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2025: Gold and oil raise rates In Asian markets on Tuesday, gold prices remained within a narrow range amid fears of long-term interest rate hikes. The absence of trading signals was also due to a holiday in the American market. Gold demonstrated some strengthening, reaching the $2000 per ounce mark after recovering from a two-month low over the last two trading sessions. However, current fluctuations in gold prices are still occurring within the range of $2,000-$2,050, which was established for the majority of 2024. Spot gold prices increased slightly by 0.1% to $2,019.17 per ounce, while the price of gold futures expiring in April settled at $2,030.20 per ounce as of 23:34 Eastern Time. Analysts from Citibank highlight three main catalysts that could push gold prices to $3000 per ounce and oil to $100 per barrel in the next 12-18 months. Among them are a sharp increase in gold purchases by central banks, stagflation, and a deep global recession. Currently, gold is trading around the $2016 mark and could rise by approximately 50% in the event of any of these scenarios materializing. Analysts point to dedollarization in central banks of developing countries as the most likely path to reaching $3000 per ounce of gold. This would lead to a doubling of gold purchases by central banks and shift the focus of demand from jewelry to gold as the main driver. Central bank gold purchases have reached record levels in recent years, aiming to diversify their reserves and reduce credit risk. Leading this trend are the central banks of China and Russia, as well as India, Turkey, and Brazil, actively increasing their gold bullion purchases. According to the World Gold Council, global central banks have maintained a level of net gold purchases exceeding 1000 tons for two consecutive years. In the context of a global recession, a deep economic downturn could force the United States Federal Reserve to drastically cut rates, which, in turn, could be the reason for gold prices to rise to $3000. Gold traditionally exhibits an inverse correlation with interest rates, becoming a more attractive asset compared to fixed income in a low-rate environment. Stagflation, combining high inflation with economic slowdown and rising unemployment, could also trigger a rise in gold prices, despite the low likelihood of such a scenario. Gold is perceived as a safe haven in periods of economic instability, attracting investors looking to avoid risks. In addition to the above factors, Citi suggests that the baseline scenario for gold involves reaching a price of $2150 per ounce in the second half of 2024, with an expected average price just over $2000 per ounce in the first half of the year. Record prices may be achieved by the end of 2024. Although geopolitical tensions in the Middle East provide support for gold prices, a more significant price increase is restrained by the prospect of long-term interest rate hikes in the US. Traders are lowering expectations regarding the Federal Reserve's imminent rate cuts following reports of high inflation in the US, and statements from Fed officials reinforce assumptions about maintaining high interest rates over a longer period. The outlook for gold in the near future remains uncertain, similar to the situation in the market for other precious metals. Prices for platinum and silver show a decline, and copper experiences a slight drop in price, despite a reduction in the base interest rate in China, the largest importer of the metal. In the context of the oil market, analysts consider a scenario where oil prices could once again reach $100 per barrel, considering risks associated with geopolitical tensions, actions by OPEC+, and possible supply disruptions from key oil-producing regions. Tensions in the Middle East, particularly the conflict between Israel and Hamas, and increasing tension on the border between Israel and Lebanon highlight potential risks for oil suppliers in the OPEC+ region.

XAU/USD: review and analysis The positive factor for raw materials currently lies in the fact that the dollar bulls are awaiting important economic events regarding the path and timing of the Federal Reserve's interest rate reduction. This week, the FOMC minutes will be published, which is expected to contribute to some impulse in the precious metal. Also, a decent increase in Treasury bond yields provides some support for the U.S. dollar and limits the rise of the non-yielding yellow metal. In addition, the overall positive tone in the stock markets contributes to restraining the global increase in the price of gold. And since yesterday was a holiday in the United States, there were no significant movements in the markets. From a technical point of view, any upward movement is likely to encounter some resistance near the $2,030 level, where the 50-day SMA is located, with subsequent testing. If this level is decisively surpassed, it will create a foundation for further growth beyond the intermediate barrier at $2,044–2,045 towards the supply zone at $2,065. On the other hand, the 100-day SMA, currently around $1,992–1,991, may act as immediate support before the $1,983 region or the two-month low reached on Wednesday. Following this is the 200-day SMA, currently tied to the $1,965 area, and in the case of a decisive breakthrough, it will be considered a new trigger for the bears. After that, gold may accelerate its decline to the November 2023 low, with some obstacles along this path.

