Bitcoin
eventually fold as the big picture outlook is starting to look more and more
bleak with global growth endangered by the Chinese ailing economy and lack of
big stimulus from the authorities, and the “higher for longer” stance from the
Fed or even more rate hikes. The resilience in the cryptocurrency has been
remarkable in the past months, but we might be at a tipping point now.

Bitcoin Technical Analysis
– Daily Timeframe

On the daily chart, we can see that Bitcoin fell
below the trendline support
where we had also the 50% Fibonacci retracement level
for confluence. The
price has eventually bounced on the strong support at 25231
but it’s starting to look more like a “dead-cat bounce” rather than a start of
another rally. The buyers, nonetheless, are likely to pile in here with a
defined risk below the level to target new highs.

Bitcoin Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that if we get a
bigger pullback, the most likely resistances will be the 38.2% Fibonacci
retracement level and the stronger 61.8% level where we have also the broken
trendline. More conservative sellers may want to just wait for the price to fall
below the 25231 support to pile in and ride the selloff into the 21509 level.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor resistance at 26300 where the price got rejected multiple times.
So now we have a range between the 25231 support and the 26300 resistance. A
break on either side should lead to a more sustained move.

Upcoming Events

This week is
pretty empty on the economic data side as we will only have the PMIs today and
the US Jobless Claims tomorrow. Strong data should support Bitcoin in the short
term, but the prospects of more rate hikes might weigh on the cryptocurrency
soon after. Conversely, weak data is likely to cause some recessionary fears in
the markets leading to negative risk sentiment and eventually weighing on
Bitcoin. Remember also that this is the Jackson Hole Symposium week, so we will
hear from many central bankers including Fed Chair Powell, who is set to speak
on Friday.

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

The drop in the euro today comes as traders are also pulling back on odds of a 25 bps rate hike by the ECB next month. That has been trimmed to ~51% now from around ~65% before the PMI data. In turn, this is all weighing on the euro with EUR/USD now nudging towards key technical support as outlined here earlier.

The 1.0800 mark and the 200-day moving average (blue line) at 1.0797 are the key levels to watch at the moment. Keep in mind as well that there are large option expiries at 1.0800 for the pair as seen here. So, there is some interest in keeping price action thereabouts for now.

But once the expiries roll off and we get to US trading, we could see sellers try to make a play I reckon. In any case, if the move comes before that, it will be a slippery slope for the euro.

There isn’t much support after on a firm break with the May low only coming in at 1.0635 next.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US economic data keeps on surprising to the
  upside, but inflation expectations and CPI readings continue to show
  disinflation with the last two Core CPI M/M figures
  coming in at 0.16%.
• At the moment, the market doesn’t expect another
  hike from the Fed, but the next NFP and CPI data will be crucial to confirm or
  change this view.

Japan:

• The BoJ kept everything unchanged as expected but implicitly tweaked
  the YCC policy keeping the target band unchanged but giving more flexibility
  with a hard cap at 1.00%.
• They basically widened the YCC band
  without stating it explicitly.
• This has created lots of volatility
  in the JPY, but eventually led to a fast depreciation.
• The BoJ has also already intervened
  twice to smooth the rise in yields ultimately weighing on the JPY.
• Last week, the Japanese CPI data surprised to the upside with
  the core-core reading reaching again the previous high.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that from the double bottom at the
138.00 handle created after the BoJ policy meeting, USDJPY just kept on rising
with just one notable pullback. The pair recently broke above the previous high
at the 145.00 handle, but it’s struggling to keep with its rally as the market
may be awaiting new catalysts. It’s also worth reminding that the 145.00-150.00
range is considered the “intervention territory” as the BoJ last year
intervened more than once around these levels.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4
hour chart, we can see that the price has been diverging with the
MACD for a
while and this is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, the 145.00 support will be
key to determine if we will get just a pullback or a reversal.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
now have a range between the 145.00 support and the 146.50 resistance. If the
price falls back to the support, we can expect the buyers to pile in with a
defined risk below the level and target new highs. The sellers, on the other
hand, will want to see the price breaking below the support to pile in and
extend the fall into new lows with the 142.00 handle being the first target.

