Daily Technical Analysis

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The USD/CAD pair remains in a defensive stance around 1.3510, rebounding from its two-week low as it enters the European session on Friday. This resilience comes even as the pair fails to respond positively to the surging prices of Canada’s primary export, WTI crude oil, with traders keeping a close watch on upcoming US employment data and Canadian GDP figures.


Despite a broader US Dollar recovery and anticipation of crucial economic data, the USD/CAD bears persisted in the previous session. The rise in WTI crude oil prices to a multi-day high added further downward pressure to the pair. Additionally, a significant revision in Canadian Current Account data for Q1 2023 contributed to the downward momentum.


Meanwhile, WTI crude oil has seen a four-day consecutive increase, reaching $83.40 and hitting a three-week high. This rally is driven by a series of measures implemented by China to safeguard its economy from a return to pandemic-induced conditions. Notably, the People’s Bank of China reduced the foreign reserve ratio by 2.0%, and numerous Chinese banks lowered Yuan deposit rates. Adverse weather conditions, including Hurricane Idalia in the US and concerns about a typhoon in China, along with a substantial inventory drawdown in the US, have also fueled the rise in oil prices.


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[dyadyaSasha]

I think we need to remember the basic principles and conditions of the technical review of the USD/CHF and EUR/USD currency pairs.
About which I dare to remind you.


Principles and Conditions of Technical Analysis for USD/CHF and EUR/USD Currency Pairs

Technical analysis is a widely used method for evaluating and predicting price movements in the Forex market. It relies on historical price data and various chart patterns, indicators, and statistical tools to make informed trading decisions. When applied to currency pairs like USD/CHF (United States Dollar/Swiss Franc) and EUR/USD (Euro/United States Dollar), technical analysis can provide valuable insights for traders. Here are the key principles and conditions for conducting technical analysis on these currency pairs:
1. Historical Price Data:

Technical analysis starts with the examination of historical price data for USD/CHF and EUR/USD. Traders use this data to identify past price patterns, trends, and levels of support and resistance. Charts can be displayed in different timeframes, such as daily, hourly, or minute-by-minute, depending on the trader's strategy and objectives.
2. Candlestick Patterns:

Candlestick patterns provide visual cues about price direction. Common patterns like doji, hammer, and engulfing patterns can signal potential reversals or continuations in the price movement. Traders watch for these patterns to make entry and exit decisions.
3. Trend Analysis:

Identifying the prevailing trend is a fundamental aspect of technical analysis. Traders use trendlines and moving averages to determine whether USD/CHF or EUR/USD is in an uptrend, downtrend, or moving sideways (range-bound). Trend analysis helps traders align their trades with the market's direction.
4. Support and Resistance Levels:

Support levels are price points where USD/CHF or EUR/USD tend to find buying interest, preventing further declines. Resistance levels are where selling interest typically arises, limiting upward movements. Identifying these levels helps traders set stop-loss orders and profit targets.
5. Technical Indicators:

Various technical indicators, such as Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Stochastic Oscillator, provide quantitative insights into the market's momentum, overbought/oversold conditions, and potential trend reversals. Traders often use multiple indicators to confirm signals.
6. Volume Analysis:

While Forex lacks a centralized exchange with volume data, traders can still use tick volume or trading activity indicators to gauge market participation. Volume analysis can confirm the strength of a price move or signal potential reversals.
7. News and Events:

Although technical analysis primarily focuses on price data, traders should also consider fundamental factors. Economic news releases, geopolitical events, and central bank policies can significantly impact USD/CHF and EUR/USD. Be aware of scheduled news releases and their potential effects on the market.
8. Risk Management:

Risk management is a critical aspect of technical analysis. Traders should determine their risk tolerance, set stop-loss orders to limit potential losses, and manage position sizes accordingly. Risk-reward ratios are also essential for assessing the attractiveness of a trade.
9. Continuous Learning:

Technical analysis is a skill that requires continuous learning and adaptation. Markets evolve, and what worked in the past may not always work in the future. Stay updated with the latest developments in technical analysis and refine your strategies as needed.
In conclusion, technical analysis for USD/CHF and EUR/USD involves analyzing historical price data, identifying patterns, trends, and support/resistance levels, and using technical indicators to make informed trading decisions. It's essential to combine technical analysis with fundamental analysis and robust risk management for successful trading in the Forex market.

