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EUR/USD dips to 1-month lowThe euro has fallen for three straight sessions and has extended its losses on Tuesday. Earlier in the day, EUR/USD fell below the 1.07 line for the first time since Jan. 23. German and eurozone numbers have been soft this week, adding to the euro's woes. Eurozone retail sales fell 2.7% in December, worse than the estimate of -2.5% and well off the November read of 1.2%. German Industrial Production came in at -3.2% in December, down from 0.4% in November and below the expectation of -0.6%. Germany is the locomotive of the bloc but the engine is stuttering, which is bad news for the rest of the eurozone. GDP in Q4 contracted by 0.2%, retail sales for December slumped by 5.3% and Manufacturing PMI remains mired in contraction territory. The US dollar received a much-needed boost from the January nonfarm payroll report, as the 517,000 gain crushed expectations. There are no major releases out of the US today, but Fed Chair Powell will participate in a panel discussion. If Powell strikes a hawkish tone, the US dollar could extend its gains. There are a host of Fed members speaking this week, and if they reiterate the "higher for longer" stance that the Fed continues to embrace, the US dollar could continue to move north. How will the Fed react to the stellar employment report?  Fed member Mary Daly called the employment release a "wow number" and said that the Fed's December forecast of a peak rate of 5.1% was a "good indicator" of Fed policy. With the benchmark rate currently at 4.5%-4.75%, we're likely looking at two more rate hikes, exactly what Jerome Powell said at the FOMC meeting last week. The spike in job creation has raised hopes that the Fed can pull off a "soft landing" and there is even talk on Wall Street of a "no landing" which would mean that a recession could be avoided. 1.0758 is a weak support line, followed by 1.0633 There is resistance at 1.0873 and 1.0954
by OANDA
EUR/USD extends lossesThe euro continues to lose ground and has started the week in negative territory. In the European session, EUR/USD is trading at 1.0783, down 0.19%. Earlier in the day, the euro has now fallen to its lowest level since Jan. 23. The euro sent market participants on a roller-coaster ride last week. The Fed's rate increase pushed the euro higher by 1.16%, but the ECB rate hike and the blowout US nonfarm payroll report sent the euro tumbling close to 2%. The January US nonfarm payrolls was an absolute blowout that surprised everybody. The economy created 517,000 new jobs, crushing the estimate of 185,000 and well above the December gain of 260,000. The unemployment rate fell from 3.5% to 3.4%, its lowest rate since 1969. The US dollar surged against most of the major currencies after the employment report and the euro fell by 1%. There has been talk that the Fed might deliver a "one and done" rate hike in March which would end the current rate-hike cycle, even though Jerome Powell said at last week's FOMC meeting that two more rate hikes were likely. After the massive gain in nonfarm payrolls, the "one and done" proponents will be lying low. How will the Fed react to the job data? The labour market, which has shown remarkable resilience to the Fed's steep rate-tightening cycle, is much too strong for the Fed's liking, as a weaker labour market is needed for inflation to continue falling. Fed member Mary Daly called the employment release a "wow number" and said that the Fed's December forecast of a peak rate of 5.1% was a "good indicator" of Fed policy. With the benchmark rate currently at 4.5%-4.75%, we're likely looking at two more rate hikes, exactly what Jerome Powell said at the FOMC meeting last week. Since the employment report, the markets have become less dovish and have priced in an increase in May. Eurozone data was a mixed bag today. German factory orders bounced back in December with a gain of 3.2% m/m, after a 4.4% decline in November. The estimate stood at 2.0%. Eurozone Sentix Investor Confidence improved to -8.0, up from -17.5 points. However, eurozone retail sales slid 2.7% m/m in January, down from a 1.2% gain in December and worse than the consensus of -2.5%. 1.0758 is a weak support line, followed by 1.0633 There is resistance at 1.0873 and 1.0954
by OANDA
