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Technical Analysis of Intraday Price Movement of GBP/CHF Cross Currency Pairs, Thursday August 08, 2024.
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Forecast for USD/JPY on August 8, 2024
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The yen has corrected more than six figures from the August 5th low. This correction is enough to resume the decline with renewed vigor towards the main target of 140.27. However, if the pair closes the day above 146.50 (with a white candle), the price might reach the target level of 148.82.
On the 4-hour chart, the Marlin oscillator has stabilized in the positive area, but the price, having been pushed back by the bears from the MACD line, is not in a hurry to follow the oscillator.
The situation appears neutral, with the prospect of further decline. Taking advantage of the current situation, the price may attempt to swing upward again. In such a case, a break above the MACD line (yesterday's peak) might be a false breakout.
The material has been provided by InstaForex Company - www.instaforex.com #The dollar survived after the tsunami
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A tsunami results from an underwater earthquake displacing a large amount of water. It has to go somewhere before it settles. The same is true for a market tsunami. There are reasons. In the case of Black Monday on August 5, it was the tightening of monetary policy by the Bank of Japan and fears of a recession in the US economy following a disappointing employment report for July. There are consequences. For EUR/USD, it soared above the 7-month high of 1.1. There's the settling of water. The Fed and the BOJ calmed investors, and many assets rode the roller coaster.
The billion-dollar question: where will the USD index go? On one hand, the Federal Reserve makes no secret of its desire to cut the federal funds rate in September, which, coupled with the slowdown in the US economy, paints a bullish picture for EUR/USD. ING believes that the main currency pair will return above 1.1 soon, and MUFG forecasts its northern march to continue until the second quarter of 2025. Yes, the presidential elections in the US will increase turbulence in the financial markets, but they are unlikely to change the direction of the trend.
On the other hand, market expectations for a 100 basis point cut in the federal funds rate in 2024 are inflated. It is unlikely that the Fed will press the panic button in September and aggressively ease monetary policy as investors demand. According to FOMC officials, the economy is not in a recession, and if its health continues to deteriorate, a dovish rhetoric can be adopted.
Dynamics of market expectations for the scale of the Fed's monetary easing
At the peak of Black Monday, market expectations for the scale of the Fed's monetary easing this year reached 150 basis points, suggesting three rate cuts of 50 basis points each. Gradually, the panic subsided, the market is now recovering, assessments are changing, and the EUR/USD bulls retreated from 1.10.
Will they return there? Reuters experts suggest it is unlikely, at least in the near term. Their consensus estimate for the main currency pair is 1.08 in three months and 1.11 in twelve. The US dollar is more likely to strengthen against the euro rather than fall. And there are reasons for this.
The slowdown of the American economy is a sort of earthquake that affects the rest of the world. Global GDP is also slowing down, which is bad news for a pro-cyclical currency like the euro. The market has overestimated the extent of the federal funds rate cut in 2024, just as it did at the end of last year. As a result, the US dollar strengthened in the first quarter.
Technically, on the daily chart, EUR/USD consolidates within the Adam and Eve pattern. The formation of an inside bar provides an opportunity to define entry points for long positions from the level of 1.096 and shorts from 1.090. It remains to set pending orders and wait for their execution.
The material has been provided by InstaForex Company - www.instaforex.com #GBP/USD: Trading Plan for the U.S. Session on August 7 (Review of Morning Trades)
Trading plan
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Trading plan
GBP/USD: Trading Plan for the U.S. Session on August 7 (Review of Morning Trades)
In my morning forecast, I highlighted
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07.08.2024 02:04 PM
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In my morning forecast, I highlighted the level of 1.2722 and planned to make decisions about market entry from that point. Let's look at the 5-minute chart and analyze what happened. The rise occurred, but there was no test and false breakout at 1.2722, so I was left without trades in the first half of the day. Therefore, the technical picture for the second half of the day was not reviewed.For Opening Long Positions on GBP/USD:I would like to see
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Video market update for August 07, 2024
00:00 Announcement of today’s analisys – USD/CAD, GOLD, NASDAQ, Bitcoin, Crude Oil and USDX
00:14 USD/CAD
01:10 Bitcoin
01:49 USDX
02:20 GOLD
02:43 Crude Oil
02:56 NASDAQ 1000
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JPY again slumps against USD
07.08.2024 10:37 AM
This morning,
the yen again slumped from 144 to 148 against the US dollar, following comments
from the Bank of Japan that highlighted discomfort caused by ongoing market
instability, which stalled further strengthening of the yen. The yen dropped
after Deputy Governor Shinichi Uchida delivered a strong dovish message in
response to recent volatility in global markets.