Inflationary explosion in the US: how do the dollar and bonds react? The consequences of high inflation are felt across the financial market. Specifically, the main Wall Street indices reacted to this news with a decrease after the publication of data indicating a higher than expected rise in consumer prices. This event pressured the expectations regarding the imminent lowering of interest rates, which in turn led to an increase in the yield of US Treasury bonds. Among other things, the Dow Jones Industrial Average recorded its most significant drop in almost 11 months after the US Department of Labor's report showed an unexpected increase in consumer prices in January, especially due to the rise in housing costs. Against this backdrop, market indices, which were on the rise in anticipation that the Federal Reserve System (FRS) would begin to lower rates as early as May, showed negative dynamics. The S&P 500 index, for example, closed above the 5000 point mark for the first time, and the Dow Jones index traded near record-high values. However, the publication of inflation data revised expectations regarding the FRS's policy, increasing the likelihood that rate cuts may not occur until June. Mega-cap companies sensitive to rates, such as Microsoft, Alphabet, Amazon.com, and Meta Platforms, showed a decrease in stock prices amid the rise in yields of US Treasury bonds to a two-month high. A similar situation was observed among chip manufacturers, including Micron Technology, Qualcomm, and Broadcom, which led to a 2% drop in the Philadelphia SE Semiconductor index. The real estate, consumer discretionary, and utilities sectors faced the most significant losses among the 11 major industry indices of the S&P 500, especially real estate, which reached its lowest values in more than two months. Small-cap companies also felt the pressure, with the Russell 2000 index showing the most significant daily drop since June 2022. "Various statements by Federal Reserve System officials in recent weeks have indicated that the market-anticipated rate cuts in the first half of the year might have been premature. The latest consumer price index data certainly confirms this trend," commented Bob Elliott from Unlimited Funds. The consumer inflation data followed a modest revision of inflation figures for the last quarter of 2023, giving investors temporary relief regarding inflation expectations. The Cboe Volatility Index reached its highest level since November, highlighting the growing market concern. The S&P 500 and Nasdaq Composite indices lost 1.37% and 1.79% respectively, while the Dow Jones Industrial Average fell by 1.36%, marking its most significant decline since March 2023. Among other developments, JetBlue Airways shares surged by 21.6% after Carl Icahn disclosed his stake in the company, calling the shares "undervalued." Arista Networks' shares declined by 5.5% following a gross profit forecast below expectations, and Marriott International lost value after forecasting annual earnings below analyst expectations. Cadence Design Systems and toy manufacturer Hasbro also faced a drop in share value after publishing gloomy forecasts. Meanwhile, Tripadvisor shares jumped by 13.8% following the announcement of the creation of a special committee to review deal proposals. The total trading volume on US exchanges reached 12.9 billion shares, comparable to the average of the last 20 sessions at 11.71 billion shares. The US stock market continues to demonstrate record levels, supported by leading technology companies and expectations of Federal Reserve rate cuts. The global stock index MSCI and the Stoxx 600 European index also showed a decline amid current events. The dollar index reached a three-month high, and bitcoin set a new record since December 2021, despite subsequent declines. Data on US retail sales and the producer price report are expected shortly, which may further influence market sentiments. The rise in oil prices continues amid tensions in the Middle East and Eastern Europe, with Brent crude futures and West Texas Intermediate showing significant increases. Meanwhile, gold prices fell below the key level of $2000 per ounce after the CPI data was released, reaching a two-month low.

GBP/USD: Pound slightly weakens, but selling still risky as dollar remains weak The pound-dollar pair surged by more than 200 points yesterday, reacting to the publication of inflation growth data in the United States. The resonant release put an end to discussions about the Federal Reserve's future steps—at least in the context of the December meeting. The probability of the Fed raising interest rates in December decreased to 5%, meaning the market is almost certain that the U.S. regulator will maintain the status quo next month. The inflation report played the role of a cold shower for dollar bulls. Last week, Federal Reserve representatives, including Chairman Jerome Powell, thoroughly heated the public with their hawkish statements, so the sharp shift in sentiment significantly impacted the greenback. The U.S. Dollar Index dropped from 105.60 to 103.80 in just a few hours, reflecting the anti-rally of the American currency. The GBP/USD pair did not stay on the sidelines and updated a two-month price high, testing the 1.2500 level for the first time since September. But, as they say, "not everything is rosy." The pound rested on its laurels only briefly, as inflation data in the United Kingdom were also published following the U.S. report. It can be said that today, GBP/USD buyers also experienced a cold shower, as almost all components of the UK data were in the red. Certain conclusions can be drawn here as well, primarily regarding the prospects of tightening monetary policy by the Bank of England. These conclusions do not favor the pound as they suggest the central bank will maintain the status quo after the upcoming meetings. For instance, the overall Consumer Price Index in the UK sharply dropped to zero month-on-month (forecasted to decline to 0.1%) after two consecutive months of growth (0.5% in September). In the year-on-year calculation, the overall index also ended up in the red, reaching 4.6% (forecast at 4.8%)—the weakest growth rate since October 2021. For comparison, the overall CPI was at 6.7% YoY in September. A separate line needs to be drawn for the core Consumer Price Index, excluding energy and food prices. In June and July, it was at 6.9%, but it dropped to 6.2% in August. In September, the indicator again demonstrated a downward trend (6.1%), as well as in October—5.7% (while most experts predicted a decline to 6.0%). This is the lowest value of the indicator since March 2022. The Retail Price Index, used by British employers in salary negotiations, similarly ended up in the red zone: -0.2% MoM (forecasted to grow by 0.1% MoM) and 6.1% YoY (forecasted to grow to 6.3%)—a two-year low, the weakest growth rate of the indicator since October 2021. However, some components of the data entered the green zone but remained in the negative territory. For example, the Producer Purchase Price Index in the year-on-year calculation rose to -2.6% (forecast at -3.3%), and the Producer Selling Price Index reached -0.6% YoY (forecasted to decline to -1.0% YoY). Commenting on the published report, the chief economist of the Office for National Statistics stated that the decline in inflation occurred against the backdrop of falling energy prices. According to him, the downward trend in key indicators is associated with the decrease this month in the maximum level of energy prices, which limits the amount that suppliers can charge consumers per unit of energy. The sharp decline in inflation in the United Kingdom is a significant blow to the positions of the British currency. However, an interesting situation has developed for the GBP/USD pair: the dollar is knocked out after yesterday's release, and the pound is knocked down after today's news. Sellers of the pair managed to muffle the upward impulse but failed to turn the situation in their favor. At the moment, it is challenging to say whether sellers of GBP/USD will be able to reverse the trend. Despite the weak positions of the pound, the pair may resume its upward movement due to further weakening of the American currency. The disappointment of the dollar bulls is too great: just last week, Powell stated that the current level of the Fed's rate might be "insufficient" to curb inflation. However, after the publication of CPI growth data in October, his words lost their relevance. Therefore, rushing to sell GBP/USD now may not be advisable—after a short pause, buyers may regain the initiative in the pair. From a technical perspective, the pair is currently testing the support level of 1.2450 (the upper line of the Bollinger Bands indicator on the daily chart). In this price range, the downward pullback has stalled. This is another signal indicating the unreliability of short positions. It is advisable to consider selling only after sellers firmly establish themselves below the 1.2450 target—in this case, the next price target will be the level of 1.2340 (the Tenkan-sen line on D1).