USD/CAD eyes retail salesThe Canadian dollar is unchanged on Friday, trading at 1.3466 in the European session. We could see some volatility in the North American session, as Canada releases retail sales. The markets are bracing for a downturn in retail sales for November, with a forecast of -0.5% m/m for the headline figure and -0.4% for the core rate. This follows a strong report in October, as the headline reading was 1.4% and core retail sales at 1.7%. If the releases are as expected or lower, it could be a rough day for the Canadian dollar. Today's retail sales release is the final major event prior to the Bank of Canada's meeting on January 25th. The markets have priced in a 25-bp increase, but a hold is also a possibility, especially with December inflation falling to 6.3%, down from 6.8%. The BoC has raised rates by some 400 basis points in the current rate-tightening cycle, which began in March 2022. Similar to the market outlook on the Fed's rate policy, there is significant speculation that the BoC could wind up its tightening at the first meeting of 2023 and then keep rates on hold. The BoC has said that future hikes will be determined by economic data, and there are signs of strength in the economy despite the Bank's aggressive rate policy. GDP expanded by 2.9% in Q3 which was stronger than expected and job growth sparkled in December, with over 100,000 new jobs. The markets will be looking for clues about future rate policy from the rate statement and BoC Governor Macklem post-meeting comments. 1.3455 is a weak support line, followed by 1.3328 1.3582 and 1.3707 are the next resistance lines
by OANDA
AUD/USD slides after soft Aussie job reportThe Australian dollar has extended its slide on Thursday. AUD/USD is trading at 0.6884 in Europe, down 0.82%. Australia's December employment report was weaker than expected, sending the Australian dollar sharply lower. The headline reading showed a loss of 14,600 in total employment, which may have soured investors. The release wasn't all that bad, as full-time jobs showed gains of 17,600, with part-time positions falling by 32,200. The unemployment rate remained at 3.5%, but this was a notch higher than the forecast of 3.4%. On the inflation front, recent releases point to inflation moving higher. November CPI rose to 7.3%, up from 6.9%, and the Melbourne Institute Inflation Expectations climbed to 5.6%, up from 5.2%. We'll get a look at the all-important quarterly inflation reading next week. Inflation came in at 1.8% q/q in Q3, and an acceleration in Q4 would force the Reserve Bank of Australia to consider raising rates higher and for longer than it had anticipated. The cash rate is currently at 3.10%, and I expect the RBA will raise it to 3.50% or a bit higher, which means we are looking at further rate hikes early in the year. The US dollar seems to take a hit every time there is a soft US release, and this week has had its share of weak data. The Empire State Manufacturing Index sank to -32.9, while headline and core retail sales both fell by -1.1%. PPI came in at -0.5%. All three releases were weaker than the November readings and missed the forecasts, indicating that cracks are appearing across the US economy, as the bite of higher rates is being felt. The markets are clinging to the belief that softer numbers will force the Fed to ease up on its pace of rate hikes and possibly end the current rate-cycle after a 25-bp increase in February. The Fed has done its best to dispel speculation that it will pivot, but I expect the US dollar to lose ground if key releases are weaker than expected. AUD/USD is testing support at 0.6893. Below, there is support at 0.6810 0.6944 and 0.7027 are the next resistance lines
by OANDA
Pound jumps as inflation easesThe British pound is in full flight upwards on Wednesday. In the North American session, GBP/USD is trading at 1.2393, up 0.86%. UK inflation eased for a second straight month in December. Headline CPI dipped to 10.5%, down from 10.7% in November and just below the forecast of 10.6%. Core CPI, however, did not show an improvement as it remained unchanged at 6.3%. The downtrend is welcome news, but inflation still remains stubbornly high after hitting 11.1% in October, a 41-year high. The Bank of England has raised rates to 3.50% but clearly, more work needs to be done. The labour market remains robust, with wage growth climbing to 6.4% in December, up from 6.2% in November and brushing past the forecast of 6.1%. This is well below inflation levels, much to the chagrin of workers, but it is much too high for the BoE, which is focussed on