dramatic than previous years

This year’s ONS revisions were less dramatic than those conducted in the previous two years. Last year, the agency’s revisions led to a significant reassessment of the UK’s economic performance during the pandemic, showing that the economy was more resilient and less of an international outlier than initially thought. Overall, the latest figures reinforce this revised view, suggesting that cumulative GDP growth from 2020 to 2022 was 2.1%, higher than the previous estimate of 1.9%. In September, the ONS will publish figures that will align GDP estimates for 2023 and 2024 with the updated and reweighted data, providing a clearer view of the ongoing economic recovery.

According to stock trading platforms, the FTSE 100 index of UK shares rose 1% on Wednesday, attempting to recover from a recent stock market slump, with most companies posting gains. Heavyweights such as HSBC Holdings and AstraZeneca saw gains of more than 1%, while Shell and BP rose 0.9% and 0.5% respectively, and Unilever rose 0.5%. Housebuilders also performed well, rising more than 1.3% after data revealed a significant rise in house prices in the country in July.

Technical forecasts for the GBP/USD pair today:

According to the performance on the daily chart, the bearish performance of the GBP/USD price will remain in place and the break of the 1.2600 support confirms the control of the bears and the readiness for stronger losses. Thus, moving the technical indicators towards strong oversold levels. Technically, the pound may remain under pressure from the Bank of England’s interest rate cut signals and if the risk-averse sentiment among investors continues as it has been recently. On the other hand, and over the same time frame, the break will be the first downtrend is moving towards the resistance 1.2885.

Ready to trade our Forex daily analysis and predictions? Here are the best forex trading platforms UK to choose from. 

ARK Invest Founder, CEO, and CIO Cathie Wood recently commented on Treasury yields and the Fed Funds Rate, stating,

“The metal-to-gold ratio suggests that the 10-year Treasury bond yield should be around 2% today, not where it is at 3.8% or last October’s 5%. If the 10-year Treasury should yield ~2% today, should the Fed funds rate be closer to 1%?”

The Bank of Japan’s Summary of Opinions revealed the intention to return the policy interest rate to the neutral rate over time, projected at 1%. If interest rate differentials do matter, the outlook is particularly bearish for the USD/JPY.

US Economic Calendar

On Friday, August 9, investors should track FOMC Member speakers. Insights on the US labor market, the economic outlook, and the interest rate trajectory may influence USD/JPY demand. Concerns about the US labor market and the economy, and calls for multiple rate cuts could push the USD/JPY below 145.

US initial jobless claims data from Thursday, August 8, eased immediate concerns about the US labor market. However, US continuing jobless claims continued to trend higher, affirming a softer labor market.

The unexpected rise in the US unemployment rate and continuing jobless claims trends supported multiple 2024 Fed rate cuts.

Rising expectations of a more dovish Fed rate path could signal a USD/JPY drop toward 140.

Arch Capital Global Chief Economist Parker Ross commented on the jobless claims report, stating,

“Recall that initial claims are flows into unemployment, while continuing claims are a reflection of how many people are unemployed. Flows (i.e. layoffs) have been relatively normal for most of 2024, but unemployed workers are taking longer to find a new job, which is reflected in the much higher level of continuing claims vs initial claims relative to recent non-COVID norms.”

Parker’s observations align with FOMC Member Thomas Barkin’s views on the US Labor Market. On Thursday, Barkin noted that firms were neither hiring nor firing, which could shift in either direction.

Short-term Forecast: Bearish

USD/JPY trends will hinge on central bank commentary. Support for multiple Fed rate cuts and pressure on the Bank of Japan to prepare for another rate hike could trigger another Yen carry trade unwind and a USD/JPY drop below 140.

Investors should remain alert. Monitor real-time data, central bank insights, and expert commentary to adjust your trading strategies accordingly. Stay updated with our latest news and analysis to manage USD/JPY volatility.

USD/JPY Price Action

Daily Chart

The USD/JPY remained below the 50-day and 200-day EMAs, affirming the bearish price signals.

A USD/JPY break above the 148.529 resistance level and the trend line would support a return to 150. Furthermore, a breakout from 150 could signal a move toward the 151.685 resistance level.

Central bank commentary needs consideration on Friday.

Conversely, a break below 147.500 could signal a fall toward the 145.891 support level. If the USD/JPY drops below the 145.891 support level, the bears could target the 143.495 support level.

The 14-day RSI at 32.39 suggests a USD/JPY drop below 147.500 before entering oversold territory.

GBP/USD Forecast: Pound Sterling sellers look to retain control as 1.2700 resistance holds

After recovering above 1.2700 during the European trading hours on Wednesday, GBP/USD erased its gains and closed the day virtually unchanged slightly below this level. The pair stays on the back foot early Thursday and trades at its lowest level in a month since early July.

The souring market mood seems to be making it difficult for Pound Sterling to stay resilient against its rivals. At the time of press, the UK’s FTSE 100 Index was down 1% on the day and US stock index futures were trading marginally lower. Read more…

GBP/USD defends 100-day SMA amid modest USD weakness, lacks bullish conviction

The GBP/USD pair once again shows some resilience below the 100-day Simple Moving Average (SMA) and attracts dip-buyers in the vicinity of over a one-month low touched earlier this week. Spot prices, however, struggle to capitalize on the uptick and currently trade with only modest intraday gains, around the 1.2700 round-figure mark.

