(Slobodan Drvenica – Windsor Brokers)
AUD/USD outlook: Bears remain fully in play but face headwinds from key support zone
The Aussie dollar started the week in negative mode, opening with gap lower after hawkish comments from Fed chair Powell further boosted the US dollar and extending last Friday’s 1.2% drop.
Fresh bears cracked key supports at 0.6850 zone (daily cloud base/Fibo 61.8% of 0.6681/0.7136 upleg/higher base, but face strong headwinds here and so far unable to break lower, despite firmly bearish technical studies on daily chart, as significantly better than expected Australian July retail sales also contributed to reducing pace of fresh bears.
The price may hold in extended consolidation while 0.6850 pivots hold, with l upticks (under 0.6915, converged 10/55DMA’s) to offer better selling opportunities, for firm break of 0.6850 zone that would generate strong signal of bearish continuation.
Res: 0.6885; 0.6915; 0.6957; 0.6982.
Sup: 0.6841; 0.6802; 0.6789; 0.6719.
USD/JPY outlook: USD/JPY eyes 2022 high and psychological 140 barrier in dollar-supportive environment
The USDJPY rose to six-week high on Monday after markets digested comments from Fed Chair Powell last Friday and hawkish stance that the central bank kept, sent stocks lower and further lifted the dollar.
Strong Fed’s hawkish stance that signals prolonged period of higher borrowing cost but also widens the divergence between the US and other major central banks’ monetary policies, remains the main driver of the US dollar, along with growing uncertainty about further slowdown in economic growth, as a result of higher interest rates.
Bulls cracked 139 barrier and pressure 2022 high (139.39) violation of which would expose psychological 140 level and risk acceleration towards 1998 peaks, if conditions remain unchanged or worsen.
Res: 139.00; 139.39; 140.00; 141.51.
Sup: 138.00; 137.53; 137.15; 136.59.
EUR/USD outlook: Euro remains in red under parity but hopes of more aggressive ECB keep losses limited for now
The Euro edges lower in early Monday’ following a triple-Doji last week that signaled strong indecision but the action is still moving above new 2022 low at 0.9900, posted on Aug 23.
The single currency came under pressure on Fed’s hawkish stance, confirmed by the statement of chief Powell in Jackson Hole last Friday, though expectations that the European
Central Bank might be more hawkish than expected in their September’s policy meeting that partially offsets negative impact and so far keeps the single currency afloat and above 0.9900 support.
Daily studies are in full bearish configuration, with negative picture being boosted by eventual weekly close below parity level for the first time in two decades and the pair being on track for the third consecutive strong monthly fall.
However, investors still keep an optimism that the ECB would be more aggressive in September, as rising inflation threatens to further damage already fragile economic situation in the EU bloc and the central bank needs to intensify its fight to restore the price stability.
Oversold weekly studies add to hopes of rebound, which would remain in play while the price stays above 0.9900, with return above parity to add to initial positive signals, however, more work at the upside will be needed to sideline immediate downside risk and generate stronger bullish signals.
Res: 1.0000; 1.0024; 1.0089; 1.0122.
Sup: 0.9900; 0.9853; 0.9793; 0.9744.
GBP/USD outlook: Cable continues to trend lower on rising dollar, pandemic low coming in focus
Cable remains in strong defensive mode and accelerates below 1.17 handle in early Monday, hitting new lowest since March 2020.
Fresh dollar’s strength following Fed Powell’s signals of extended period of higher interest rates and slower economic growth, in fight to restore price stability, further deflated sterling, which closed in red for the second consecutive week and posted new 2022 low on Monday.
The pair is on track for a massive monthly loss (over 4% so far) that weighs on sentiment and adds to scenario of retesting pandemic spike low at 1.1410.
Bearish technical studies support the notion, though oversold conditions on weekly chart warn that bears may face headwinds en-route.
Falling daily Tenkan-sen (currently at 1.1895) should keep the upside protected to provide better selling opportunities, but caution on extended bounce and violation of daily Kijun-sen (1.1971) and daily cloud base (1.1985) that would put larger bears on hold.
Res: 1.1717; 1.1760; 1.1852; 1.1900.
Sup: 1.1648; 1.1634; 1.1556; 1.1493.