curbing inflation. The BoE meets next on February 2nd and the markets have priced in a second-straight 50-bp increase. The BoE will also release updated economic forecasts, which could play a key role in the central bank's rate policy over the next several months. US consumers cut back on spending in December for a second consecutive month. Retail sales fell 1.1%, driven lower by a decline in vehicle sales due to rising interest rates for vehicle loans, as well as lower gas prices. This was lower than the November reading of -1.0% and the consensus of -0.8%. Core retail sales also declined by -1.1%, compared to -0.6% in November and the forecast of -0.8%. The disappointing numbers have sent the US dollar lower against the majors, as speculation rises that the Fed may have to ease up on the pace of rate hikes due to a weakening economy. GBP/USD has pushed above resistance at 1.2292 and 1.2352. The next resistance line is at 1.2455 There is support at 1.2189 and 1.2129
by OANDA
Japanese yen dips, inflation risesUS and Japanese markets are open on Tuesday, but trading remains thin after the Christmas holiday. There are some key Japanese events on the calendar, although US releases are all tier-2 events. In the North American session, USD/JPY is trading at 133.41, up 0.44%. There are a host of events out of Japan today. Retail sales rose for a ninth consecutive month in November, buoyed by the tourist trade after Japan opened its borders. Still, the gain of 2.6% y/y was well off the 4.4% gain in October and 4.8% in September, and below the consensus of 3.7%. Household and consumer consumption account for more than half of economic growth, so the downtrend is clearly worrying. Japan's economy contracted in Q3, as a poor global outlook, the slowdown in China and a weak yen put a squeeze on economic growth. Inflation continues to rise in Japan, although the levels pale in comparison to what the US, the UK and the eurozone are experiencing. The Bank of Japan's preferred inflation gauge, BOJ Core PCI, accelerated for a ninth straight month in November, rising to 2.9% y/y, up from 2.8% and above the consensus of 2.7%. Last week, Japan's Core CPI rose 3.7% y/y in November, its highest level since 1981. Inflation is moving higher as firms continue to pass along higher costs to consumers, unable to absorb the rise in energy, food and raw materials. The rise in inflation hasn't budged the BoJ, with Governor Kuroda saying that inflation would fall back below the 2% target in 2023. Kuroda stated on Monday that the widening of the yield curve band was not a prelude to an exit from the Bank's ultra-loose policy. We'll get more details of that dramatic move later today, with the release of the BoJ Summary of Opinions from last week's policy meeting. The report should make for some interesting reading. 133.62 is a weak resistance line. Above, there is resistance at 134.12 There is support at 132.80 and 131.83
by OANDA
GBP/USD under pressure, UK GDP nextGBP/USD is sharply lower on Wednesday. In the North American session, the pound is trading at 1.2093, down 0.74%. There was an unexpected surprise from the UK CBI Realized Sales today. December sales volumes showed a strong rebound, rising 11 points. This easily beat the November reading of -19 and the consensus of -21. However, retailers expect the rebound to be short-lived and are predicting a decline in January, with a forecast of -17. The UK releases Final GDP for Q3 on Tuesday. The consensus stands at -0.2%, after an identical release from GDP in the second quarter. Two consecutive quarters of negative growth would technically mean that the UK economy is in recession, but it's clear that there is a recession even without this definition. The Office for Budget Responsibility (OBR) is projecting that the UK is in a recession that will last more than one year and cause a massive 7% drop in household incomes over the next two years. Households have been hit by a double punch of high inflation and rising interest rates, and wages have failed to keep pace with inflation. Tens of thousands of ambulance workers went on strike today in England and Wales, and more public sector workers are expected to follow suit this winter. This sets up the specter of a wage-price spiral, which would complicate the Bank of England's struggle to curb inflation, which remains in double digits. We'll also get a look on Tuesday at UK Revised Business Investment for Q3. A weak release of -0.5% is expected, after an identical reading in the second quarter. GBP/USD is testing support at 1.2106. Next, there is support at 1.2023 There is resistance at 1.2234 and 1.2349
