Fundamental Overview

Yesterday, we got some more
positive US data releases as the US retail sales came out a touch better than
expected and the industrial production data beat forecasts erasing the
hurricane related weakness in July.

Despite that, the market is
still pricing a 63% probability for a 50 bps cut at today’s decision. What’s
more important is that the Fed is cutting into a resilient economy which should
lead to better growth expectations and support the stock market.

Russell 2000
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Russell 2000 eventually rallied back above the major trendline and extended the gains into the
previous high around the 2250 level. The next target for the buyers should be
the 2300 level where we can expect the sellers to step in to position for a
drop back into the trendline.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we had a very strong rally from the lows as the market looks forward
to the Fed rate cuts and the pickup in economic activity. From a risk
management perspective, the buyers will have a better risk to reward setup
around the 2185 support
zone. The sellers, on the other hand, will want to see the price breaking lower
to pile in for a drop into the 2120 level.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have upward minor trendline defining the current bullish momentum. The
buyers will likely keep on leaning on it to position for new highs, while the
sellers will want to see the price breaking lower to position for a drop into
the 2185 support. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the FOMC rate decision, while tomorrow we get the latest US
jobless claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

A lot of Hezballah pagers blew up yesterday but what will it do to the oil market? Some people thought oil might surge but the chart and price action does not care about what we think. Here is oil technical analysis I see but please do your own research and trade at your own risk.

Oil Technical Analysis: Failed Breakout and Market Sentiment Shift

The oil market has recently experienced significant volatility, as illustrated in the Light Crude Oil Futures (CL1!) chart. Traders were caught off guard by a failed breakout and a subsequent bearish momentum, which reflects a shift in market sentiment. Here’s a breakdown of the key technical events unfolding.

Failed Breakout and Bull Trap

The chart shows a failed breakout from a bull flag pattern, a bearish signal that typically indicates a reversal in price momentum. After an attempted breakout above the upper resistance, bulls were trapped with the breakout proving short-lived. This led to a swift price reversal, disappointing those who were expecting further upward movement.

The contract rollover to the November futures (CLX2024) adds another layer of complexity to this technical setup. As the contract switched, bullish traders were trapped in their positions, unable to capitalize on expected gains. This failure often creates a scenario where traders rush to close long positions, fueling bearish pressure.

Downward Price Channel

Since mid-August, oil prices have been trending within a descending channel. This sustained downtrend is highlighted by lower highs and lower lows, indicating that bears are currently in control of the market. The recent failed breakout attempt suggests that the downward pressure remains strong, with bulls unable to break free from the prevailing bearish momentum.

At the time of writing, oil prices are hovering around $68.85, representing a 3.29% decline. The failed breakout at $71.19 marked the peak of this brief rally attempt, but the market quickly reversed, confirming resistance at this level.

Bears in Control: Gap Down Confirms Sentiment

The most recent action saw bears taking advantage of a gap down, further solidifying their hold on the market. This gap reinforces the bearish sentiment, with the price now struggling to maintain a foothold around the $68-$69 range. Given the failure to maintain support above $71, traders may expect additional downside movement, potentially targeting previous lows around $65.27.

Moving Forward: Key Levels to Watch

• Resistance at $71.19: The failed breakout and subsequent bearish action confirm this as a key resistance level. Any future upward attempts will need to decisively clear this level to regain bullish momentum.

• Support at $68.85: The current price is testing this support zone. A break below could open the door for further downside, with the next major support seen near $65.27.

• $65.27 Support Level: This represents a critical psychological level that, if broken, could accelerate the downward trend in the oil market.

Conclusion: Bearish Outlook Continues

With the failed breakout from the bull flag pattern and a significant bearish gap down, the current outlook for Light Crude Oil Futures remains bearish. Bulls are struggling to regain control, and until they can break above the key resistance at $71.19, the downward trend will likely persist.

Traders should watch for further downside tests of the support levels mentioned, and any bounce attempts should be monitored for potential short-term trading opportunities.

In this environment, risk management is crucial, as the market remains highly volatile and prone to sudden shifts, particularly with contract rollovers and macroeconomic factors influencing oil prices.

This article was written by Itai Levitan at www.forexlive.com.

• Will the US retail sales later mess up the Fed odds even more?
• Dollar holds lightly changed on the day
• Gold rally stalls as traders wait on Fed decision
• Germany September ZEW survey current conditions -84.5 vs -80.0 expected
• European indices hold higher to start the day
• What are the main events for today?
• Eurostoxx futures +0.5% in early European trading
• FX option expiries for 17 September 10am New York cut
• A light one on the agenda in Europe today
• The bond market stays in focus in run up to the Fed tomorrow
• New Zealand Treasury see more positive data, but no firm sign of a recovery just yet

Markets:

• AUD leads, CAD lags on the day
• European equities higher;
  S&P 500 futures up 0.24%
• US 10-year yields flat at
  3.618%
• Gold
  down 0.29% to $2,575
• WTI
  crude up 0.20% to $70.23
• Bitcoin
  up 1.49% to $59,069

It’s been a
quiet session with no major news releases. The only economic report was the
German ZEW which missed expectations by a big margin.