Upcoming Events

This week is
pretty empty on the economic data side as we will only have the PMIs tomorrow
and the US Jobless Claims on Thursday. Given the strong appreciation in the US
Dollar seen in the past weeks, we can expect some USD weakness if the data
misses expectations, and we will likely need much stronger than expected
readings to see another sustained rally in the greenback. Remember also that
this is the Jackson Hole Symposium week, so we will hear from many central
bankers including Fed Chair Powell, who is set to speak on Friday.

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

• Dollar eases lower in European morning trade
• USD/JPY down on the day but keep a close eye on the bond market
• Yuan fallout still being somewhat contained by Beijing for now
• BOJ’s Ueda says did not discuss FX volatility in meeting with Kishida
• Eurozone June current account balance €35.8 billion vs €9.1 billion prior
• UK August CBI trends total orders -15 vs -9 prior
• Switzerland July trade balance CHF 3.13 billion vs CHF 4.82 billion prior

Markets:

• NZD leads, EUR lags on the day
• European equities higher; S&P 500 futures up 0.5%
• US 10-year yields down 2.6 bps to 4.316%
• Gold up 0.4% to $1,900.91
• WTI crude down 0.4% to $80.40
• Bitcoin down 0.3% to $26,034

It was a fairly mixed session as markets remain slightly on the quiet side in Europe once again today.

The dollar nudged slightly lower as equities sentiment picked up once again, with tech shares leading the way after yesterday’s solid start to the week. US futures were flattish early on but are now seen higher with S&P 500 futures up 0.5% and Nasdaq futures up 0.7%. European indices has some catching up to do to yesterday, and so are posting gains of roughly 1% across the board.

EUR/USD raced up to a high of 1.0930 but sellers are holding on the 100-day moving average at that key level, before falling back to 1.0885 now. USD/JPY is keeping lower at around 145.70 levels from around 146.00 earlier as slightly lower bond yields are also weighing.

The lower yields in long-term Treasuries today is making for a bit more of a mixed mood early on but just be mindful that the bond market tends to take on a life of its own in US trading.

Despite the yuan’s softness (even with efforts by China to defend the currency), the aussie and kiwi are able to brush that aside temporarily. AUD/USD is up 0.5% to 0.6445 and NZD/USD up 0.6% to 0.5960 on the day.

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

The flash estimates for the August PMI readings in the euro area will be due tomorrow. And another set of relatively poor data could yet prove to be a drag for the euro in the days/weeks to come. The manufacturing sector is already well in recession and a slowing services sector as well is threatening to cause stagnant growth in the region during Q3.

While the ECB is still largely focused on the inflation mandate, policymakers cannot ignore economic developments as well. That especially as the Eurozone looks to be staring at a credit crunch right in the face.

For now, traders are pricing in roughly 68% odds of a 25 bps rate hike by the ECB for next month. The data tomorrow will likely have some impact on that one way or another. But markets will also stay guarded ahead of Lagarde’s appearance in Jackson Hole and more importantly, the inflation numbers that will come next week.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US economic data keeps on surprising to the
  upside, but inflation expectations and CPI readings continue to show
  disinflation with the last two Core CPI M/M figures
  coming in at 0.16%.
• At the moment, the market doesn’t expect another
  hike from the Fed, but the next NFP and CPI data will be crucial to confirm or
  change this view.

New Zealand:

• The RBNZ kept its official cash rate unchanged while
  stating that it will remain at the restrictive level for the foreseeable future
  to ensure that inflation comes down back to target.
• The recent New Zealand inflation and employment data surprised to the upside but
  the PMIs are in contraction with the Services PMI last week plunging into
  contraction.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely for
  second round effects.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that after breaking
below the May low and extending to the downside some more, the NZDUSD started
to pull back into the broken level in what could end up being a classic “break
and retest” pattern. In fact, we can expect the sellers to pile in around the
0.5987 level with a defined risk above the level to target new lows with the
ultimate target standing at 0.5514.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD for a
while and this is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we are in fact seeing a pullback into the
resistance where we
can find the confluence with the
downward trendline and the
38.2% Fibonacci retracement level.