by OANDA
Soft German retail sales can't stop EUR/USDThe euro has climbed to its highest level since June 29th, as the US dollar continues to struggle. In the North American session, EUR/USD is trading at 1.0496, up 0.85%. German consumers are being squeezed by the double-whammy of rising interest rates and double-digit inflation, and the October retail sales report shows that consumer spending was sharply lower. Retail sales dropped 2.8% YoY, versus 1.2% in September and a consensus of -0.6%. On an annualized basis, retail sales plunged 5.0%, much worse than the September read of -0.9% and the consensus of -2.8%. The soft retail sales report couldn't dampen the shine on the euro, which has climbed sharply as the US dollar can't find its footing. The dollar found itself in full retreat after Fed Chair Jerome Powell's speech on Wednesday. Powell's comments were balanced and didn't stray from the steady stream of Fedspeak we've been hearing for weeks, but investors still treated the speech as dovish, sending equity markets higher and the US dollar lower. The markets were delighted that Powell essentially confirmed that the Fed would ease policy as soon as the December meeting. After four straight rate increases of 75 basis points, the Fed is poised to deliver a milder 50-bp hike, with perhaps smaller hikes in the new year. Powell said that smaller rate increases were less important than the question of high to hike and for how long. Powell added that the direction of inflation remains "highly uncertain", and that more evidence was needed to demonstrate that inflation had peaked. As well, he said that rates will likely rise "somewhat higher" than the September forecast. That certainly sounds like a hawkish stance, but the markets chose to focus on Powell's broad hint that the Fed would likely begin lowering rates as soon as next week. The Fed may not consider that a dovish pivot, but the fact remains that Powell's comments have renewed optimism, sending stocks higher and the US dollar lower. EUR/USD is testing resistance at 1.0490. Above, there is resistance at 1.0583 There is support at 1.03537 and 1.0264
by OANDA
NZD/USD higher ahead of retail salesThe New Zealand dollar continues to gain ground this week. In the North American session, NZD/USD is trading at 0.6267, up 0.35%. New Zealand will release retail sales for Q3 later in the day. The markets are expecting a small gain of 0.5%, which would be a turnaround from a disappointing -2.2% in Q2. Consumers continue to struggle with high inflation and rising interest rates, and after back-to-back declines, a gain in retail sales would be welcome news. The Reserve Bank of New Zealand delivered a huge 75-bp hike on Wednesday, which raised the cash rate to 4.25%. The move had been priced in by the markets, but the New Zealand dollar jumped 1.5%, thanks to the oversize move and a broadly-lower US dollar. The cash rate is the highest among major central banks, but there's more to come. The RBNZ has projected a terminal rate of 5.5% in 2023, which means more rate hikes in 2023. Inflation has been stickier than the RBNZ anticipated, and the bank's Monetary Policy Statement was decidedly hawkish, noting that “core consumer price inflation is too high" and "near-term inflation expectations have risen.” The statement said that inflation is expected to accelerate to 7.5% in Q4 and would not fall to the midpoint of the 1%-3% target until 2025. The RBNZ is ready for a long fight with inflation, but it remains to be seen if the bank can guide the economy to a soft landing. The Fed minutes reiterated that lower rates are on the way, which we've been hearing from a stream of Federal members over the past two weeks. The minutes were vague as far as a timeline, noting that smaller rate increases would happen "soon", as the Fed continues to evaluate the impact of the current policy on the economy. Members also voiced concern that inflation was yet to show any signs of peaking. Still, the markets viewed the minutes as dovish, which is weighing on the US dollar today. NZD/USD is testing resistance at 0.6283. Above, there is resistance at 0.6361 There is support at 0.6217 and 0.6139
by OANDA