In the
markets, the mood is tentatively positive as risk assets continue to gain as we
head into the FOMC decision tomorrow. The probability for a 50 bps cut stands
now around 65%.

In the
American session, we get the US Retail Sales and the US Industrial Production
data. If we get weak readings, then the market will likely seal the 50 bps cut
with a 70%+ probability. In case the data comes out strong though, it’s
unlikely that we will see much change in the pricing although we should get closer to a 50/50 chance.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Last month, July retail sales nudged up by 1.0% and beat estimates here. Ten out of the thirteen categories showed an increase, so that helped. But this time around, the estimate is for headline retail sales to show a 0.2% decline. That said, ex-autos is estimated to increase by 0.2% and the more important control group is expected to be higher by 0.3% again.

The hurdle doesn’t seem too high but spending might cool a little after the hotter-than-expected July performance. That especially as we are starting to build towards the holiday spending spree in the months ahead.

In any case, it’s not so much about the details of the data at this point. This is a market that is currently trending high on emotions ever since the whole carry trade fiasco at the end of July and start of August.

And in pricing in higher odds of a 50 bps move by the Fed since last week, it looks like traders are very much caught in that again.

As such, I would argue that the risks are asymmetric when it comes to the US retail sales today.

If the report is a poor one, it would just serve to exacerbate calls for a 50 bps rate cut tomorrow. That considering market players are wanting to try and force that on the Fed, or so it would seem.

But if the report is relatively in line with estimates and even perhaps showing that spending is doing fine, markets are likely to take that as a „carry on as you will“ message. There might be some minor adjustments to the current pricing in favour of 25 bps but surely we won’t go as far as to pricing out the possibility of a 50 bps move.

Timiraos‘ report last week certainly threw a curveball to markets. The Fed communique since Jackson Hole has been siding with a 25 bps move. But then now, traders have had to rethink whether 50 bps should still be in the picture.

And when you give traders an inch, they’ll happily take a mile. Even more so if they can lean on the data to back that up.

Either way, a poor report today will certainly make things very, very interesting going into tomorrow. That especially given the current market pricing. It will make this one of the most anticipated and watched Fed meetings in recent times.

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

Fundamental
Overview

Last Thursday, WSJ’s
Timiraos published an article which seemed suggesting that a 50 bps cut was
still being discussed. The market responded by raising 50 bps cut probabilities
to around 40% from 13% before the news.

Nick Timiraos is considered
a Fed “insider”, so the market is attentive to all of his pieces concerning
potential Fed decisions. Since then, the 50 bps camp got more vocal and the
probability for the Fed to cut by 50 bps at the upcoming meeting stands now
around 70% with a total of 120 bps of easing by year-end.

This repricing weakened the
US Dollar across the board as Treasury yields fell further. Once we are done
with the Fed decision though, the focus will switch back to the economic data.
In case we start to see better figures, the market might start to pare back the
aggressive easing expected in 2025 supporting the greenback in the short-term.

For the RBA, the market
sees a 91% probability of no change at the upcoming meeting and a total of 21
bps of easing by year-end. The central bank keeps its fairly hawkish stance as
inflation has been slow to return inside the target range and the labour market
remains resilient.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD bounced around the 0.6650 level and eventually rallied back
above the key 0.67 resistance increasing the bullish momentum.
The target for the buyers should now be the 0.68 handle where we can expect the
sellers to step in with a defined risk above the level to position for a drop
back into the 0.67 handle.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the bullish momentum increase as the price broke above the 0.67 resistance
and the trendline
as more buyers piled in while the sellers squared their positions. There’s not
much else to glean from this timeframe, so we need to zoom in to see some more
details.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have an upward trendline defining the current bullish momentum. The
buyers will likely keep on leaning on the trendline to position for more
upside, while the sellers will look for a break lower to pile in for a drop
back into the 0.67 level. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US Retail Sales and the US Industrial Production data.
Tomorrow, we have the FOMC Rate Decision. On Thursday, we get the Australian Labour
Market report and the latest US Jobless Claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

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This article was written by FL Contributors at www.forexlive.com.

The changes among the day remain light, with dollar pairs all holding within 10 pips change currently. It’s just one of those days where even if there are any moves, one shouldn’t look too much into it. At this point, it’s all about the Fed tomorrow.

USD/JPY was a bit more volatile in Asia, trading up to 141.25 but is now flat at 140.60. Meanwhile, EUR/USD saw a light extension of its range earlier to 1.1146 but is now flat again around 1.1135. So, there’s not really a whole lot to talk about in terms of the movement today.