Remarkably, the yen has already advanced by nearly 10% this quarter, convincing traders to cut down on carry trade positions and putting pressure on Japanese stocks and bonds. Uchida's
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USD/JPY: simple trading tips for beginners for the European session on August 7
The price test of 144.37 occurred when the MACD indicator had moved significantly below the zero mark, limiting further downward potential for the pair. For this reason, I did not sell and waited for the implementation of scenario No. 2 for buying the pair, which I detailed in yesterday's forecast. Shortly after that, another test at 144.37 occurred when the MACD indicator was in the oversold area and was recovering from it, confirming the correct entry point to buy, which brought about 100 pips of profit. A similar story, but in the opposite direction, occurred with 145.30, making it possible to take another approximately 90 pips of profit from the market.
Today's statement by the deputy governor of the Bank of Japan, declaring that the central bank will not raise interest rates while financial and capital markets are unstable, led to a sharp drop in the Japanese yen and strengthened the US dollar, which also partially calmed investors worried by the recent rise of the Japanese currency. Despite this, I will continue to act, relying more on short positions following the downward trend. However, it is best to do so as high as possible, especially after today's significant rise during the Asian session. As for the intraday strategy, I will rely more on implementing scenarios No. 1 and 2 for selling further along the trend.
Buy signals
Scenario No. 1. Today, I plan to buy USD/JPY when the price reaches the entry point around 147.26, plotted by the green line on the chart, with the goal of rising to 148.60 plotted by the thicker green line on the chart. At around 148.60, I will exit long positions and open short ones in the opposite direction, expecting a movement of 30-35 pips in the opposite direction from that level. We can only expect the pair to rise today within the framework of the upward correction. But the higher the pair will be, the more attractive it is to sell the dollar. Important: Before buying, ensure the MACD indicator is above the zero mark and starting to rise from it.
Scenario No. 2. I also plan to buy USD/JPY today in case of two consecutive tests of 146.70 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reverse market upturn. One can expect growth to the opposite levels of 147.26 and 148.60.
Sell signals
Scenario No. 1. I plan to sell USD/JPY today only after testing 146.70 plotted by the red line on the chart, which will lead to a rapid decline in the pair. The key target for sellers will be 145.48, where I will exit short positions and immediately open long positions in the opposite direction, expecting a movement of 20-25 pips in the opposite direction from that level. Pressure on USD/JPY may return at any moment, especially in case of unsuccessful correction in the first half of the day and failure to test the daily high. Important: Before selling, ensure the MACD indicator is below the zero mark and starting to decline.
Scenario No. 2. I also plan to sell USD/JPY today in case of two consecutive price tests at 147.26 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reverse market downturn. One can expect a decline to the opposite level of 146.70 and 145.48.
What's on the chart:
Thin green line: the entry price at which you can buy the trading instrument.
Thick green line: the estimated price at which you can set Take Profit or manually close positions, as further growth above this level is unlikely.
Thin red line: the entry price at which you can sell the trading instrument.
Thick red line: an estimated price at which you can place Take Profit or manually close positions, as further decline below this level is unlikely.
MACD indicator: when entering the market, it is essential to be guided by overbought and oversold zones.
Important: Novice traders in the forex market must be cautious when deciding to enter the market. It is best to stay out of the market before important fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. You must set stop orders to avoid losing your entire deposit, especially if you don't use money management and trade in large volumes.