USD/CAD rises as retail sales slipThe Canadian dollar is in positive territory on Tuesday. In the North American session, USD/CAD is trading at 1.3400, down 0.39%. The Canadian consumer was not in a spending mood in September, as retail sales declined by 0.5%, following a 0.4% gain a month earlier. The forecast stood at -0.4%. Core retail sales fell by 0.7%, worse than the consensus of -0.4% and the prior reading of 0.5%. Despite the weak data, the Canadian dollar has managed to post gains today, thanks to a broad US dollar pullback. The drop in retail sales will put a damper on expectations of a 50-basis point hike at the December meeting, as the Bank of Canada will likely deliver a modest 25-bp hike. Inflation, the bank's number one priority, remains very high at 6.9%, as the BoC's aggressive rate-hike cycle is yet to show results. The benchmark rate is currently at 3.75%, and like the Federal Reserve, there's more life remaining in the current rate-tightening cycle. The BoC is closely monitoring employment and retail sales data, as strong numbers will make it easier for the bank to continue hiking as policy makers look for that elusive peak in inflation. The recent US inflation report triggered a wave of exuberance, sending equity markets higher and the US dollar on a nasty slide. Investors became more confident that Fed was close to a pivot in its aggressive policy and risk sentiment soared. The Fed has pushed back hard, with Fed members delivering hawkish statements and projections, which has chilled risk appetite and stabilized the US dollar. Fed member Mary Daly weighed in on Monday, stating that inflation remained unacceptably high and projecting that the fed funds rate will peak at 4.75%-5.00%. USD/CAD tested resistance at 1.3455 earlier in the day. Next, there is resistance at 1.3523 There is support at 1.3341 and 1.3218
by OANDA
What Now With GBPUSD ?- Key points: 1- The fall statement came in the context of weak economic growth, high inflation rates and high interest rates. The Office of the Balance Sheet projected that the UK would be in recession from the third quarter which would last for just over a year until the third quarter of 2023, with GDP falling 2.1% during that time. 2- Retail sales volumes are estimated to have increased 0.6% in October 2022 after a 1.5% decline in September (revised from a 1.4% decline) which was affected by the additional state funeral bank holiday. 3- On November 3, the Bank of England's Monetary Policy Committee (MPC) announced that it had raised interest rates for the eighth consecutive meeting. Rates were raised 0.75 percentage points to 3.0%, the largest increase since "Black Wednesday" in 1992. - Technical Analysis: Diving into the technical part, we can see that there's a bearish structure starting from level 1.18700 approx. on the daily timeframe. In addition to that, considering 50&200 MA's starting from 1 hour timeframe is taking a downtrend path, which means things will take time on the daily until things payoff a bit and go bearish. Now speaking of oscillators, even from the daily and down they're all taking the downtrend path. Same with MACD, starting from 4H, and getting to the peak on daily before breaking down. Now channels, donchian, supertrend; were kind of reaching the peak on the daily while as on smaller ones they already broke down. Now, as a nutshell, all these meetings the EoB and the UK did during the last week, due to their importance and the reports they gave in which everyone was waiting for to know what's next, was very necessary to the currency as well for traders to know what path the GBP will take for the next days or even weeks. Now for those who are asking what's the next checkpoint if it went bearish? Well, on smaller timeframes, like the 1H and 2H, there is a major orderblock on a level of 1.17670 approx. In which the price would go for a reversal, or break down more. And to do so, economical events must play it's major role. It depends on interest rates and inflation, as well as the CPI, stuff like these...
Short
by JawadShoukeir
1
Stocks React to CPI and Retail SalesStocks took a sharp dive after yet another hotter than expected CPI print. We tested 3500, then dip-buyers came in and we subsequently pivoted back to recover the 3600's. More momentum followed and we are currently testing our target highs at 3714. Stocks still look strong despite another flaccid data point in retail sales, which came in relatively weak. If we are able to break through highs, then 3810 is the next target. Otherwise, we can expect support at 3624.
