<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/a-crest-of-hope-and-comfort-20220811/“>A crest of hope and comfort?</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/markets-settle-down-in-european-morning-trade-20220811/“>Markets settle down in European morning trade</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-daly-were-not-near-done-yet-in-battle-against-inflation-20220811/“>Fed’s Daly: We’re not near done yet in battle against inflation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-gasoline-prices-drop-below-4-for-the-first-time-since-march-aaa-20220811/“>US gasoline prices drop below $4 for the first time since March – AAA</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/german-chancellor-scholz-says-does-not-think-will-see-unrest-in-the-country-20220811/“>German chancellor Scholz says does not think will see unrest in the country</a></li></ul><p>Markets:</p><ul><li>NZD leads, GBP lags on the day</li><li>European equities mixed; S&P 500 futures up 0.4%</li><li>US 10-year yields down 2 bps to 2.76%</li><li>Gold up 0.1% to $1,794.63</li><li>WTI crude up 0.7% to $92.55</li><li>Bitcoin up 3.0% to $24,623</li></ul><p style=““ class=“text-align-justify“>It was another quiet session in terms of headlines but there were some decent moves in markets as the dollar slipped further after yesterday’s fall. The greenback is contesting or looking to contest some key technical levels on the charts (<a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>euro</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>yen</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>pound</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/usdcad-looks-to-establish-further-downside-leg-after-fall-to-two-month-lows-20220811/“ target=“_blank“>loonie</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/audusd-takes-a-peek-above-key-resistance-level-on-dollar-struggles-20220811/“ target=“_blank“>aussie</a>) and that will be ones to watch in the sessions ahead.</p><p style=““ class=“text-align-justify“>The dollar is generally lower across the board with EUR/USD moving up from 1.0300 to 1.0340 and USD/JPY down from 132.70 to 132.30 during the session. Meanwhile, AUD/USD moved up from 0.7080 to 0.7115 while NZD/USD tracked higher from 0.6400 to 0.6445 as equities also held steadier for the most part.</p><p style=““ class=“text-align-justify“>European indices are trading more mixed after a positive start while US futures are holding slight gains, building on the positive momentum from yesterday.</p><p style=““ class=“text-align-justify“>The bond market remains more tepid though and that might be something for market players to be wary about as Fed funds futures also dialed back some of the pricing for a 75 bps rate hike after the drop yesterday. Odds are now seen at ~43% after a drop to ~30% following the US CPI data.</p>

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

<p style=““ class=“text-align-justify“>The hype this week was all about the US CPI data and the reaction yesterday did not disappoint. However, it seems like market players are running out of steam today or it may just be another summer’s day in Europe as things settle down and we are seeing light changes overall for the most part.</p><p style=““ class=“text-align-justify“>European indices are now little changed after a positive open, trading more mixed while US futures are still keeping slightly higher but the gains are rather measured. S&P 500 futures are up 11 points, or 0.3%, while Nasdaq futures are up by only 0.1% on the day.</p><p style=““ class=“text-align-justify“>Meanwhile, Treasury yields cratered initially to the release yesterday but picked itself up as rates showed little change in general but are slightly lower today. Perhaps 10-year yields are looking for a bigger play with a wedge/flag pattern forming at the moment:</p><p style=““ class=“text-align-justify“>While greed is the name of the game in the equities space, the bond market seems to be voting that not much has changed in terms of the Fed outlook after just one data point that may be hinting at inflation pressures easing slightly. I think the fact that Fed funds futures also dialed back a little higher to ~43% for a 75 bps rate hike next month (it was down to ~30% at one point) is a testament to that.</p><p style=““ class=“text-align-justify“>In FX, the dollar remains a little softer today but there are some key technical levels in play at the moment before any further downside leg for the greenback as outlined earlier:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>EUR/USD nudges higher as dollar stays sluggish</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>GBP/USD looks to build on yesterday’s gains amid heavy dollar</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>USD/JPY taken on a see-saw ride by US economic releases</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdcad-looks-to-establish-further-downside-leg-after-fall-to-two-month-lows-20220811/“ target=“_blank“>USD/CAD looks to establish further downside leg after fall to two-month lows</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/audusd-takes-a-peek-above-key-resistance-level-on-dollar-struggles-20220811/“ target=“_blank“>AUD/USD takes a peek above key resistance level on dollar struggles</a></li></ul>