Remember, a clear trading plan, like the one I've outlined, is essential for successful trading. Making impulsive decisions based on the current market situation is a losing strategy for novice intraday traders.Pentru mai multe detalii, va invitam sa vizitati stirea originala.
From sell-off to gains: stock indexes show positive dynamics
The S&P 500 and Nasdaq jumped 1% on Tuesday, showing a strong recovery from the recent sell-off. Investors began to actively buy stocks again, inspired by positive comments from Federal Reserve officials, which eased fears about a possible recession in the U.S.
Global growth and a return to risk
Equally on the day, stocks around the world began to recover from the aggressive declines the previous day. Amid this gain, U.S. Treasury yields increased and the dollar strengthened. Investors have returned to buying riskier assets despite lingering concerns about an economic slowdown.
Cooling Optimism
The Dow Jones Industrial Average also showed positive dynamics, but, like other major indices, it fell by the end of the trading day, falling short of the daily highs. This shows some caution among market participants despite the overall improvement in sentiment.
Fed calms markets
U.S. Federal Reserve officials issued statements rejecting the view that weak July employment data points to an approaching recession. However, they warned that lowering interest rates may be necessary to prevent a possible economic slowdown.
Rate cuts likely
Amid weak economic data, stocks were under pressure, fueling fears of a U.S. recession. According to CME Group's FedWatch tool, traders are pricing in the likelihood of a rate cut at the next meeting in September, with 75% expecting a 50 basis point cut and 25% expecting a 25 basis point cut.
S&P 500 Sectors Advance: The Day's Top Performers
All of the major sectors of the S&P 500 ended the day higher, with real estate and financials leading the way. Tech company Nvidia was a particular highlight, jumping nearly 4% to lead the gains for the S&P 500 and Nasdaq.
Investors Return to the Market
"The market has been oversupplied, but there's a significant recovery happening, particularly in the Nasdaq. Investors are starting to believe again that lower interest rates will be good for stocks," said Rick Meckler, a partner at Cherry Lane Investments, a family-owned investment firm in New Vernon, N.J.
Indices Are Rising
The Dow Jones Industrial Average gained 294.39 points, or 0.76%, to 38,997.66. The S&P 500 gained 53.7 points, or 1.04%, to 5,240.03, and the Nasdaq Composite gained 166.77 points, or 1.03%, to 16,366.86.
The Impact of Artificial Intelligence
The Nasdaq Composite has risen 9% in 2024, helped by strong earnings and a bullish outlook for AI. However, as Meckler noted, "while recent earnings have been good, they have fallen short of expectations in many cases." Market valuations remain high, with the S&P 500 trading at 20 times trailing 12-month earnings, according to LSEG, well above the long-term average of 15.7.
Expectations and Risks
Amid unexpected developments such as the Bank of Japan's recent rate hike, investors have begun to unwind the yen-denominated financing that has been used to buy stocks for years. This has added to market uncertainty and left many wondering about the outlook.
Awaiting Powell's Speech
One of the key events investors are watching is Federal Reserve Chairman Jerome Powell's speech at a symposium in Jackson Hole, Wyoming, scheduled for August 22-24. His words could influence future market moves and provide insight into the future of monetary policy.
Uber and Caterpillar Succeed
Uber shares soared 11%, beating Wall Street's second-quarter revenue and profit expectations. The company was able to show solid growth thanks to strong demand for its ride-sharing and food delivery services. Meanwhile, Caterpillar shares rose 3% as the company also beat analysts' forecasts despite weaker demand in North America. Rising prices for heavy equipment such as excavators helped offset those losses.
Trading Activity on the Rise
Trading volume on U.S. stock exchanges totaled 13.52 billion shares, above the 20-day average of 12.48 billion. Advancing stocks outnumbered declining stocks on the New York Stock Exchange by a 2.59-to-1 ratio, while the Nasdaq saw a 1.93-to-1 ratio.
