The greenback is pretty much flat against the euro, yen, and pound while keeping little changed against the franc and loonie. It is only the aussie and kiwi which are slightly higher in trading today but the gains there aren’t anything too significant. AUD/USD is still down 0.8% on the week and NZD/USD is down 0.5% on the week so far.

EUR/USD is stuck around 1.0700 with large option expiries at the figure level also in play. Meanwhile, USD/JPY is not really moving too much after recovering from its earlier fall in Asia. 10-year Treasury yields are down 1.8 bps to 4.244%, so that is at least keeping any upside moves at bay for now.

In the equities space, we are seeing a softer mood overall as noted here. That is something to watch out for especially for risk currencies as a further softening in sentiment could eventually spill over and drag the aussie and kiwi back lower.

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

Yesterday,
the US ISM Services PMI beat
expectations by a big margin and caused a selloff in the Nasdaq Composite. The
market pricing for future interest rates expectations turned a little bit more
hawkish with basically a 50/50 chance of another hike in November and less
rates cuts in 2024. Last week we got a “bad news is good news” type of
reaction, while yesterday it was the complete opposite as “good news was bad
news”. It looks like the market is still trading on interest rates
expectations.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite tested the broken trendline and fell
into the previous resistance turned support where we
have also the confluence with the
red 21 moving average. We
should get a bounce here, but a lot will depend on the data going forward.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the
strong support zone
where we can find many confluences. In fact, there’s the daily and the 4-hour
red 21 moving average and the 38.2% Fibonacci retracement level.
This is where the buyers should pile in with a defined risk below the support
to target another higher high. The sellers, on the other hand, will want to see
the price breaking lower to invalidate the bullish setup and position for a
selloff into the 13174 support.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
had a divergence with
the MACD around
the trendline which is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we are still in the pullback territory,
but if the price continues lower and breaks through the support and the upward
trendline, then we will have a confirmation of a reversal and the sellers will
regain control.

Upcoming
Events

Today we will have the last important US economic
data for this week: the US Jobless Claims report. We saw just yesterday that
the market doesn’t like strong US data as that raises the chances that the Fed
might need to do more and eventually lead to a worse recession. So, if we get
good data, we should see more weakness in the Nasdaq Composite, while bad data
should provide a relief rally. At some point though, the market should start to
worry about bad data as well.

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

• BOJ’s Nakagawa: No preset idea on order or timing on how to phase out easy policy
• BOJ’s Nakagawa: Further YCC tweak cannot be ruled out but is not an imminent issue now
• UK businesses see lower inflation expectations for the year-ahead in August
• Chinese yuan on the brink as it falls to the lowest levels this year
• China’s forex reserves fell by roughly $44 billion in August
• China has widened existing curbs on use of iPhones by state employees – report
• Eurozone Q2 final GDP +0.1% vs +0.3% q/q second estimate
• Germany July industrial production -0.8% vs -0.5% m/m expected
• France July trade balance -€8.09 billion vs -€6.71 billion prior
• UK August Halifax house prices -1.9% vs -0.3% m/m expected
• Switzerland August seasonally adjusted unemployment rate 2.1% vs 2.1% expected

Markets:

• NZD leads, GBP lags on the day
• European equities mixed; S&P 500 futures down 0.4%
• US 10-year yields down 1.4 bps to 4.275%
• Gold up 0.2% to $1,920.83
• WTI crude down 0.5% to $87.06
• Bitcoin up 0.1% to $25,690

There weren’t any major headlines during the session and market moves were relatively contained for the most part.

The dollar continues to hold steadier across the board, keeping a slight advance against the euro and pound. EUR/USD eased from 1.0720 to 1.0705, though still sitting in a 25 pips range on the day. Meanwhile, GBP/USD fell from 1.2500 to 1.2450 as the pound fallout continues – not helped by softer UK business inflation expectations.

USD/JPY is keeping lower though, down 0.2% at around 147.30 currently, as the bond selling this week takes a slight breather in European trading.

In the equities space, tech shares are the major laggards with Nasdaq futures trailing by 0.7% and that is pinning down S&P 500 futures by 0.4%. Dow futures are down 0.1% while European indices are a bit more mixed now after a slightly softer open. There’s still some hints of nervousness as we await further developments in the bond market.