NZDUSD Technical Analysis –
1 hour Timeframe

On the
1 hour chart, we can see that the price is indeed rallying towards the 0.5987
resistance area where we are expecting the sellers to pile in strongly and
restart the downtrend. The buyers, on the other hand, will want to see the
price breaking above the resistance to have more conviction on the upside and
start targeting new highs with the 0.61 handle as the first target. More
conservative sellers may want to wait for the price to break below the
counter-trendline before joining the downtrend.

Upcoming Events

This week is
pretty empty on the economic data side as we will only have the PMIs tomorrow
and the US Jobless Claims on Thursday. Given the strong appreciation in the US
Dollar seen in the past weeks, we can expect some USD weakness if the data
misses expectations, and we will likely need much stronger than expected
readings to see another sustained rally in the greenback. Remember also that
this is the Jackson Hole Symposium week, so we will hear from many central
bankers including Fed Chair Powell, who is set to speak on Friday.

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

• Prior -9

UK factory output drops at its fastest rate in nearly 3 years with the net balance of output for the three months to August coming in at -19 from +3 in July, marking the lowest reading since September 2020. As order books are also deteriorating, it’s a gloomy outlook to say the least for the manufacturing sector in the UK – much like the rest of Europe.

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

This is a similar view shared by Citi and Barclays as well quite a number of other analysts. Beijing already lacked in response to cutting the lending policy rates today but with mounting pressure on the economy and especially the property sector, further liquidity injections via RRR cuts would be much needed.

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

The
Nasdaq Composite selloff has been remarkable with key levels being breached
with no hesitation as the sentiment turned negative. The reason for the selloff
is unclear as the US data has been supporting the soft-landing narrative but
the sharp slowdown in the Chinese economy is expected to infect the other
advanced economies and drag the global economy down. Moreover, the quick rise
in long term Treasury yields is also tightening financial conditions with real
yields approaching the levels last seen during the Global Financial Crisis of
2008. It’s a tough environment for sure, so the technicals will be very helpful
in managing the risk.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite broke below the trendline and
extended the selloff into the key 13174 support. This is
where we can expect the buyers stepping in more strongly with a defined risk
below the level to target another rally to the high. The sellers, on the other
hand, will want to see the price breaking below the support to extend the
selloff into the 12274 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price is
indeed bouncing from the support at the moment and if see a bigger pullback,
the sellers are likely to step in near the broken trendline now turned
resistance, the 38.2% Fibonacci retracement level
and the red 21 moving average.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a strong minor trendline where the sellers have been leaning on to
position for more downside. We can expect them to do so again and we can see
that we have also the confluence with
the Fibonacci retracement levels and the previously mentioned moving average.
The buyers will need the price to break above the trendline to turn the bias
more bullish and get the conviction to target the high again.

Upcoming
Events

This week is
pretty empty on the data front with just the US PMIs scheduled for Wednesday
and the US Jobless Claims for Thursday. We seem to be at a point where good
news is bad news because of the Fed’s stance and bad news is bad news because
the slowdown in global growth will lead to a recession in many countries
included the US. Remember also that it’s the Jackson Hole Symposium week, so we
will get comments from Fed officials again and especially Fed Chair Powell who
is scheduled to speak on Friday.

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

There’s not much in terms of headlines driving the move but higher bond yields are certainly playing a part I would say. 10-year Treasury yields are still up 5 bps to 4.301% and that is underpinning yen pairs so far on the session. The near-term chart for USD/JPY is also seeing buyers seize back control now:

The pair bounced around its key hourly moving averages at the end of last week, with buyers holding a defense at the 145.00 mark as well. They are now regaining some momentum on a push back above the 100-hour moving average (red line), switching the near-term bias to being more bullish again.

But as is the case on Friday, any further break higher in the pair would also need approval from the bond market. For now, yields are threatening a break but we’re not there yet.

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