Trading Signals for GOLD (XAU/USD) for October 20-23, 2023: sell below $1,980 (21 SMA - double top) Early in the European session, gold is trading around 1,977.41, above the 21 SMA, and below the 8/8 Murray. Gold reached a new high around 1,982.12 and is showing indecision which is likely to trigger a strong technical correction in the coming hours. Since October 4, gold has been trading within an uptrend channel and has now reached the top of this channel, which means that a technical correction could occur in the next few hours with the target in the area of 1,944 (21 SMA). Yesterday, during a speech by the Fed Chairman, expectations were generated that the Fed would not raise interest rates anymore. This fueled the demand for gold as a safe haven asset reaching a new high. As investors do not expect any further interest rate hikes this year, gold could continue to rise. However, we should expect a technical correction to occur as long as gold trades below the psychological level of $2,000. A good level to buy could be around 1,944 (21SMA) or around 6/8 Murray at 1,937. Both levels could give us the opportunity to buy again with goals at the psychological level of $2,000. On the other hand, if XAU/USD continues to rise and reaches the 8/8 Murray level around $2,000 in the next few hours, it could face strong rejection. This 8/8 area acts as strong resistance and a key level. We could use the pullback to sell below this area with the target at 1,937. The eagle indicator once again reached the extremely overbought zone. So, we expect a technical correction to occur in the next few hours. Hence, our strategy could be to sell below 1,980 with targets at 1,962 and 1,944.

EUR/USD: Short-term rise and bearish outlook. Markets eye Fed meeting Traders are showing a renewed appetite for the euro at the start of this week. However, it is essential to remain cautious. The trend remains bearish, and the eurozone calendar remains almost empty. The US dollar is under the spotlight this week. Meanwhile, some predict another US dollar rally. What to expect from EUR/USD this week? The euro will likely face pressure against the greenback in the coming weeks, especially after dipping below a critical level last week. With no new data from the eurozone, the Fed's upcoming rate decision might not add to this pressure and could even boost the pair's quotes. Everything hinges on the message from the US regulator. The following trading sessions will be tense. The direction for the EUR/USD pair remains unclear, even if some think otherwise. As we know, markets can quickly shift their sentiment. Following the European Central Bank's (ECB) recent decision on interest rates, the euro began to decline. The decision confirmed rates would remain steady for the foreseeable future, signaling a pause in rate hikes. The euro hovered near 1.0675, the lowest level since March 2023. There were initial attempts for a euro rally after the ECB decided to hike rates by 25 basis points, peaking at 1.0729, but these efforts did not bear fruit. This could lead to a test of this year's range between 1.0500 and 1.1000. Markets expect the ECB to tighten its policy by approximately 11 basis points and cut by 25 basis points in July 2024. This could pressure the euro, especially if followed by a soft review. The current instability of the EUR/USD pair suggests a stronger dollar position, especially after falling below the 200-day moving average on the daily chart. Analysts at Societe Generale say that this looks ominous. Upcoming economic data is anticipated to show a slowdown, implying a downturn in the eurozone due to high interest rates. This economic slowdown will work against the euro. The euro might remain at risk until economic growth in the eurozone starts to rebound. The only silver lining for the euro or British pound, in a context where growth forecasts drive currency trajectories, is that growth expectations for the UK and eurozone are already bleaker than in the US. This should help prevent a dramatic drop in the EUR/USD or GBP/USD pairs, but the pound could still reach 1.2000 and the euro could fall below 1.0500 if we do not see any positive economic news in the near future. Euro Technical Analysis The EUR/USD pair is bracing for a rebound from the multi week low of 1.0630 that was recorded on Friday. If the pair breaks the 15 September low of 1.0631, the next targets will be the 15 March low of 1.0516 and then the 6 January 2023 low of 1.0481. If the pair breaks through the level of 1.0827 (200-day simple moving average), it could encourage a bullish move to 1.0922 and then the August 30 high of 1.0945. A break above this level could facilitate a test of the psychological level of 1.1000 and the August 10 peak at 1.1064. Fed meeting The US central bank is preparing to release its latest decisions and recommendations, which may cause volatility for the US dollar. However, many experts believe that major changes in the Fed's monetary policy are unlikely. Highlights include Rate Forecasts: Many economists expect the Fed to keep rates at 5.25-5.50%. Fed Dot Plot. This chart will show how FOMC members see future interest rate movements. Most members will likely indicate that the current rate level will remain unchanged through the end of 2023. Risks for the US dollar. If the dot plot shows that some Fed members are considering a rate cut in 2024, it could put pressure on the dollar. Fed Summer Indicators. Two CPI inflation reports are expected to be close to consensus. These data, along with other economic indicators, will confirm that the current level of interest rates is likely adequate to stabilize inflation. Based on these projections and analysis, the Fed's decisions may confirm the current trend in monetary policy and, as a result, the resilience of the dollar in global markets. US Dollar Technical Analysis The US dollar index is near its 2023 high of 105.88. Short-term support and resistance levels are located at 104.44 and 105.88 respectively. The long term support level is marked at 103.04. Bullish Scenario. If the DXY closes above 105.88 during the week, it could signal further dollar strength in the medium term. Bearish Scenario. If the index reverses and breaches the level of 104.44, it could signal a significant decline to 103.04. Economic Outlook. Despite the current difficulties, the US dollar continues to attract investors due to high interest rates, especially compared to the economic situation in Europe and elsewhere.