[xtreamforex.com]

USD/JPY is holding steady around 146.10-15 as we enter Monday’s European session, following a slow start to the week with Japan’s GDP numbers and the US ISM Services PMI in focus. The lack of action in the Yen pair can be attributed to the US Labor Day holiday, as well as mixed signals from the US Federal Reserve (Fed) and the Bank of Japan (BoJ).


Earlier today, Japan’s Monetary Base data for August showed a 1.2% year-on-year growth in liquidity, compared to -1.3% in the previous period. Despite cautious optimism in the market and inactive bond markets due to the US holiday, the market still expects the BoJ to support the Japanese Yen (JPY).


In other news, market sentiment remains positive as China implements stimulus measures and hopes rise for no more rate hikes from the US Federal Reserve (Fed).
China’s government recently established a special cell to promote the private economy and remove barriers for the services industry, boosting sentiment on Monday. The People’s Bank of China (PBoC) also made a significant cut to its foreign exchange reserve requirement ratio (FX RRR), with several China banks reducing interest rates on Yuan deposits. Furthermore, there are reports that China will take more action to revive the country’s property sector.


On the flip side, the likelihood of the Federal Reserve (Fed) adopting a hawkish stance in the future has decreased, particularly following the mixed US jobs report for August. This positive market sentiment weighs on the USD/JPY price.


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The EUR/USD currency pair is in a bit of a sticky situation. It’s currently hanging around the 1.0780 level, which is pretty important. It’s been at this level for about 5.5 months. Recently, there was a tiny bounce, but that excitement didn’t last long. Why? Well, the European Central Bank (ECB) folks didn’t drop any hints that they’re going to be super aggressive with their money moves. On the flip side, the US Dollar is flexing its muscles because of changes in interest rates and some big money events coming up in Europe and the US.


Philip Lane, who’s the big shot economist at the ECB, said that inflation data for August wasn’t looking so hot. But he also said we should chill a bit and wait for more data before we go making any big decisions. The ECB President, Christine Lagarde, is also all about keeping our expectations for inflation in check. Other bigwigs at the ECB think the same way.


Now, over in the US, things are looking up. The US job numbers (Nonfarm Payrolls) and what Moody’s thinks about US growth have people thinking that the US might get more serious about its money game. That’s been giving the Euro a hard time. Plus, folks in the market aren’t completely sold on what China is doing with its money, and there’s some tension between China and the US, which makes the US Dollar look even better.


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[dyadyaSasha]

This trend will not last long

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Chinese Property Stocks Fail to Ease Growth Concerns, Bears Control Asian Stock Market


The Asian stock market is not doing so well today. Even though China’s property stocks are getting better, the overall situation is not great. People who trade stocks are being careful because they saw big losses yesterday. They are also waiting for a report called the US ISM Services PMI.


A thing called the MSCI’s Index of Asia-Pacific shares (excluding Japan) has gone down by almost 1%. But in Japan, something called the Nikkei 225 has gone up by 0.75% in the morning.


Yesterday, a number for China’s Caixin Services PMI in August was not so good. It was 51.8, which is lower than the 54.1 from before. This made people worry about China’s economy. There is also a problem between the US and China, and the US Commerce Secretary talked about it. She said that the US will keep taxes on things from China until they look at it again in four years.


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The NZD/USD pair is currently facing a tough challenge during the Asian trading session. It’s hovering around a level between 0.5865 and 0.5860, marking its lowest point since way back in November 2022. The main culprit behind this struggle is the strong US Dollar (USD), and the Federal Reserve (often referred to as the Fed) isn’t showing any signs of lowering interest rates anytime soon. This weighty situation has put significant pressure on the NZD/USD pair.


Recent positive news about the US economy has added to the pressure. A key indicator called the US ISM Non-Manufacturing PMI, which measures the health of service-based businesses like restaurants and stores, reached its highest level since February. This signals that the US economy is performing quite well. This positive news has led many to believe that the Fed might increase interest rates again this year. When the Fed does that, it’s generally good news for the US Dollar.