Coming up later, there is the US weekly jobless claims but if not, do keep an eye on Treasuries to see if the selling will return and impact broader markets once again.

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

The report says that China has in recent weeks widened existing curbs on iPhone usage by state employees, telling some central government agencies to stop using the Apple product at work. It is said that staff in at least three ministries and government bodies were told not to use their iPhones at work.

The „ban“ doesn’t seem to be widespread just yet with a third source at one of the three ministries saying he was still using an iPhone at work. Meanwhile, a fourth source at a Chinese regulatory body did say they had not been barred but were warned that they will be held responsible if there would be any issues arising from their iPhone usage.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• Inflation measures
  since then showed further disinflation.
• The labour market
  displayed signs of softening although it remains fairly tight.
• Overall, the economic data started to surprise to
  the downside lately.
• The Fed members are leaning more towards a pause in
  September.
• Yesterday, we got a big beat in the ISM Services PMI.
• The market pricing now sees a 50/50 chance for a
  November hike.

EU:

• The ECB hiked by 25 bps and
  changed a line in the statement that leant more on the dovish side.
• President Lagarde didn’t hint to what we can expect
  next and, in line with the Fed, just reaffirmed their data dependency and kept
  all the options on the table.
• Inflation measures
  did soften a bit but remain uncomfortably high.
• The labour market remains
  very tight with the unemployment rate stuck at record low levels.
• Overall, the economic data has been showing signs
  of fast deterioration in the economy pointing to a possible recession in the
  next 6 months.
• The message from ECB members has been mixed but
  leaning more towards a pause.
• The market doesn’t expect the ECB to hike at the
  upcoming meeting.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD recently
tried to break out of the downward trendline, but the
price got smacked back down soon after leaving behind a fakeout and causing a
big selloff that led to the breakout of the bottom trendline. This breakout opened
the door for a fall into the 1.0515 level and the sellers are now in firm
control.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
fakeout, which is generally a reversal pattern, and the impulses to the
downside with the most important levels. The pair is clearly in a downtrend as
the price has been printing lower lows and lower highs and the moving averages are
crossed to the downside.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
had a divergence with
the MACD with
the last leg lower. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, we got a pullback into the
trendline and the 38.2% Fibonacci
retracement level where the sellers piled in with a
defined risk above the trendline to position for a fall into the 1.0515 support.

If the price breaks below the recent low,
we should see even more selling coming into the market and push the price to
new lows. The buyers, on the other hand, will need the price to break above the
trendline to invalidate the bearish setup and start targeting new higher highs,
but ultimately, they will need the price to break above the major downward
trendline around the 1.08 handle to reverse the main downtrend.

Upcoming Events

Today we will have the last important US economic
data for this week: the US Jobless Claims report. We saw just yesterday that
strong US data is tailwind for the US Dollar as that raises the chances that
the Fed might need to do more. So, if we get good data, we should see more USD
strength, while bad data should weigh on the greenback in the short term.

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

This is a familiar story as we were also in this position yesterday. For now, Treasury yields are sitting just slightly lower on the day but things could turn around once again later when we get to US trading. Keep that in mind if you’re looking for any changes to the trading bias in the day ahead.

At least for the moment, the dollar is still keeping steadier with light gains against the euro and pound while holding just a touch lower against the yen. USD/JPY is seen at 147.40 levels now but the 50 pips range is relatively modest compared to what we have seen in the past two days.

Elsewhere, equities are not really finding much enthusiasm. It has been one-way traffic this week and I reckon investors would only feel more comfortable if the bond selling also takes a bit more of a breather in US trading. Otherwise, the jittery mood looks set to continue with Adam highlighting the potential for a head-and-shoulders pattern in the S&P 500 here.

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

Last
week, Bitcoin jumped following the news that Greyscale won the lawsuit against
the SEC as the D.C. court ruled that the SEC improperly rejected the Bitcoin
spot ETF. This was seen as a positive news as Greyscale will have to reapply
for a spot ETF but that an ETF is actually coming. The news helped to lift many
cryptocurrencies like Ethereum, since Bitcoin is seen as the benchmark for the
crypto market. Ethereum started to “selling the fact” soon after though and
eventually returned to the previous lows. Looking at the bigger picture, we
have some bearish news all around as CryptoQuant reported
that Bitcoin trading volume is at its lowest in more than four years and on the
macro side we have more and more deteriorating economic data that point to a
possible recession in Q4 2023 or Q1 2024. On top of that, the central banks are
expected to keep monetary conditions tight even if we start to see more
weakness creeping in, which should ultimately make the economic conditions and
the risk sentiment worse.