The US Dollar (USD) comes under some renewed selling pressure in the wake of rising bets for bigger interest rate cuts by the Federal Reserve (Fed), which triggers to a fresh leg down in the US Treasury bond yields. This, in turn, offers some support to the GBP/USD pair, though a softer risk tone helps limit losses for the safe-haven buck and acts as a headwind. Read more…

EUR/USD Current price: 1.0895

• Financial markets keep moving on sentiment related to central banks’ announcements.
• United States Initial Jobless Claims resulted better than anticipated at 233K.
• EUR/USD turns bearish in the near term, aims to extend its slide.

The EUR/USD pair trades around its daily opening in the 1.0920 price zone, showing little directional aims throughout the day. The US Dollar finds modest demand ahead of Wall Street’s opening, as the market sentiment deteriorated following the poor performance of United States (US) indexes on Wednesday. Asian and European shares edged lower, weighing on US futures

Overall, financial markets remain cautious amid increased uncertainty about upcoming central banks’ monetary policy decisions. Tepid macroeconomic data and shifts in policymakers’ tone fueled concerns and resulted in panic-related movements.

 The Eurozone did not publish relevant data, while the US just released Initial Jobless Claims for the week ended August 2, which decreased to 233K from a previously revised 250K, also beating expectations of 240K.

EUR/USD short-term technical outlook

The EUR/USD pair fell following the release of US employment-related data and pierces the 1.0900 mark. The daily chart shows it’s down for a third consecutive day and that technical indicators turned south, in line with the increased selling pressure. At the same time, the pair trades above all its moving averages, although the 20 Simple Moving Average (SMA) has lost its upward strength and turned flat at around 1.0870. The case for a steeper decline seems limited, albeit a break through 1.0890, the immediate support level, could exacerbate the decline.

In the near term, and according to the 4-hour chart, the risk skews to the downside. EUR/USD retreated sharply after repeatedly meeting sellers around a flat 20 SMA, somehow suggesting buyers capitulate. Technical indicators, in the meantime, head firmly south within negative levels, supporting another leg lower.

 Support levels: 1.0890 1.0845 1.0800

Resistance levels: 1.0950 1.1005 1.1045

• GBP/USD stays under bearish pressure below 1.2700 on Thursday.
• The negative shift seen in risk mood weighs on Pound Sterling.
• Investors await weekly Initial Jobless Claims data from the US.

After recovering above 1.2700 during the European trading hours on Wednesday, GBP/USD erased its gains and closed the day virtually unchanged slightly below this level. The pair stays on the back foot early Thursday and trades at its lowest level in a month since early July.

The souring market mood seems to be making it difficult for Pound Sterling to stay resilient against its rivals. At the time of press, the UK’s FTSE 100 Index was down 1% on the day and US stock index futures were trading marginally lower.

In the second half of the day, the weekly Initial Jobless Claims data from the US will be looked upon for fresh impetus. Markets expect the number of first-time applications for unemployment benefits to come in at 240,000 in the week ending August 3. In case the number arrives above the market expectation, the initial reaction could hurt the USD and help GBP/USD limit its losses.

Nevertheless, GBP/USD could have a difficult time staging a rebound in case safe-haven flows continue to dominate the financial markets in the second half of the day.

GBP/USD Technical Analysis

GBP/USD trades below the descending trend line and the Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40, reflecting a bearish stance in the near term.

1.2620 (static level, beginning point of the latest uptrend) aligns as first support for GBP/USD before 1.2600 (psychological level, static level) and 1.2550 (static level)..

On the upside, first resistance is located at 1.2710-1.2700 (Fibonacci 78.6% retracement of the latest uptrend, psychological level align) ahead of 1.2750 and 1.2780 (Fibonacci 61.8% retracement).

• The first thing that I would notice is that the market has broken above an inverted hammer from the previous session, which is quite often a very bullish sign.
• In general, this is a market that tends to be very volatile under the best of circumstances, and with the recent nonsense coming out of Japan, that is even more so reality at this point.

Overnight, officials from the Bank of Japan suggested that they were not going to raise interest rates anytime soon as the markets had gotten far too volatile. That makes a certain amount of sense, considering that the Nikkei 225 at one point had lost 20% in just 3 trading sessions. Because of this, Japan has found itself in serious trouble, and as a result it makes sense that we would see the Bank of Japan turned back around. All things being equal, the market is likely to continue to see a lot of dangers moves in both directions, but at this point in time I think it’s going to be difficult to get into a huge position in any currency pair, let alone one that is as volatile as this one.

Carry Trade

This has been all about the carry trade recently, and therefore it’s likely that the narrative starts to shift back toward whether or not the carry trade is going to continue. Quite frankly, this is a market that has been absolutely decimated, so a bounce does make a certain amount of sense, but whether or not it can actually hold its own remains to be seen. The ¥190 level above of course is an area that is a large, round, psychologically significant figure, and that is something that is worth paying attention to.

The size of the candlestick for the session on Wednesday certainly shows that there are a lot of people jumping into the market, so it’s possible that we could see a little bit of follow through, but I will be paying close attention to the ¥190 level for a sign that momentum could be picking up.

Not sure which broker to choose? We’ve made a list of the best forex brokers for you.