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

<ul><li>Tax relief is part of overall package to help citizens</li></ul><p style=““ class=“text-align-justify“>There are sparse details on this with German finance minister Lindner only stating that the tax relief plan would be in the realms of €10 billion. This is on top of the €30 billion package unleashed by the government earlier which included a fuel tax cut and a public transport ticket valid across Germany priced at just €9 a month for June, July and August.</p>

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

<p style=““ class=“text-align-justify“>The pair traded to fresh highs in two months after the US CPI data yesterday but the daily close fell short of breaching the 100-day moving average (red line). That key resistance level is once again the focus today and we are seeing buyers look to test waters above that at 0.7085 at the moment.</p><p style=““ class=“text-align-justify“>Hold above and the bearish bias in the pair will be put off as there is the scope for price action to trade towards the 200-day moving average (blue line), seen at 0.7150 currently. These key technical levels have been vital in definining and limiting price moves in AUD/USD, as evident from the chart above since May trading.</p><p style=““ class=“text-align-justify“>As such, they will be key levels to pay attention to in gauging the potential for the next leg lower in the dollar against the aussie. Across other dollar charts, the greenback also has key levels that are being contested, or close to, at the moment as seen with the <a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>euro</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>pound</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>yen</a>, and <a target=“_blank“ href=“https://www.forexlive.com/news/usdcad-looks-to-establish-further-downside-leg-after-fall-to-two-month-lows-20220811/“ target=“_blank“>loonie</a>.</p><p style=““ class=“text-align-justify“>The coherent technical picture across multiple pairs exemplifies the notion that dollar sentiment is the key driver in FX at the moment, as markets continue to look for clues on the Fed pivot. For now, we’re still caught up in the reaction to the US jobs report from Friday last week and the US CPI data yesterday. The dollar is softer and while there is scope for a further drop, there needs to be confirmation from the technicals and we are approaching that crossroads towards the end of the week.</p>

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

<p style=““ class=“text-align-justify“>There were big moves across dollar pairs in trading yesterday and USD/CAD was no exception as it cast aside the memory of the jump to 1.2980 last Friday in a drop back below 1.2800 in the aftermath of the US CPI data release. There hasn’t been much relief since the drop with the slight retracement earlier stalling at the 100-day moving average (red line) at 1.2793 – a level that was broken yesterday and which helped to stall the downside trend initially on 1 August.</p><p style=““ class=“text-align-justify“>The break below the key technical level is a boost to sellers and opens up the path towards testing the 200-day moving average (blue line) next at 1.2741. That is the key support level to watch now as a break below that will pave the way for a further downside leg in the pair.</p><p style=““ class=“text-align-justify“>It isn’t much of a coincidence that we are seeing dollar pairs in general move close towards testing another round of key technical levels in which a break might set off the next downside leg for the dollar.</p><p style=““ class=“text-align-justify“>I want to say that the late surge in oil prices yesterday helped to keep the loonie steadier but considering its recent volatility, it’s hard to really pin down such a move to fluctuations in oil. For now, dollar sentiment is still the key driver in FX and the technicals are what is defining the action at the moment as seen with the <a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-nudges-higher-as-dollar-stays-sluggish-20220811/“ target=“_blank“>euro</a>, <a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-looks-to-build-on-yesterdays-gains-amid-heavy-dollar-20220811/“ target=“_blank“>pound</a>, and <a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-taken-on-a-see-saw-ride-by-us-economic-releases-20220811/“ target=“_blank“>yen</a> as well.</p>

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