Ethereum Technical Analysis
– Daily Timeframe

On the daily chart, we can see that Ethereum spiked
higher following the news of Greyscale winning the lawsuit against the SEC but
found strong sellers at the red 21 moving average and the
61.8% Fibonacci retracement level,
eventually coming back to the previous lows. The price is now consolidating but
the bias remains clearly skewed to the downside.

Ethereum Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that the buyers had
a chance to enter at the previous resistance turned support where
they also had confluence with the
38.2% Fibonacci retracement level, but the price just fell through it like
nothing and even broke out of the counter-trendline. This is
a bearish sign, and we should see the sellers coming into the market at every
pullback now.

Ethereum Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see that we
have now a consolidation near the lows. Such consolidations generally lead to
big moves once the price breaks out. If the price breaks to the upside, we
should see the buyers piling in to target the 1681 resistance and
try a breakout to invalidate the bearish setup. The sellers, on the other hand,
will want to see the price breaking to the downside to pile in even more
aggressively and extend the fall into the 1400 level.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI today and the US Jobless Claims tomorrow being the main
highlights. If we see strong data, the market is unlikely to price an imminent
recession and thus it shouldn’t affect Ethereum too much. On the other hand,
weak data should bring back recessionary fears and likely trigger some risk
aversion in the markets eventually weighing on Ethereum.

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

• A slower day for major currencies as the bond selling pauses for now
• ECB’s Kazimir: The preferable option would be to hike rates by 25 bps next week
• ECB’s Knot: Markets may be underestimating September rate hike chances
• ECB’s Villeroy: We are near or very near the peak on interest rates
• ECB’s Villeroy: There is a slowdown but no recession
• BOJ’s Takata: We won’t evaluate currencies by focusing on certain levels
• BOJ’s Takata: Stronger than expected US economy having an impact on currencies
• Japan’s Matsuno says watching FX moves with high sense of urgency
• Eurozone July retail sales -0.2% vs -0.1% m/m expected
• Germany July factory orders -11.7% vs -4.0% m/m expected
• Germany August construction PMI 41.5 vs 41.0 prior
• UK August construction PMI 50.8 vs 50.5 expected

Markets:

• JPY leads, GBP lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields down 2 bps to 4.248%
• Gold down 0.1% to $1,924.39
• WTI crude down 0.5% to $86.29
• Bitcoin up 0.2% to $25,745

The selling in Treasuries is taking a bit of a breather, at least for now, and that is helping to keep dollar gains in check in European trading today.

The greenback is slightly on the lower side but nothing too significant. USD/JPY did hit a low of 147.03 but is keeping around 147.30-40 levels now, still down 0.2% on the day.

Meanwhile, EUR/USD is up 0.2% to 1.0740 and AUD/USD up 0.2% to 0.6390 levels currently. But those are the only real movers with there being light changes among other dollar pairs, so that speaks to the lack of enthusiasm so far.

In the equities space, there is a more cautious mood though with European indices trailing and US futures also slightly softer. There is still some angst it would seem, after the jump higher in bond yields on Friday and yesterday.

In terms of headlines, we did get some added verbal intervention from Japan and also ECB policymakers trying to keep a rate hike next week as being a ‚possibility‘. But both of those developments aren’t anything new at this stage.

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

• One more, likely last rate hike, still needed
• The alternative option would be to hike in October or December
• Inflation remains stubbornly high, price growth expectations too far above 2%

As we move closer to the decision next week, it looks like maybe ECB policymakers are starting to break rank. This is one of the more direct and hawkish takes as compared to the others, which are just alluding to a rate hike being a mere „possibility“.

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

• Prior +2.3%
• Market index 183.6 vs 189.0 prior
• Purchase index 141.9 vs 144.9 prior
• Refinance index 388.1 vs 407.1 prior
• 30-year mortgage rate 7.21% vs 7.31% prior

Mortgage applications declined once again in the past week with both purchase and refinancing activities falling. It adds to the strain in the housing market amid higher interest rates.

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