However, investors are growing increasingly concerned about a couple of factors. When interest rates rise, it can become more expensive for individuals and businesses to borrow money, potentially slowing down the economy. Moreover, there’s unease surrounding China’s economic slowdown. These concerns have collectively dampened the appetite for riskier assets, including the New Zealand Dollar, which is often affectionately called the Kiwi.


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GBP/USD Recovers, Stays Below 1.2500


GBP/USD has seen a glimmer of hope after enduring three consecutive days of losses. In the Asian trading session on Friday, the currency pair made a modest recovery, hovering around the 1.2490 mark. This turnaround can be primarily attributed to a correction in the value of the US Dollar (USD), which had been enjoying an impressive winning streak for the past three days. The trigger for this correction can be traced back to a pullback in US Treasury yields. In particular, the 10-year US Treasury bond yields experienced a decline of 1.36%, resting at 4.22%, as compared to the previous day.


The recent US economic data has played a role in shaping the currency dynamics. On Thursday, the release of employment data revealed that Initial Jobless Claims had fallen to 216K on September 1st, a notable improvement from the previous figure of 229K. This exceeded expectations, as analysts had projected an increase to 234K. Additionally, in the second quarter (Q2), US Unit Labor Costs surged to 2.2%, a significant uptick from the previous 1.6%, contradicting earlier forecasts. These favorable economic indicators have been contributing to the strengthening of the US Dollar (USD).


The US Dollar Index (DXY), a gauge of the Greenback’s performance against six major currencies, is currently trading around the 104.90 mark. Although it remains below its highest level since April, which it reached on Thursday, the USD is displaying resilience.


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During the Asian session on Monday, the AUD/USD held above the 0.6400 area, with the Australian Dollar (AUD) benefiting from a weaker US Dollar and diminishing concerns about China’s deflation. Currently trading near 0.6425, the pair has gained 0.75% for the day.


Following the G20 Summit, US Treasury Secretary Janet Yellen expressed greater confidence that the US can effectively manage inflation without negatively impacting the job market. Yellen also stated that inflation indicators are decreasing, with no significant wave of layoffs. Chicago Fed President Austan Goolsbee also outlined the central bank’s objective of leading the economy towards a “golden path.” This scenario envisions falling inflation rates without causing a recession. Furthermore, Fed New York President John Williams emphasized the decline in inflation and the improving economic balance.


Based on the CME FedWatch Tool, the market has priced in a 93% probability of interest rates remaining unchanged at the September meeting and a 43.5% chance of a rate hike at the November meeting. Strong US economic data from last week supports the expectation of a sustained low-interest rate environment in the US. This could strengthen the US Dollar (USD) and limit the upside potential of the AUD/USD pair.


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GBP/JPY aims for 184.00 as UK employment data paints a mixed picture

During the Asian trading session on Tuesday, GBP/JPY exhibited a resilient upward trend, currently hovering around the 183.70 mark. The pair’s recent gains can be attributed to a nuanced assessment of the latest employment data emanating from the United Kingdom.


The Office for National Statistics unveiled key labor market indicators that stirred the forex landscape. To begin with, the ILO Unemployment Rate (3M) for July came in at 4.3%, marking a slight uptick from the previous reading. This figure, however, remained in alignment with market expectations, somewhat soothing trader sentiments. Conversely, the headline Employment Change for July left markets disheartened, recording a worrisome decline of 207,000 jobs, a stark contrast to the previous month’s modest growth of 66,000 positions. This disappointing plunge surpassed market forecasts, which had anticipated a more modest reduction of 185,000 jobs. On a brighter note, the Claimant Count Change for August displayed a positive shift, improving to 0.9K from the previous figure of 29K, signaling a potential turnaround in the UK labor market.


In parallel developments, Bank of England policymaker Catherine Mann injected a dose of optimism into the British Pound (GBP). Mann’s remarks suggested that it is premature for the central bank to halt its interest rate adjustments. She emphasized a proclivity towards pursuing a more aggressive rate-hiking strategy rather than ceasing these adjustments prematurely. Such hawkish commentary often resonates well with traders, providing support for the British Pound (GBP) and, by extension, the GBP/JPY pair.


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