FX:SPX500Short
by quantguy
GBP/USD dips, US retail sales nextGBP/USD has reversed directions today and is in negative territory. In the North European session, GBP/USD is trading at 1.1274, down 0.34%. The pound continues to show strong volatility and jumped 2% on Thursday. The sharp swings over the past few weeks were triggered by Chancellor Kwarteng's mini-budget in late September. Normally tame affairs, the mini-budget contained sweeping tax cuts to stimulate economic growth. Perhaps a solid idea in normal times, but with soaring inflation, high interest rates and the spectre of a recession, the markets absolutely savaged the plan. Even the IMF gave the plan a thumbs-down. The pound plunged to a 37-year low after the tax cuts were announced, and the Bank of England had to intervene due to a near-crash in the UK bond market. The new Truss government has had to make a humiliating about-face, and reports on Thursday that the government would abolish the planned tax cuts sent the pound sharply higher. The BoE was forced to step in with an emergency gilt-buying program, which is expected to end today. There is some concern that the bond market could show further volatility, in which case the BoE will have to again intervene. The government's clumsy attempt to slash taxes could cost Prime Minister Truss and Chancellor Kwarteng their jobs, and the political uncertainty and instability surrounding the new Truss government will only add to the pound's problems. The US wraps up the week with the September retail sales report. This will be a report card on how consumer spending is holding up, given red-hot inflation and high interest rates. Headline retail sales is expected to nudge lower to 0.2% MoM (0.3% prior), while core retail sales is projected to come in at -0.1% (-0.3% prior). GBP/USD faces resistance at 1.1373 and 1.1455 There is support at 1.1214 and 1.1085
by OANDA
Japanese yen dips, retail sales nextThe yen has reversed directions today and is in negative territory. In the North American session, USD/JPY is trading at 144.59, up 0.33%. Japan releases a data dump later today, highlighted by retail sales for August. The headline reading is expected to rise to 2.8%, following a 2.4% gain in July. It was exactly a week ago that the yen went on a spectacular roller-coaster ride, as USD/JPY traded in a 450-point range. The yen has performed poorly this year, losing about 20% of its value against the dollar. As the yen continued to slide, the Bank of Japan and the Ministry of Finance (MoF) would warn that it was concerned, but the verbal rhetoric was not backed up with action until the MoF's dramatic currency intervention last week. The MoF stepped in after USD/JPY broke 145, and the yen climbed as much as 2.5% after the intervention. Immediately, there were questions as to whether a unilateral action could stem the yen's descent. Is 145 truly a line in the sand, or will Tokyo allow the yen to continue to fall? The intervention gave the yen a brief shot in the arm, but it has been unable to consolidate these gains, for two reasons. First, the Federal Reserve is expected to remain hawkish at least into 2023, which has pushed US Treasury yields higher and widened the US/Japan rate differential. Second, the yen is caught in a tug-of-war between the MoF, which wants to see a stronger yen, and the BoJ, which is focused on maintaining an ultra-accommodative policy, which has kept JGB yields at low levels, even though this has hurt the yen. Governor Kuroda has said more than once that a weak yen is not necessarily bad, and has made clear that he will not change policy until it is clear that inflation is not transient (taking a page out of Jerome Powell's playbook). These conflicting signals have invited speculation in short positions in the yen and I would not be surprised to see dollar/yen make another attempt at breaking the 145 line shortly. 144.81 is under pressure in resistance. 146.06 is next There is support at 143.21 and 141.88
by OANDA
GBP/USD dips on strong US data, UK GDP nextThe British pound is in negative territory today and has fallen below the 1.15 line. In the North American session, GBP/USD is trading at 1.1497, down 0.38%. US retail sales rose 0.3% MoM in August, rebounding from -0.4% in July. Excluding gasoline, retail sales were up 0.8%, as consumers responded to lower gas prices by increasing spending on other items. The data indicates that consumer spending is holding up, despite an inflation rate of 8.3%. There was more positive news as US initial job claims fell for a fifth consecutive week, falling to 213 thousand. This follows the previous release of 218 thousand and beat the consensus of 226 thousand. These releases are especially significant, as the Federal Reserve relies on a strong labour market and solid consumer spending in order to remain