EUR/USD: The euro falls after hawkish ECB surprise The European Central Bank surprised market participants by raising interest rates by 25 basis points. We must pay tribute to the ECB – it hasn't forgotten how to surprise! Although such unexpected moves, typical of, say, the Reserve Bank of New Zealand, are not characteristic of the ECB – they indicate a weak level of communication. Some hints of hawkishness were heard from certain representatives of the Bank (for example, Klaas Knot suggested not underestimating the potential for a hawkish scenario), but overall, the market was largely expecting a different outcome. The probability of maintaining the status quo was estimated at around 60-70%, and this confidence was also shaped by cautious/dovish statements from ECB members. Weak PMIs, ZEW, IFO, a contradictory report on inflation growth in the eurozone, weak retail sales, a decline in industrial output, and a slowdown in the Chinese economy – all these factors also spoke in favor of a wait-and-see stance. Therefore, the ECB's decision is one that goes "against the grain." However, the determination (in the current circumstances, it can even be called boldness) of ECB members did not help the single currency. Ironically, the unexpected hawkish surprise from the ECB sent EUR/USD plunging. Reacting to the results of the September meeting, the pair hit nearly a 4-month low, marking it at 1.0650 (the lower Bollinger Bands line on the daily chart). So, what is the reason for such an anomalous market reaction at first glance? The devil, as always, is in the details. The ECB raised interest rates by 25 bps with one hand but effectively put an end to the current cycle of monetary policy tightening with the other. The central bank signaled that interest rates have "reached a level that will make a substantial contribution to containing inflation." Such wording is difficult to interpret, so EUR/USD traders viewed the ECB's decision as the "final chord" of the current cycle. Interestingly, ECB President Christine Lagarde tried to soften the message during the final press conference, stating that "it is not possible to definitively say that ECB rates have reached their peak at this time." However, judging by the EUR/USD reaction, market participants have already drawn conclusions about the prospects for further monetary tightening. It is important to note again that most ECB officials were cautious or dovish in the run-up to the September meeting, pointing out signs of economic slowdown (especially after the release of PMIs), cooling labor markets, slowing inflation (particularly core HICP), and a slowdown in bank lending. Thus, they hinted at the need to maintain the status quo. However, after the September meeting, it became clear that inflation, which is still at a high level, worries ECB officials more than the deteriorating economic outlook. The latest inflation report reflected the "stubbornness" of European inflation. The Consumer Price Index remained unchanged at 5.3% in August (against expectations of a decline to 5.1%). This gauge has been steadily declining since October 2022, moving from its peak of 10.6% to the current target of 5.3%. However, the downtrend has recently stalled. As for core inflation, the situation is somewhat different. Core HICP, excluding energy and food prices, rose actively until March, reaching 5.7%. Then, the gauge gradually lost momentum but remained within a range: it was at 5.3% in May, 5.5% in June and July, and finally, in August, the index returned to 5.3%. This report was published two weeks ago on August 31st. Since then, discussions in the expert community about the ECB's future actions have not subsided. After a series of disappointing economic reports (as listed above), hawkish expectations diminished, and the balance tipped in favor of a wait-and-see stance. However, as we can see, the ECB decided to "squeeze" inflation without considering the fragile economic growth in the eurozone. At the same time, the ECB weakened the euro with its "conclusive" rhetoric. In particular, it was stated that interest rates are already at a level that will be maintained "for a sufficiently long time." According to the ECB, this will significantly contribute to reducing inflation. The central bank hinted that another round of monetary tightening within the current cycle is possible, but such a step would be of an extraordinary nature. This rhetoric did not sit well with the euro, particularly with EUR/USD buyers, resulting in the pair remaining below the 1.06 level. From a technical perspective, the bears reached the support level at 1.0650, which corresponds to the lower Bollinger Bands line on the daily chart but failed to break through it. Therefore, selling appears risky right now, as you may "catch a price bottom." Short positions should be considered once the pair breaks through 1.0650 (in which case the bearish target will be around 1.0600) or during bullish corrections. In the latter case, the target would be 1.0650.

Trading Signal for GOLD (XAU/USD) on September 12-13, 2023: buy above $1,919 (3/8 Murray - 21 SMA) Early in the European session, gold (XAU/USD) is trading around 1,923.19, above the 3/8 Murray, and above the 21 SMA. On the 4-hour chart, we see that gold is consolidating within a bullish trend channel formed since August 6. If theinstrument remains above 1,919 in the next few hours, we could expect it to continue rising and the price could reach the top of this channel around 1,930. According to the 4-hour chart, the bears are gaining strength in the short term, but overall, XAU/USD remains consolidated around 1,920 - 1,930. XAU/USD is above the daily pivot point which gives it a positive outlook. The key level is 1,923, above which gold is expected to continue rising to 1,930 and up to 1,953 (5/8 Murray). In case gold trades below 1,919, a bearish acceleration is expected to occur, but for this, we should wait for confirmation below 1,915, which could be seen as a signal to sell with the first target of 2/8 Murray at 1,906. The price could even reach the psychological level of 1,900. Meanwhile, gold might produce a positive signal if it manages to settle above 1,920. Then, there will be an opportunity to buy with targets at 1,930, 1,937, and 1,953. The eagle indicator is giving a positive signal. However, if the gold price falls below 1,915, we should avoid buying. If this scenario does not occur at the current price levels, we could buy with the target at 1,953 in the short term.