Highs and Lows
The S&P 500 posted 12 new 52-week highs and seven new lows, while the Nasdaq Composite posted 31 new highs and 144 new lows. These figures highlight the continued volatile market, with gains and losses alike.
Oil Prices Rebounding
Oil prices also edged higher after falling to multi-month lows on Monday. Investors' attention has shifted to supply-side concerns, which, along with a recovery in financial markets, has eased concerns about future energy demand.
Nikkei recovery: relief after collapse
Tokyo's Nikkei index rose 10%, providing some relief after its 12.4% plunge on Monday. The drop was the biggest one-day sell-off in Japan since Black Monday in 1987, causing global investor jitters.
Fed: Slowdown, not recession
U.S. Federal Reserve officials on Monday dismissed speculation about a recession despite weak employment data for July. San Francisco Fed President Mary Daly stressed that current data suggest the economy is slowing, but not collapsing. She noted the importance of preventing a labor market crisis.
Global Markets Rise
The MSCI index, which tracks shares around the world, rose 8.91 points, or 1.17%, to 770.99, off its daily high of 777.81. That followed a more than 3% drop on Monday, marking the third straight day of losses for the global market.
European Markets Volatility
Europe's STOXX 600 index ended the session up 0.29%, despite earlier volatility, when it fell 0.54%. That underscores the nervousness among European investors trying to adjust to rapidly changing market conditions.
FX Market Jitters
On the FX front, the dollar strengthened against its major counterparts, while the Japanese yen hit seven-month highs against the US dollar. Some of the more dramatic moves of recent days have eased, and markets are beginning to feel a sense of calm again.
Dollar Strengthens Amid Currency Volatility
The dollar index, which tracks the dollar against major currencies including the yen and euro, rose 0.07% to 102.94. Against the Japanese yen, the dollar gained 0.4% to 144.74, while the euro weakened 0.2% to $1.093.
U.S. Treasury Yields Rise
U.S. Treasury yields rose as fears of a potential recession in the country proved overblown, dampening demand for safe-haven U.S. bonds.
The 10-year yield rose 12 basis points to 3.903%, while the 30-year yield rose 12.1 basis points to 4.1924%. The yield on 2-year bonds, which often react to changes in interest rate expectations, also rose to 3.9936%.
Oil prices recover
Oil prices have stabilized after falling on Monday. U.S. crude rose 0.36% to $73.20 a barrel, while Brent crude ended the trading session at $76.48 a barrel, up 0.24% from the previous day.
Precious Metals: Gold Loses Ground
With the dollar strengthening and bond yields rising, precious metals prices fell. Spot gold fell 0.82% to $2,387.88 an ounce. U.S. gold futures also fell 0.37% to $2,392.70 an ounce. However, expectations of a U.S. interest rate cut in September and ongoing tensions in the Middle East limited gold's losses, maintaining its appeal as a safe haven asset.Pentru mai multe detalii, va invitam sa vizitati stirea originala.
Is the yen preparing a dead cat bounce?
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And the last shall be first. From the ugly duckling or main underdog of the international currency market, the Japanese yen suddenly transformed into a beautiful swan, or the main favorite. The USD/JPY crash from July's low levels reached 13%, and only the calm rhetoric of Federal Reserve officials managed to cool the ardor of the rampant bears. But for how long?
If the break in the ascending trend was due to currency interventions by the Japanese government at just the right moment amid slowing U.S. inflation, other events became the main drivers of the USD/JPY's plunge. At the end of July, the Bank of Japan appeared before investors in the plumage of a hawk. It not only raised the overnight rate to 0.25% and promised to halve the scale of quantity easing by 2026 but also spoke at length about the harm of a weak yen. Previously, central bank heads did not link their verdicts to the currency rate.
The dismal July data on American employment led to demands for the Fed to aggressively lower the federal funds rate. The futures market estimates the scale of monetary easing at 125 bps in 2024, and the divergence in monetary policy allows hedge funds and asset managers to reduce short positions on the yen. Not long ago, they reached the highest level since 2007, but by the beginning of August, they had significantly thinned out.
