• The Japanese yen has appreciated to the vicinity of 145 yen against the US dollar, reaching its highest levels in about two weeks due to the weakening US dollar and increased expectations of monetary policy easing by the Federal Reserve.
• Last week, Chicago Fed President Austan Goolsbee said the US labor market and some leading economic indicators were flashing warning signs, citing rising credit card delinquency rates.

Domestically, investors absorbed economic data showing that Japan’s machinery orders, an indicator of capital spending, rose 2.1% month-on-month in June, exceeding expectations of a 1.1% increase. Markets are now looking to Japanese inflation figures later this week for clarity on the Bank of Japan’s monetary policy path. Overall, the Japanese yen (JPY) has risen against the US dollar (USD) for the second consecutive day, driven by hawkish sentiment surrounding the Bank of Japan (BoJ) and growing geopolitical tensions. Stronger-than-expected growth in Japan’s GDP in the second quarter has fueled expectations that the BoJ may consider raising interest rates in the near term, contributing to the yen’s appreciation.

According to the economic calendar results, data last week showed that Japan’s economy expanded by 0.8% on a quarterly basis in the second quarter, after contracting by 0.6% in the first quarter and beating expectations by 0.5%. On an annual basis, the economy grew by 3.1% in the second quarter, reversing from a 2.3% decline in the first quarter and beating expectations for a 2.1% growth.

On the stock trading platforms, Japanese stocks fall on profit-taking. According to Monday’s trading, the Nikkei 225 index of Japanese shares fell 1.77% to close at 37,388 points, while the broader TOPIX index lost 1.4% to 2,641 points, ending a five-day advance amid profit-taking and as the rising yen pressured domestic stocks. Also, the strong Japanese yen hurts the earnings outlook for Japan’s export-dependent industries and discourages investors from borrowing in the currency to invest in higher-yielding assets.

Also, investors digested data showing that Japan’s machinery orders, a proxy for capital spending, rose 2.1% on-month in June, beating expectations for a 1.1% gain. According to the trading, the heavyweights in the index such as Disco Corp (-4.7%), Tokyo Electron (-3.1%), SoftBank Group (-2.1%), Toyota Motor (-3.1%), and Fast Retailing (-2.6%) witnessed significant losses.

USD/JPY Technical Analysis and Expectations Today

According to the performance on the daily chart, the USD/JPY price returned to its broader downward path. Technically, breaking the support of 144.00 will support the next stronger downward move towards the psychological support of 140.00, and before that. Also, the technical indicators will move towards strong oversold levels. On the other hand, and over the same period of time. furthermore, the psychological resistance of 150.00 will remain an important element for bulls to advance further. Ultimately, the USD/JPY pair may remain in its current bearish range until markets and investors react to the announcement of the minutes of the last US Federal Reserve meeting and what will be said by global central bank officials at the Jackson Hole symposium.

Want to trade our daily forex analysis and predictions? Here’s a list of forex brokers in Japan to check out. 

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gone back and forth against the Japanese yen during the trading session on Tuesday, as we are trying to sort out what direction we are heading. That being said, I think this is a market that will continue to be very noisy, but I also recognize that we are in the midst of trying to determine whether or not the carry trade can come back or if it’s dead and gone. Ultimately, I do think the next few days will probably be more of the sideways chop that we have seen, so I’m not looking for much, but there are a couple of levels that I am paying close attention to.

If we can break above the 150 yen level, then I think you have the possibility of seeing this pair go much higher, perhaps reaching the 152 yen level followed by the 155 yen level. If we break down from here, then the 144 yen level will be support. Anything below there, then it starts to get somewhat dicey for the greenback. It’s worth noting that the US dollar is selling off against almost everything at the moment.

So, the fact that we can even hold our ground here is probably a good sign, but it’s still a bit early to make any major distinctions on that. I think we have sideways action ahead of us, but once we break out of this area and pass one of those levels, we should see this market really start to pick up momentum.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

More From FXEMPIRE:

• At the start of this week, the GBP/USD currency pair jumped close to the psychological resistance of 1.3000, reaching its highest level in a month.
• This was as signs of economic resilience and moderate inflation led traders to expect fewer interest rate cuts from the Bank of England compared to the US Federal Reserve.
• Traders expect a 44-basis-point interest rate cut from the Bank of England this year, with a 39% chance of a 25-basis-point cut in September.

For the US Federal Reserve, a 25bp cut in September is fully priced in, with a 24.5% chance of a larger 50bp cut and more than 90bp of easing expected by the end of the year. This week, attention turns to the Fed’s Jackson Hole symposium, where US central bank chairman Jerome Powell will speak on Friday, and in the UK, investors await the PMI readings and consumer confidence data from GfK.

