<p style=““ class=“text-align-justify“>The dollar is in charge once again in trading today as traders continue to weigh up recession risks and the Fed outlook in general. The latter was in focus last week amid the slightly softer US CPI data but we have seen the reaction completely faded now as the greenback takes charge again.</p><p style=““ class=“text-align-justify“>As is the case, it seems like the bond market is right once again and FX is following suit as such. The dollar has completed a round lap against the euro in a drop from its 61.8 Fib retracement level at 1.0361 to 1.0130 currently. The latest retreat is a massive blow for the euro as it targeted a breakout, and it exemplifies how bad sentiment is for the single currency.</p><p style=““ class=“text-align-justify“>It’s tough to find any reason whatsoever to like the euro as the economic outlook remains rather dire. At this stage, the ECB has still only delivered a 50 bps rate hike and already it seems like their window to deliver another is closing.</p><p style=““ class=“text-align-justify“>The euro area economy looks to have deteriorated sharply in July and with a looming energy crisis set to befall the region in the winter months, it’s hard to be optimistic towards the end of the year.</p><p style=““ class=“text-align-justify“>Looking at EUR/USD, the next key level to watch will be the short-term support near 1.0100 and if that gives way, parity beckons once more for the pair. And this time, it may not be just a flash in the pan drop below the key psychological level.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Investor sentiment remains bearish in August</li><li style=““ class=“text-align-justify“>But no longer „apocalyptically bearish“ on hopes inflation, rates shocks may end in coming quarters</li><li style=““ class=“text-align-justify“>Long USD remains the most crowded trade</li><li style=““ class=“text-align-justify“>Uninvested cash levels drop to 5.7% from 6.1% in July, but „still very high“</li></ul><p style=““ class=“text-align-justify“>Some findings from the latest BofA global fund manager survey for August. Interestingly, most respondents noted that current sentiment is still too bearish for an immediate reversal and that they remain „patient bears“. Besides that, the fact that investors are still staying long the dollar is a testament to overall market sentiment as recession risks are heightened and the Fed pivot is a no go just yet.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Prior -45.8</li><li>Economic sentiment -55.3</li><li>Prior -53.8</li></ul><p style=““ class=“text-align-justify“>That’s another dismal reading as ZEW notes that they expect a further decline in the already weak economic growth in Germany. Adding that high inflation rates and expected additional costs from higher energy prices are to decrease profit expectations for the private consumption sector.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>The dollar is lightly higher on the day and that is helping to keep USD/JPY underpinned but the pair in general tends to see a much wider range than most dollar pairs recently, feeding off some volatility after the drop back below 135.00 at the end of July.</p><p style=““ class=“text-align-justify“>As much as buyers are holding up, there is still a sense of directionless movement in USD/JPY for now. The downside for the pair is limited closer to the 100-day moving average (red line) while topside action is capped by the 135.00 handle. All eyes are on the bond market for what comes next and <a target=“_blank“ href=“https://www.forexlive.com/news/the-bond-market-continues-to-be-a-key-spot-to-watch-in-the-week-ahead-20220815/“ target=“_blank“>there might be more waiting to do in that sense</a>.</p><p style=““ class=“text-align-justify“>Looking ahead, the US retail sales data tomorrow will be one to watch in terms of risk events for this week.</p>

This article was written by Justin Low at www.forexlive.com.