The euro could be heading down for a long time The euro kicked off the new week with some negative traction. In previous articles, I've already drawn your attention to the statements of some members of the European Central Bank's Governing Council, which boiled down to a simple idea – the hawkish rhetoric is fading, and the ECB is preparing to conclude the process of tightening monetary policy. Thus, the decrease in demand for the euro is quite natural. On Monday, ECB President Christine Lagarde refused to answer questions about the rate at the September meeting. Some of her colleagues actively hinted that rates should be kept at peak levels for as long as possible but didn't mention new rate hikes. On Wednesday, Peter Kazimir said that interest rates could rise by another 25 basis points. This could happen as early as next week, although a pause in September with a subsequent increase in October or December is also possible. In my opinion, it doesn't matter when exactly the ECB will raise rates for the last time. The key point is that until the tightening process is complete, there is at most one more hike. Right now, it's not even important how high inflation is in the European Union and how quickly it is decreasing because rates have been the priority for the market over the past year. Since the ECB may raise rates for the last time and the Federal Reserve may raise rates for the last time, it may seem that the euro and the dollar are in similar conditions. However, this is not the case. First, the sentiment suggests a decline. Second, the US currency has been falling for quite a while, and during this period, the Fed has been more aggressive than the ECB. This implies that the euro is a bit more expensive than it should be. I believe that most factors currently favor further depreciation. I would also like to note another statement from another member of the ECB's Governing Council, Francois Villeroy de Galhau, who stated that interest rates are near their peak, echoing Kazimir's rhetoric. Villeroy also noted that there is currently no recession, and inflation will not slow down to 2% until at least 2025. This implies that the central bank will not further tighten its policy to avoid causing a recession in the European economy, and they can afford to wait on inflation. Based on the conducted analysis, I came to the conclusion that the upward wave pattern is complete. I still believe that targets in the 1.0500-1.0600 range are quite feasible. Therefore, I will continue to sell the instrument with targets located near the levels of 1.0636 and 1.0483. A successful attempt to break through the 1.0788 level will indicate the market's readiness to sell further, and then we can expect to reach the targets I've been discussing for several weeks and months. The wave pattern of the GBP/USD pair suggests a decline within the downtrend. There is a risk of completing the current downward wave if it is d, and not wave 1. In this case, the construction of wave 5 might begin from the current marks. But in my opinion, we are currently witnessing the construction of the first wave of a new segment. Therefore, the most that we can expect from this is the construction of wave "2" or "b". I still recommend selling with targets located near the level of 1.2442, which corresponds to 100.0% according to Fibonacci.

The most interesting events this week The previous trading week was filled with important events and reports. When looking at the range and movements of both instruments, one might wonder: why was it so subdued? It was reasonable to expect stronger movements and market reactions. To briefly recap, key reports from the United States turned out weaker than market expectations. Even the stronger ones left a peculiar impression. GDP grew by 2.1% in the second quarter, not the expected 2.4%. The ADP report showed fewer new jobs than expected. Nonfarm Payrolls reported more jobs, but the previous month's figure was revised downward. The ISM Manufacturing Index increased but remained below the 50.0 mark. The unemployment rate rose to 3.8%, which few had anticipated. Based on all these reports, one might have assumed that it was time to build a corrective upward wave, but on Thursday and Friday, the market raised demand for the US dollar, so both instruments ended the week near their recent lows. So what can we expect this week? On Monday, the most interesting event will be European Central Bank President Christine Lagarde's speech. On Tuesday, another speech by Lagarde, as well as Services PMIs of the European Union, Germany, and the United Kingdom. We can also expect speeches by other members of the ECB Governing Council. I advise you to monitor the information related to Lagarde's speeches. If she softens her stance, it can have a negative impact on the euro's positions. Wednesday will begin with a report on retail trade in the EU and end with the US ISM Services PMI. We can consider the ISM report as the main item of the week, although the ISM Manufacturing PMI that was released on Friday did not stir much market reaction. It is likely that the index will remain above the 52.7 mark, which is unlikely to trigger a market reaction. On Thursday, you should pay attention to the final estimate of GDP in the second quarter for the European Union. If it comes in below 0.3% quarter-on-quarter, the market may reduce demand for the euro. The US will release its weekly report on initial jobless claims. On Friday, Germany will publish its inflation report for August, and that's about it. There are hardly any important events and reports this week. Based on the conducted analysis, I came to the conclusion that the upward wave pattern is complete. I still believe that targets in the 1.0500-1.0600 range are feasible, and I recommend selling the instrument with these targets in mind. I will continue to sell the instrument with targets located near the levels of 1.0637 and 1.0483. A successful attempt to break through the 1.0788 level will indicate the market's readiness to sell further, and then we can expect the aforementioned targets, which I have been talking about for several weeks and months.

Growth in yields and stable inflation suggest further rate hikes. USD, EUR, GBP Review The net short position in USD grew by $490 million to -$16.272 billion over the reporting week after a strong correction a week earlier. The decline is largely related to long positions on the euro, and in terms of other major currencies, the notable trend is selling across all significant commodity currencies (Canadian, Australian, New Zealand dollars, and also the Mexican peso). The yen and franc are slightly doing better, i.e., there is demand for safe-haven currencies and a sell-off in commodity currencies. Since long positions in gold have decreased by $4.5 billion, we can expect increasing demand for the US dollar. PMIs for the eurozone, the UK, and the US will be published on Wednesday, which can significantly influence the rate forecasts of the European Central Bank, the Bank of England, and the Federal Reserve. Last week, we witnessed a clear uptrend in bond yields, suggesting increased demand for risk amid more upbeat economic reports. At the same time, we see a sharp deterioration in China's economy, which, on the contrary, points to slowing demand. This dilemma may be resolved after the release of the PMIs, so we can expect increased volatility. EUR/USD The final estimate confirmed that the euro area annual inflation rate was 5.3% in July 2023, with core inflation unchanged at 5.5%. Since there are no seasonal factors that could explain the price increase at the moment, it would be best to assume the most obvious explanation - price growth is supported by broad price pressures in the growing services sector. Stubborn inflation supports market expectations that the ECB will raise rates in September, and this increase is already reflected in current prices. The strong labor market is also in favor of a rate hike. After a sharp decrease a week earlier, the net long position in the euro grew by $1.275 billion, putting the bearish trend into question. The settlement price is below the long-term average, giving grounds to expect a continuation of the euro's decline, but the momentum has noticeably weakened. A week earlier, we assumed that the bearish trend would continue. Indeed, the euro consistently passed two support levels, but did not reach the 1.0830 level. The resistance at 1.0960, which the euro can reach if a correction develops, is still considered in the long term. We assume that the trend remains bearish, and the 1.0830 level will be tested in the short term. GBP/USD Inflation in July fell from 7.9% to 6.8%. This is mostly due to the fall in the marginal price of OFGEM (Office of Gas and Electricity Markets) from 2500 pounds to 2074. Without this decline, inflation would have still fallen, but much less - to 7.3%. Despite the sharp decline, inflation remains at a very high level, and further falls in the marginal price of energy carriers are unlikely. The NIESR Institute suggests that, among the possible scenarios for future inflation behavior, we should choose between "very high", assuming an average annual inflation of around 5% over 12 months, and "high persistence", which is equivalent to an annual level of 7.4%. Needless to say, both scenarios imply inflation higher than in the US, so the likelihood of a higher BoE rate remains, leading to a yield spread in favor of the pound. These considerations do not allow the pound to fall and support it against the dollar, while against most major currencies, the dollar continues to grow. After three weeks of decline, the long position in GBP grew by $302 million to $4.049 billion. Positioning is bullish, the price is still below the long-term average, but, as in the case of the euro, an upward reversal is emerging. In the previous review, we assumed that the pound would continue to decline, but UK inflation pressure remains stubborn, which changed the rate forecast and supported the pound. A correction may develop, and the nearest resistance level is 1.2813. If the pound goes higher, the long-term forecast will be revised. At the same time, we still consider the bearish trend, and the chances of restoring growth are high, with the nearest target being the support area of 1.2590/2620.