aggressive with its hawkish policy as its grapples with high inflation. The Fed is expected to increase rates by 75 basis points next week, with an outside chance of a massive 100bp hike. Inflation has proved to be more resilient than expected, and with the Fed continuing its steep rate-hike cycle, we may see more demand destruction which raises the likelihood of a recession. The UK wraps up a busy week with retail sales on Friday. Consumers have been hammered by the cost-of-living crisis and predictably are cutting back on spending, which will only exacerbate the grim economic landscape. Retail sales fell by 3.0% YoY in July, and the markets are bracing for an even worse month of August, with an estimate of -3.4%. A release of -3.0% or worse could extend the British pound's losses. GBP/USD is testing resistance at 1.1548. Next, there is resistance at 1.1689 There is support at 1.1417 and 1.1306
by OANDA
Euro dips as 0.75% ECB hike in questionEUR/USD slipped to a new 20-year low earlier today, falling to 0.9864. Currently, the euro is trading at 0.9910, down 0.20%. Eurozone government yields fell sharply today on reports that the ECB may decide to scale down an expected 75 basis point hike on Thursday. This has pushed the euro to a new 20-year low earlier today, as the currency remains under pressure. There have been broad expectations that the ECB, which has been lagging behind most central banks in tightening policy, would deliver a 0.75% rate hike, but apparently, ECB policy makers may be looking at scaling the hike to just 0.60%. The markets are currently pricing in a 67% chance of a 75bp move, sharply lower than the almost 90% likelihood earlier today. We could see the pricing continue to fluctuate as we get closer to the meeting, with investors looking for clues as to how high the ECB will hike. High inflation isn't going anywhere, and the ECB will need to drastically tighten if interest rates are to curb inflation. At the same time, the eurozone economy is weak, and the German locomotive has also slowed down. If the ECB raises rates too aggressively, the economy could tip into a recession. Germany Factory Orders for July, released today, served as a grim reminder that the manufacturing sector remains in trouble. The reading of -13.6% YoY follows a decline of 9.0% in June (-6.0% est). In the eurozone, economic releases are sounding the alarm. PMIs are indicating contraction in manufacturing and business activity, retail sales are down and investor confidence remains mired deep in negative territory. With no indication that things will improve anytime soon, the euro could continue to lose ground. EUR/USD is testing resistance at 0.9984. The next resistance line is 1.0056 There is support at 0.9888 and 0.9816
by OANDA
USD/JPY stabilizes after hitting 139The Japanese yen is in positive territory today after starting the week with sharp losses. USD/JPY is trading at 138.22, down 0.34%. Japan releases a host of events on Wednesday, including retail sales and consumer confidence. Retail sales for July is expected to come in at -0.5% MoM, following a 1.4% decline in June. Consumer confidence remains weak, with a July estimate of 31.0, following the June read of 30.2. Japanese consumers are in a sour mood and nervous about the economy, and it's no surprise that they are holding tight to the purse strings as inflation continues to rise. The yen remains under pressure and took it on the chin after Fed Chair Powell's speech at Jackson Hole on Friday. Powell's brief speech went straight to the point, pledging to continue raising rates until inflation was brought under control. Powell pointedly said that one or two weak inflation reports would not cause the Fed to U-turn on its tightening, a veiled reference to the market euphoria which followed the July inflation report, which was lower than the June release. With the equity markets taking a tumble after Powell's speech, it appears that investors have finally gotten the Fed's hawkish message. Powell's speech removed any doubts about the Fed's plans to continue raising rates, but the size of the increases will depend not just on inflation, but also on other economic data. Overshadowed by Jackson Hole, US Personal Income and Spending data was weaker than expected. As well, the Core PCE index, the Fed's preferred inflation indicator, fell to 6.3%, down from 6.8% and below the forecast of 7.4%. If Friday's non-farm payrolls report is weaker than expected, it would be a clear indication that the sharp increase in rates is having its desired effect and the economy is slowing. In such a scenario, Fed policy makers may be more inclined to raise rates at the September meeting by only 50 basis points, rather than 75bp. USD/JPY is testing support at 1.3822. The next support line is at 137.01 1.3891 and 1.4012 are resistance lines
by OANDA