On the electronic trading front, UK 10-year gilt yield hovers at a one-week high. By performance, the UK 10-year gilt yield was little changed, at a one-week high of 3.95%, as financial markets await US Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole symposium. In the UK, attention is focused on the upcoming PMI readings and GfK consumer confidence data. Economic resilience and moderate inflation have led traders to expect a smaller rate cut from the Bank of England than from the Fed.

Currently, Traders expect a 44bp rate cut from the BoE this year, with a 39% chance of a 25bp cut in September. For the Fed, a 25bp cut in September is fully priced in, with a 24.5% chance of a 50bp cut and more than 90bp of easing expected by the end of the year.

According to reliable trading platforms, the GBP/USD exchange rate has rebounded strongly from its early August losses, but both charts and economic fundamentals are consistent in indicating that further gains may remain possible in the future. Technically, the pound has regained multiple key levels on the charts against the US dollar last week in an extended rebound from its early August lows, including its 200-week moving average at 1.2845, and a 50% Fibonacci retracement of its July decline at 1.2857, and a 61.8% retracement of the same downward trend at 1.2901.

Nonetheless, it may have room to reclaim more lost ground, in part because US producer and consumer price figures last week suggested that more deflation was brewing, and with July retail sales figures and Thursday’s jobless claims data dampening concerns about the risk of a US or global recession.

Technical forecasts for the GBP/USD pair today:

According to the daily chart performance, the GBP/USD exchange rate is shown over daily periods with selected moving averages and black trendlines indicating a narrow symmetrical triangle, which indicates potential areas of technical support. While Fibonacci retracements of the July downward trend highlight potential technical resistances. With the UK’s economic story not playing a significant role, if any, in the heavy selling seen in the GBP/USD pair in late July and early August. Moreover, with the international issues that caused it currently receding, there may be room for the pound to rise further in the near term and possibly to the 78.6% retracement level of the July decline at 1.2965 or even higher.

This would highlight the year-to-date high at 1.3047, which is the last defense of the highest level recorded in July 2023 at 1.3145. furthermore, any breakthrough above this level in the near or medium term would indicate a continuation of the longer-term recovery from the September 2022 lows that stalled last summer.

Ready to trade our daily GBP/USD Forex forecast? Here’s some of the best forex broker UK reviews to check out

• The Canadian dollar rallied as risk sentiment improved.

• Economists expect Canada’s inflation to ease from 2.7% to 2.5% in July.

• Traders will focus on Powell’s speech at the end of the week for guidance on the Fed’s policy outlook.

The USD/CAD price analysis leans South as the Canadian dollar trades near a five-week high amid improved risk sentiment. At the same time, investors are awaiting Canada’s inflation report, which could shape the outlook for BoC rate cuts. 

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

The Canadian dollar rallied on Tuesday, making new highs as risk sentiment improved. The loonie gained with US equities due to optimism about the US economy. Last week, data dismissed fears that the US economy was on the verge of a recession. At the same time, Fed rate cut expectations improved the outlook for the economy, supporting Wall Street and the Canadian dollar. 

Meanwhile, investors eagerly await Canada’s inflation report for more clues on the Bank of Canada’s rate cut outlook. Economists expect inflation to ease from 2.7% to 2.5% in July. The Bank of Canada has already implemented two rate cuts. If inflation continues cooling, the central bank might cut again in September. 

On the other hand, the US dollar was weak as markets increasingly bet on a Fed rate cut in September. Inflation figures last week met expectations, showing a gradual decline to the Fed’s 2% target. As such, policymakers might be ready to signal a rate cut in September. 

Traders will focus on Powell’s speech at the end of the week for guidance on the Fed’s policy outlook. Additionally, the FOMC meeting minutes will show policymakers’ stance on rate cuts and inflation.

USD/CAD key events today

• Canada CPI m/m
• Canada median CPI y/y
• Canada trimmed CPI y/y

USD/CAD technical price analysis: Strong bearish momentum heads for 1.3601 support

On the technical side, the USD/CAD price has fallen sharply after retesting the 30-SMA and breaking below the 1.3700 support level. The 30-SMA sits well above the price and points down, indicating a steep downtrend. Meanwhile, the RSI has fallen below 30 into the oversold region. 

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

Given the solid bearish bias, the decline might soon challenge the 1.3601 support level. If the level holds firm, the price will pull back to retest the 30-SMA or its bearish trendline. On the other hand, if the level gives way, USD/CAD will make new lows, continuing the downtrend.

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.

EUR/USD Current price: 1.1083

• The persistent upbeat mood maintains the US Dollar under strong selling pressure.
• Financial markets welcome stable macroeconomic data and an upcoming rate cut.
• EUR/USD is technically overbought but can reach higher highs in the near term.