EUR/USD. Weekly preview. US retail sales, Fed minutes, ZEW indices Over the course of the first two weeks of August, the EUR/USD pair has failed to establish a clear direction. Despite prevailing bearish sentiments, sellers have been unable to solidify their position at the base of the 9th figure, let alone breach the support level at 1.0870. All of this indicates that the bears are hesitant, who are eager to lock in profits as soon as the price dips below the 1.0950 level (the middle line of the Bollinger Bands indicator on the weekly chart). The significant events of the previous week, like China's foreign trade data, the downgrade of American banks' ratings by Moody's, and the US inflation reports, led to a certain level of volatility. However, once again, the price remained within the confines of the 9th figure, with a brief impulsive surge to 1.1062. The pair completed a circle and returned to it's previous positions. The economic calendar for the upcoming trading week is relatively modest, although not entirely devoid of events. Let's review the main highlights of the next five days. Monday - Tuesday At the start of the trading week, the pair is likely to trade with the momentum of Friday. Monday's economic calendar is almost empty, with perhaps the German Wholesale Price Index being of interest. This indicator is expected to show a positive trend, but will still remain in the negative territory, both on a yearly basis (-2.6%) and on a monthly basis (-0.1%). The main release on Tuesday is the US Retail Sales report. Positive dynamics are anticipated here. According to forecasts, retail sales volume in the US is expected to increase by 0.4% in July, following a 0.2% growth in June. Excluding auto sales, the indicator is also projected to rise by 0.4%. Additionally, the Empire State Manufacturing Index, which is based on a survey of manufacturers in the New York Federal Reserve District, will be released on Tuesday. Here, on the contrary, negative dynamics are expected, with the indicator predicted to decline to -0.3. Furthermore, on Tuesday, Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, will be speaking. He could potentially generate increased volatility among the dollar pairs. Firstly, he holds voting rights in the Committee this year. Secondly, Kashkari has already commented on recent inflation releases, and his tone was rather positive. According to him, the US central bank has made "good progress" in combating inflation. If he voices similar rhetoric next week, the dollar might come under pressure again. During the European session on Tuesday, traders should pay attention to the German ZEW Economic Sentiment indices. In particular, the business sentiment index for Germany in August is expected to remain at the July level of -12 points. The business expectations index is expected to deteriorate to -15 points (the worst reading since December 2022). The current situation index is also projected to worsen to -63 points (the lowest reading since November of the previous year). Wednesday On Wednesday, EUR/USD traders will focus on the minutes of the July Federal Reserve meeting. Recall that the outcomes of the July meeting did not favor the US dollar. Among all the possible scenarios, the Fed implemented perhaps the most dovish one. The US central bank tied the fate of the interest rate to the dynamics of key macroeconomic indicators. The central bank retained the key formulations of the accompanying statement in their previous form, and Fed Chairman Jerome Powell, during the final press conference, indicated that the September Fed meeting could end with either another rate hike or keeping it unchanged. He emphasized that the central bank in the fall will evaluate the entire set of macroeconomic data "with special emphasis on progress in the field of inflation." The Fed's indecisive stance was interpreted against the US dollar. A hawkish tone in the minutes of the July meeting could provide support to the US dollar, especially since this meeting took place before the release of US inflation data for July. However, in my opinion, the document will likely reflect the Fed members' hesitant stance, considering the corresponding formulations in the final communique. In addition, on Wednesday, the report on the volume of building permits issued in the US will be released (expected growth of 1.1%), as well as the industrial production report (also expected to grow by 0.3%, following two months of negative dynamics). Thursday On Thursday, traders should focus on the Philadelphia Federal Reserve's Manufacturing Index. The indicator has been in the negative zone since September 2022. According to forecasts, in August, the index will also remain below the "waterline" but will demonstrate positive dynamics, rising to the level of -9.8 points. Furthermore, on Thursday, traders could also pay attention to the Initial Jobless Claims data in the US. Over the past two weeks, this indicator has been rising, and according to forecasts, this trend will continue: next week, the number of claims is expected to increase by 250,000 (last week - 248,000, the week before last - 227,000). Friday The economic calendar for the final trading day of the week is not packed with events for the EUR/USD pair. The only thing of interest is the eurozone inflation data for July. We will learn the final assessment of July's Consumer Price Index (CPI), which, according to forecasts, should match the initial assessment (a decrease in the Consumer Price Index and an increase to 5.5% in the core CPI). Conclusions The EUR/USD pair is in a hanging state. In order to develop a downtrend, sellers need more than just to establish themselves at the base of the 9th figure – they need to overcome the support level of 1.0870 – at this price point, the lower line of the Bollinger Bands indicator on the daily chart coincides with the upper and lower bands of the Kumo cloud. If the bears break through this price barrier, the Ichimoku indicator will form a bearish "Parade of Lines" signal, indicating the strength of the downward movement. This is not an easy task, considering the fact that over the last two weeks, the downward momentum has faded at the base of the 9th figure. The bulls don't have an easy task either: they need to establish themselves above the 1.1050 mark – this is the upper line of the Bollinger Bands, coinciding with the Kijun-sen line on the same timeframe. In that case, the pair can move towards the 11th figure. However, throughout August, buyers only impulsively tested the 1.1050 target, afterwards they retreated, locking in profits. Given the relatively uneventful economic calendar for the upcoming week, we can assume that the pair will continue to trade within the range of 1.0950 – 1.1050, with periodic attempts to establish themselves at the base of the 9th figure.