Dynamics of speculative positions on the yen
The BOJ has deprived investors of practically free resources by steering towards normalization. Coupled with fears of an American recession and the associated spike in volatility, this has led to the closure of carry-trade transactions. The primary beneficiary has been the yen as a cheap funding currency.
Will the bears' trump cards for USD/JPY continue to work? Moody's notes that the global economy's weakness forced the BOJ to roll back the recently increased rates in 2000 and 2006. It is quite possible that the central bank might do this now, especially if the US actually plunges into a recession. Moreover, the BOJ is facing considerable criticism. How could it ignore the weak data from Japan if it follows a data-dependent policy?
If BOJ Governor Kazuo Ueda and his colleagues take currency exchange rates into account, they are unlikely to rush the continuation of the normalization cycle. It is not certain that the weak US labor market data for July will compel the Fed to cut the federal funds rate aggressively. It seems that the divergence in monetary policy is already priced into the USD/JPY quotes, which lays the groundwork for a pullback.
On the other hand, demand for the yen will be high due to Japanese investors returning to hedge currency risks and further unwinding carry-trade transactions.
Technically, on the USD/JPY daily chart, the formation of a dead cat bounce is not ruled out. A return above 145.8 would be grounds for taking profits on short positions formed from 153.8 and a reason for long positions in the short term. As long as the pair trades lower, it makes sense to hold positions.
The material has been provided by InstaForex Company - www.instaforex.com #The euro takes a cold shower
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After a wild party, a hangover inevitably follows. The start of such a party for EUR/USD was the release of the July US labor market data. Disappointing data sharply boosted the chances of a federal funds rate cut by 125 basis points in 2024. From the European Central Bank, derivatives expect around 80 bps. No wonder the euro soared to a seven-month high at jet speed. However, the hangover took only a short time to arrive.
Strong economy - strong currency. The dollar must be sold if the US is already in a recession. Investors decided this and demanded a lifebuoy through aggressive monetary easing from the Federal Reserve. However, opinions vary as much as people do. And it's not a fact that the market's opinion is the only correct one. The Fed thinks differently. Yes, the central bank plans to lower rates, but what kind of downturn are we talking about when GDP shoots up 2.8% in the second quarter, and business activity in the services sector quickly recovers after the worst performance in four years?
The yen and the Fed became the primary beneficiaries of market panic. For a long time, the central bank did not lower rates, worrying that easing financial conditions might help high inflation return. However, massive stock sell-offs have dropped financial conditions. Now, it can be assumed that prices, at worst, have anchored and, at best, continue to fall towards the 2% target. It's time to ease monetary policy.
The dynamics of financial conditions in the US
It is highly doubtful that Fed Chair Jerome Powell and his team will act as quickly as the markets expect. They anticipate a sharp cut in borrowing costs by 50 bps in September and November, followed by a switch to 25 bps in December. Does that sound familiar? Derivatives made similar forecasts for aggressive rate cuts in December 2023 after the Fed's dovish pivot. How did that end? With pleasant surprises from the US economy and a dollar rising from the ashes. Is history repeating itself?
Why not? Suppose the slowdown in employment is due to the impact of hurricanes, and unemployment is rising due to the layoff of temporary workers. Why shouldn't the labor market deliver a pleasant surprise in early September?
Panic eventually ends. Investors have moments of clarity, and the situation is such that you cannot build the correct narrative on just one report. The Fed will only aggressively lower rates in the event of a recession, which is nowhere to be seen. Market expectations for the scale of monetary easing are overblown, and if so, the US dollar will soon regain control over Forex.
Technically, on the daily chart, EUR/USD is retracing to the upward trend. If the bears cling to the upper boundary of the fair value range at 1.0805-1.0930 and keep the pair within it, the risk of falling to 1.089 and 1.0855 increases. As long as the euro trades below $1.093, it is preferable to favor selling.
The material has been provided by InstaForex Company - www.instaforex.com #
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