In this article, we have covered the highlights of global market news about the GBP/USD, USD/JPY, AUD/USD, and Eurozone Recession.
GBP/USD Price Analysis: Pokes critical support around 1.2100 to break three-day decline
For the third day in a row, GBP/USD bears maintain control at the intraday low; the currency pair is down 0.22% intraday as of Monday’s London start.
While the GBP/USD reversal was caused by a downward sloping resistance mile from mid-June, the 21-DMA and an upward sloping support line that has been in place for one month, close to 1.2100, provide a challenge to the bears.
With the MACD’s positive bias lately waning and the RSI (14), the GBP/USD is expected to keep falling below the crucial support level of 1.2100.
Following that, the pair’s decline towards the annual low of 1.1760 may be temporarily halted at the 1.1975 level of the 23.6% Fibonacci retracement of the pair’s decline from late May to mid-July.
Recovery movements, meantime, would attempt to first test the 50% Fibonacci retracement level of 1.2215 before posing a challenge to the stated resistance line from mid-June, at the latest at 1.2260.
If the GBP/USD buyers are successful in getting over the 1.2260 barrier, the monthly high at 1.2295 and the mid-June swing high near 1.2410 may serve as a challenge for the bulls before giving them the upper hand.
USD/JPY: Additional consolidation before losses? – UOB
24-hour view: “Last Friday, we emphasised that’slowing negative momentum implies USD is unlikely to drop more’ and that we anticipated USD to ‘trade sideways between 132.30 and 133.80. After then, USD trade within a smaller range (132.87/133.89) than anticipated. The USD is anticipated to go downward due to a softening of the underlying tone. However, it seems doubtful that the support at 132.40 will be threatened (minor support is at 132.70). Resistance is located at 133.55, then comes 133.80.
Within the next three weeks: “Last Thursday (11 August, spot at 132.85), we noted that US Dollar might initially stabilize for a few days before falling to 131.65. Although the downward momentum has slowed down a little, our assessment has not changed. Overall, only a break of 134.40 (a continuation of last Friday’s “strong resistance” level) would suggest that additional USD weakness is improbable.
AUD/USD presently expects to reach 0.7170 – UOB.
24-hour perspective: “Last Friday, we said that the Australian dollar “is unlikely to increase further” and that we anticipated it to “trade sideways within a band of 0.7060/0.7130.” Although the Australian dollar moved inside a tighter range than anticipated (0.7085/0.7128), our prediction of sideways trading held true. Additional sideways trading would not be unexpected, albeit it is more likely to occur around the 0.7095/0.7140 area.
1-2 weeks from now: “Our assessment from last Thursday (11 August, spot at 0.7080) remains valid. As was said, the AUD is expected to gain more, and 0.7170 is the key to watch. Overall, the present AUD strength is seen to remain intact as long as it stays above 0.7035 (last Friday’s strong support level was around 0.7015).”
Quek Ser Leang and Peter Chia, FX Strategists at UOB Group, believe that in the near future, AUD/USD may continue to rise and reach the 0.7170 area.
Eurozone recession is now more probable than not, according to a Bloomberg poll.
According to Bloomberg’s most recent poll of analysts, the Eurozone may experience a technical recession as a result of the escalating oil crisis and historically high inflation.
“The likelihood of production contracting for two consecutive quarters has increased from 20% before Russia’s invasion of Ukraine to 60% from 45% in the previous poll.”
“Inflation is now predicted to average about 8% in 2022, which is roughly four times the ECB’s target, and 4% in 2019. However, respondents still predict that it will slow down to the 2% objective in 2024.”
As it did in its first move in July, “they predict the ECB hiking interest rates by a half-point in September.”
Please click here for the Market News Updates from 13 Aug, 2022.