The global economy is slowing down, risk appetite is decreasing, and the USS is experiencing increased demand. Overview of USD, CAD, JPY Activity in the currency market remains subdued in the absence of significant economic reports, with the main focus on the US inflation report on Thursday, which could lead to more pronounced movements. Risk assets are still under pressure due to weak data from China, indicating a decline in global demand. Following Tuesday's disappointing external trade data, it was revealed that China's economy has slipped into deflation, with inflation turning negative at -0.3% YoY in July. Consumer prices rarely decrease in China, and given that other countries continue to grapple with high inflation, this is a worrying sign for the global economy as a whole. The US dollar remains the leader in the currency market, playing the role of the primary safe-haven currency in the current conditions. USD/CAD The Canadian dollar has received several sensitive blows and lost its positive momentum against the USD. The labor market report for July showed a decrease in the number of new jobs (-6.4K), while an increase of 21.1K was forecasted, which is particularly noticeable against the backdrop of strong growth in June (+59.9K). The unemployment rate rose from 5.4% to 5.5%, and more importantly, the average wage growth increased from 3.9% YoY to 5% YoY. Wage growth is usually a bullish factor as it fuels high inflation, but with simultaneous economic slowdown, this factor begins to work against it. The Ivey Purchasing Managers Index (PMI) for July dipped into contraction territory, hitting a multi-month low of 48.6 points. This indicates an economic slowdown. However, the price sub-index rose to a 5-month high, increasing from 60.6 points to 65.1 points. The Canadian economy has suddenly lost the advantage that allowed for expectations of sustainable CAD growth. Inflation remains strong, and to contain it, it is logical to anticipate further actions by the Bank of Canada. These expectations are in favor of CAD strengthening. However, simultaneously, a slowdown in activity with further tightening of monetary policy could lead Canada's economy into a recession. This, on the contrary, limits the resolve of the Bank of Canada. The unstable equilibrium deprives the Canadian currency of its advantage, weakening the bullish momentum. The net long position on CAD has increased slightly over the reporting week, with positioning being neutral. However, the calculated price after the release of the disappointing employment report turned upwards and moved above the long-term average. The sharp upward turn in the calculated price reduces the chances of a confident resumption of USD/CAD decline. Currently, the pair is trading near the middle of a corrective bearish channel. If no additional arguments arise from the Canadian side, the likelihood of further growth will remain high. The long-term target is the upper band of the channel at 1.3690/3720, with support at 1.3350/70. USD/JPY The key question that will determine the fate of the Japanese yen remains how resolutely the Bank of Japan is prepared to act in order to reduce domestic inflation. Alternatively, the Bank might continue adopting a wait-and-see position, resorting to adjustments to the current monetary policy. Possible hawkish steps by the BOJ involve two potential actions - either a complete abandonment of the yield curve control (YCC) policy or a withdrawal from negative interest rates. Any actions in this direction will be interpreted by the market as a hawkish signal, leading to yen strengthening. Conversely, maintaining the current policy will inevitably contribute to further yen weakening. The recent comments from BOJ officials after the July 28 meeting are cautious and do not provide grounds to expect any decisive steps. For example, BOJ Deputy Chief Uchida Shinichi stated at a press conference that the Bank is "considering an exit from monetary easing but does not see reasons for any actions in the foreseeable future," and that the decision is still "far off." In other words, the "wait and see" policy remains in place. The yen can start to strengthen under current conditions only if negative trends in the global economy intensify, leading to a noticeable increase in demand for safe-haven assets. As long as there is no reason for such a scenario, there is no reason for yen strengthening. The net short position on the yen has slightly increased over the reporting week and solidified just above -7 billion, speculative positioning is confidently bearish. The calculated price is above the long-term average and aimed at continuation of growth. The development of the upward movement for USD/JPY is still the main scenario, despite attempts at consolidation near the 143 level. A week ago, we identified the local high at 145.06 as the target for bullish momentum development and the upper band of the channel at 147.30/70 as the long-term target. These targets remain relevant and can only be adjusted in case of truly significant changes from the BOJ in its monetary policy. As long as changes are cosmetic, the dollar is objectively stronger in this pair.