The EUR/USD pair keeps reaching fresh 2024 highs, approaching the 1.1100 mark during European trading hours. An upbeat mood and the market’s conviction that the Federal Reserve (Fed) will pull the trigger in September put pressure on the US Dollar.  As the date looms, global equities accelerate its momentum, with Asian and European indexes posting substantial gains, reflecting the optimistic sentiment.

Meanwhile, Germany released the July Producer Price Index (PPI), which rose 0.2% MoM while declining by 0.8% from a year earlier, in line with the market’s expectations. Additionally, the Eurozone confirmed that the Harmonized Index of Consumer Prices (HICP) rose 2.9% YoY in July. Finally, the EU reported that the June Current Account posted a seasonally adjusted surplus of €51 billion.  The figures had no impact on the Euro.

The American session will bring no United States (US) data, although some Fed members will be on the wires. Should they pave the way for a September interest rate cut, the most likely outcome is additional USD weakness.

EUR/USD short-term technical outlook

From a technical point of view, EUR/USD bullish route seems poise to continue. The daily chart shows that the pair extends its advance beyond all its moving averages, with the 20 Simple Moving Average (SMA) heading north almost vertically far below the current level while above the longer ones. Technical indicators, in the meantime, have lost their directional momentum and consolidate within overbought levels, not giving any other sign of upward exhaustion.

The 4-hour chart shows bulls maintain the pressure in the near term. The Relative Strength Index (RSI) indicator aims marginally higher at around 75, while the Momentum indicator consolidates as the pair hovers below its intraday high. Still, moving averages are clearly bullish, well below the current level, in line with buyers’ continued pressure.

 Support levels: 1.1050 1.1020 1.0985  

Resistance levels: 1.1090 1.1120 1.1160

• The British pound has rallied again during the trading session on Monday as it looks like we are threatening the 1.30 level.
• The 1.30 level is a large round psychologically significant figure and therefore I think it does make a certain amount of attention seeking traders pay attention to this pair.
• After all, there are a lot of options barriers at these large, round, psychologically significant figures, and therefore a lot of people will look at this through the prism of whether or not people are going to be aggressive.

Short-term pullbacks will almost certainly be buying opportunities and I think that the 1.2850 level underneath is massive support Furthermore, you also have the 50-day EMA racing towards that area So I think it all ties together for a potential pullback and then bounce That being said if the market were to break above the 1.3050 level then the market could continue to go higher. Having said that we are a little overstretched at this point and it looks to me like it’s a situation where we probably need to find value hunters underneath.

We Will Continues to See Noise

All things being equal, this is a market that continues to be noisy and that will be the case going forward as traders around the world continue to worry about what’s going to happen with central banks. Furthermore, we are in the midst of getting ready for the Jackson Hole Symposium, and that will have speeches from both the head of the Federal Reserve and the head of the Bank of England.

So that could throw this pair into a little bit of disarray as well. I do think we’re overdone, and I do think that we pull back, but I don’t necessarily think that it’s going to end up being a shorting opportunity. Rather, I think you probably get a chance to buy the pound at a lower price if you’re just patient enough. That being said, it’s very difficult to time this move, but I certainly think that you will get an opportunity to pick up British pounds “on the cheap.”

Ready to start trading the GBP/USD forecasts? Start working with a Forex broker recommended in the UK here.

• The British pound has gone back and forth during the course of the trading session here on Monday as we continue to dance around the 190 yen level.
• The 190 yen level of course is a large round figure that a lot of people will pay attention to but it’s not necessarily going to be the be all end all of the world here.
• Given enough time, I do think the technical traders out there will be paying more attention to the 200 day EMA than anything else.

If we can break above there, then I think that the British pound will really start to take off and we could see some upward momentum. Short-term pullback, see plenty of support near the 188 yen level, and then again down at the 183 yen level.

Long-Term Levels

Those are both short-term support levels, but they should be somewhat important. Keep in mind that a lot of this comes down to the carry trade and whether or not it still exists, so therefore you do need to pay attention to the Japanese yen-related pairs across the board. Risk appetite is a major feature of what drives this as well, so if risk appetite picks up a little bit, I expect this GBP/JPY pair to do the same.

It got absolutely hammered recently but a bit of a bounce makes a certain amount of sense. Now the question is, can we break back above the 200 day EMA? And if we can, then it’s likely that we will continue to rally towards the 50 day EMA, perhaps even as high as the 200 yen level. I do think it’s going to be noisy, but at the end of the day, you get paid to hang on to this pair, and that’s something that has not changed despite the fact that everybody had a freak out. Ultimately, this is a market that I think will continue to be hard to keep hanging onto, if you are heavily levered. However, if you keep your position size reasonable, you should do okay.

Ready to trade our Forex daily analysis and predictions? Here’s the best forex trading company in UK to trade with. 