In the equities space though, US futures are pushing higher with tech shares seen rebounding. S&P 500 futures are up 0.4% with Nasdaq futures up 0.6% currently. In the bond market, 2-year yields remain on edge at 3.556% and 10-year yields down marginally on the day at 3.614%.

As for Fed pricing, traders are still seeing ~67% odds of a 50 bps rate cut currently.

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

Headlines:

• Dollar remains pinned down to start the new week
• Major central bank decisions to dominate the agenda in trading this week
• ECB’s de Guindos: Our projections show inflation will hover around 2% by end of 2025
• ECB’s Kažimír: Will almost surely wait until December for next rate cut
• Eurozone July trade balance €21.2 billion vs €22.3 billion prior
• Italy August final CPI +1.1% vs +1.1% y/y prelim
• Switzerland August producer and import prices +0.2% vs 0.0% m/m prior
• SNB total sight deposits w.e. 13 September CHF 466.8 bn vs CHF 455.9 bn prior

Markets:

• USD lags on the day
• European equities mixed; S&P 500 futures down 0.1%
• US 10-year yields down 0.5 bps to 3.643%
• Gold up 0.2% to $2,581.04
• WTI crude up 1.0% to $69.36
• Bitcoin down 0.8% to $58,663

There weren’t any headlines that really stood out on the session but that didn’t stop traders from kick starting the week with a bit of action.

It was all about positioning flows as the dollar lagged across the board, falling against the rest of the major currencies bloc. USD/JPY in particular dipped to a low of 139.57 during the session, its lowest since July last year. That before returning back to hover in and around the 140.00 mark.

The drop in the dollar comes as yields stay pressured, with 2-year Treasury yields in particular continuing to flirt with the 2023 low near 3.55%.

EUR/USD nudged higher to 1.1120 levels while GBP/USD is contesting the 1.3200 mark, up 0.5% on the day. Meanwhile, AUD/USD and NZD/USD are both up 0.6% to 0.6745 and 0.6190 respectively. That despite risk sentiment being more tentative during the session.

European indices are a little mixed after a slightly softer start, with US futures also keeping little changed overall.

In the commodities space, gold is holding up after the break to fresh record highs last week. The precious metal is up another 0.2% to $2,581 and hoping to continue that form into the Fed later this week.

It’s all about the major central bank meetings this week and the Fed is the one most anticipated. That will keep markets on edge with positioning flows set to dominate proceedings in the run up to the meeting.

For now, it looks like traders are looking for a more dovish Fed at least.

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

Fundamental
Overview

Late Thursday, around 1:00
PM ET, WSJ’s Timiraos published an article which seemed suggesting that a 50
bps cut was still being discussed. The market responded by raising 50 bps cut
probabilities to around 40% from 13% before the news.

Nick Timiraos is considered
a Fed “insider”, so the market is attentive to all of his pieces concerning
potential Fed decisions. The probability for the Fed to cut by 50 bps at the
upcoming meeting stand now around 60% with a total of 118 bps of easing by
year-end.

These repricing weakened
the US Dollar across the board as Treasury yields fell further. Once we are
done with the Fed decision, the focus will switch back to the economic data. In
case we start to see better figures, the market might start to pare back the
aggressive easing expected in 2025 supporting the greenback in the short-term.

For the BoC, the market
sees a 25% probability of a 50 bps cut at the upcoming meeting and a total of
68 bps of easing by year-end. Governor Macklem last week raised the prospect of
larger cuts if growth and inflation were to fall more than expected.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD is testing the key resistance around the 1.36 handle. This is where
the sellers are stepping in with a defined risk above the resistance to
position for a drop back into the 1.34 handle. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
the 1.38 handle next.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the pair is now trading in a tight range between the 1.3560 support
and the 1.36 resistance. The buyers will want to see the price breaking out to
the upside to increase the bullish bets into new highs, while the sellers will
look for a break lower to pile in for a drop back into the 1.34 handle.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the tight range and the choppy price action. There’s not much
else to add here as the market participants will wait for a breakout on either
side. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the Canadian CPI, the US Retail Sales and the US Industrial
Production data. On Wednesday, we have the FOMC Rate Decision. On Thursday, we
get the latest US Jobless Claims figures. On Friday, we conclude with the
Canadian Retail Sales.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• It would take a significant shift in the outlook for the ECB to cut in October
• Very little new information in the pipeline before October meeting
• There is no rush to cut rates
• The safest approach is to wait for the outlook to become clearer

All this is very much a given now and they have guided markets relatively well in that regard. But at least economic developments are also playing out accordingly, so that helps with expectations. Traders are pricing in just ~39 bps of rate cuts for the last two meetings this year and not looking for a change in October as well; ~75% odds of no change to rates.

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