• The euro bounced a bit during the early hours on Monday as it looks like the 0.85 level is going to give a little bit of support, especially as the 50 day EMA sits just below all things being equal.
• This is a market that I think given enough time probably sees an attempt to break above the 200 day EMA.

If we do in fact break above the 200 day EMA, then it’s possible that the market could go looking to the 0.86 level. That being said, this is a market that I think continues to be very noisy and that is typical for this type of currency pair as the market continues to see a lot of noisy behavior. If we can break above the 0.86 level,

I’m Still Inclined to Be Bullish

It’s likely that we could go much higher at this point, and that could open up a move to the 0.8750 level, possibly even the 0.9 level. From a longer term perspective, this is a market that has been testing a major support level on the monthly chart. So, all things being equal, I think this does make a certain amount of sense. It isn’t necessarily that the euro is going to be the be all end all of strong currencies, it’s just that we had gotten a bit overzealous to the downside and now we are going to try to find some type of normalcy. In fact, you can see that even just rallying to the 0.8750 level in the longer term chart would just put us basically into a state of normalcy. So, I think all things being equal, dips will continue to be value in this pair.

That being said, you also have to realize that EUR/GBP is a pair that is quite choppy and erratic as the 2 economies are so highly intertwined. Because of this, you will need to be very patient and recognize that it may take some time for the trade to play itself out.

Ready to trade our Forex daily forecast? We’ve shortlisted the best forex broker list for you to check out.au 

Pine timber being exported from Wellington, New Zealand. Photo by James Anderson, World Resources Institute.

The Pound to New Zealand Dollar exchange rate has resumed its recent correction lower in tandem with many US Dollar pairs and it could be likely to remain heavy, with a downside bias over the coming days.

GBP/NZD rallied briefly to 1.15 last week after the Reserve Bank of New Zealand surprised the market by cutting its cash rate but the move was quick to fade, perhaps owing to the bank’s new forecasts.

These suggested as much as 100 basis points of additional cuts are likely over the year to next August when the market had been pricing in a much deeper 200 basis point reduction for that period.

The main Kiwi pair, NZD/USD, has since recovered back above 0.60 as a result, aided by a softer US Dollar, which has led GBP/NZD to recede back below 2.13 despite a buoyant performance from Sterling.

“Our proprietary flows show USD selling across the board so far in August, particularly from hedge funds and corporates. EUR, JPY and GBP have benefited the most, but more recently also high beta G10 currencies and EM FX,” BofA Global Research strategists said in a Monday note to clients.

Above: Pound to New Zealand Dollar rate shown at daily intervals with Fibonacci retracements of June upturn and selected moving averages indicating possible areas of technical support.

“Despite GBP being the weakest in G10 so far in August, our investor proprietary flows remain positive, with hedge funds in particular offering strong support. GBP positioning is long, but not stretched, with hedge funds having more room,” the BofA team also said.

The nascent rebound in NZD/USD is a headwind for the negatively-correlated GBP/NZD pair but the currently buoyant performance from GBP/USD is something that might limit the downside in GBP/NZD this week.

The author’s model suggested earlier on Monday that a relatively narrow range between 2.1321 and 2.1557 was likely for the week ahead and while GBP/NZD has since slipped through the bottom of this, there is some technical support just above the nearby 2.11 handle that might frustrate further losses in the short-term.

“The Kiwi has quickly put last week’s OCR cut and dovish U-turn by the RBNZ behind it and has resumed focussing on global themes. That also makes it a little more sensitive to moves in the USD, which is continuing to track lower as US bond yields fall,” ANZ Research strategists said.

Above: Quantitative model estimates of possible ranges for the week. Source: Pound Sterling Live.

“Falling interest rates were a key factor undermining the Kiwi in the lead-up to last week’s cut, and they’re likely to have a similar impact on the USD as the Fed inches closer to easing. On that score, all eyes are on this week’s Jackson Hole Economic Symposium,” they added in a Monday note to clients.

Much about the near-term trajectory of GBP/NZD is likely to be determined by the direction of the US Dollar before and after the Federal Reserve’s Jackson Hole Symposium on Thursday and Friday, where the main event is a Friday speech from Chairman Jerome Powell.

Market focus will be on whether he validates or pushes back against current expectations for as much as 100 basis points worth of interest rate cuts from the Fed this year, which matters for the US Dollar because this kind of easing would be likely to erode its yield advantage over other currencies.

Any validation of the market’s outlook for US rates would likely act as a headwind for GBP/NZD, though Sterling will also be sensitive to a subsequent speech from Bank of England Governor Andrew Bailey, and particularly any remarks on what last week’s data deluge means for the UK interest rate outlook.

However, before then, GBP/NZD could potentially benefit somewhat on Wednesday and Thursday if Kiwi credit card spending data for July and retail sales figures for the second quarter remain weak, as this would reinforce the case for further interest rate cuts from the Reserve Bank of New Zealand.