EUR/USD: euro holds ground despite stronger dollar The US dollar started the day on a positive note, attempting once again to overtake its European counterpart. However, the euro is not giving up so easily and continues to fight for leadership in the EUR/USD pair. At the beginning of this week, the greenback retreated slightly, but quickly made up for its early losses. According to analysts, the dollar's recent failures were temporary and were not able to drag the currency into negative territory. Neither the recent downgrade of the US credit rating nor the unstable macroeconomic data published by the US Department of Labor managed to undermine the greenback's position. In July, the US job market added 187,000 new jobs, following the 185,000 previously recorded. Although these figures fell short of the anticipated 205,000, experts assessed the overall macroeconomic outlook as positive. Analysts often say that the Nonfarm Payroll (NFP) is one of the most unpredictable indicators. This is why any dramatic shifts in the market or any reviews of the Fed's current decision were highly unlikely. According to Austan D. Goolsbee, head of the Chicago Fed, the American job market should "find its balance" soon. The official had previously remarked that while the US labor market is cooling down, it's "still exceptionally hot." According to estimates, overall employment growth in the US was slightly below expectations. However, the increase in wages and the decrease in unemployment rates might provide reasons for the Fed to consider another rate hike. The return of the unemployment rate to 3.5% is particularly noteworthy. Analysts believe this rate is now at cyclical lows, which continues to exert inflationary pressure. In this context, the Federal Reserve may find it hard to soften its stance, experts believe. In addition to this, hourly wages grew more than expected (by 0.4% MoM) over the reporting period, maintaining an annual rate of 4.4% set earlier this year. With such wage growth, rates and employment figures, inflation is unlikely to ease. In the current scenario, the Fed might further tighten its monetary policy. This sentiment is shared by Atlanta Fed President Raphael Bostic. Last Friday, August 4, he told Bloomberg that the central bank would maintain its restrictive monetary policy until 2024. This is crucial to achieve a target rate of 2%, the official reiterated. Against this backdrop, the dollar has noticeably appreciated against other major currencies, primarily the yen and the euro. The greenback's strengthening was driven by the latest import and export reports from China. Official data indicates that from January to July, exports from China decreased by 5%, while imports fell by 7.6% year-on-year. Additionally, last month both indicators plunged by 14.5% and 12.4% respectively. At the start of the week, the greenback managed to stabilize after a moment of weakness. On Tuesday morning, August 8, the EUR/USD pair was trading near 1.0997 before rising quickly to 1.1000 and breaking through it. EUR/USD is expected to hit new record highs and its next target is believed to be the 1.1100 mark. Today, the market's focus is on significant macroeconomic data from the United States, with analysts expecting a noticeable decrease in inflation in the short term. On Thursday, August 10, the country's Department of Labor will publish these reports. According to preliminary forecasts, consumer prices in America surged by 3.3% year-over-year in July. The data on US consumer prices will help investors assess the results of the Federal Reserve's prolonged cycle of monetary policy tightening. In addition, inflation is projected to have accelerated over the past month. Current macro statistics will help forecast the Federal Reserve's next step and partly predict its actions at the September meeting. Meanwhile, the majority of analysts (86.5%) believe that the regulator will maintain the key rate at the current level of 5.25%-5.5%. Other experts assume there might be a slight increase. Last week, tensions escalated in the global stock market after the deterioration of the American credit rating. Against this backdrop, market participants were seriously afraid of widespread sell-offs, but this did not happen. Moreover, the market managed to avoid the correction that many feared after a 7-month period of growth. As a result, the market found relative stability as traders and investors did not rush to lock in profits and sell securities in their portfolios. Fitch's recent decision has not negatively affected the US currency rate. According to analysts' observations, the US dollar index (DXY) closed last week with gains, showing a short-term dip. Earlier, in August 2011, S&P Global Ratings downgraded the US credit rating amid problems with the debt ceiling. However, these actions also barely affected the national currency. Moreover, the dollar index closed 2021 with a 7% growth, and during that time, it added over 30%. According to analysts, in the medium and long-term planning horizons, the greenback will maintain stability. A more positive scenario implies a sustained upward trend of the US dollar against the euro. According to Jane Foley, Head of Currency Market at Rabobank, the dollar is still considered a safe-haven currency "thanks to its massive share in international payments." The currency strategist at Rabobank acknowledges that the greenback may lose its dominant positions over time "but it is unlikely to happen in the next 20, 30, or 40 years." Many specialists assume that the trajectory of the American currency will largely depend on the Federal Reserve's monetary policy. Besides, USD will continue to gain support thanks to the confident growth of the US economy.

The Bank of England will raise interest rates in September The week ended quite predictably for both instruments, but the wave analysis suggests that it is quite challenging to predict what lies ahead. Both uptrends cannot be impulsive, but they can be five-wave corrective patterns of the a-b-c-d-e kind. Consequently, quotes can rise within the wave e. The recent downward waves have taken a three-wave corrective pattern at the moment, which corresponds to a corrective status but not an impulsive one. However, after three waves, two more waves can be built. Based on the above, both instruments, from current levels, have an equal probability of either starting a new upward movement or extending the decline. In this situation, I recommend focusing on the nearest Fibonacci levels. For the euro, the wave analysis is somewhat more complicated, while for the pound, we see a clear three-wave downward movement. A successful attempt to break the 161.8% Fibonacci level may indicate the end of the downward wave, which would be the fourth wave within an uptrend. The euro may also construct a similar wave formation. The question of further interest rate hikes by the Bank of England is also crucial for the market right now. Many analysts (including myself) believe that the tightening cycle will end this year, with only three meetings remaining until the end of the year. The next meeting is likely to result in a 100% rate hike, as BoE Governor Andrew Bailey has not signaled any pause, and inflation remains high. Bailey has also given an approximate inflation target for autumn 2023. If inflation decreases to 5%, the BoE will take a less aggressive approach to interest rates. In November, the probability of a rate hike is 50/50. Consequently, by December, the likelihood of a rate increase approaches zero. This implies that, at best, there may be two more rate hikes. Meanwhile, the FOMC may raise rates one more time, resulting in almost complete parity between the two central banks. In my view, this scenario suggests a horizontal movement or continuation of the downward trend, but not a new upward wave for both instruments. After all, the ECB is also starting to talk about a possible pause in September in recent weeks. Therefore, I believe that there's a high probability that both instruments will fall, and the nearest Fibonacci levels should help determine the resumption of the downward movement. I also want to draw attention to the similarity in the movements of the euro and the pound. Hence, a signal for one instrument can be used for the other as well. Based on the conducted analysis, I conclude that the formation of the upward wave set is complete. I still consider targets around 1.0500-1.0600 quite realistic, and with these targets in mind, I recommend selling the instrument. The a-b-c structure looks complete and convincing, and closing below the 1.1172 mark indirectly confirms the formation of the downtrend segment. Therefore, I insist on selling the instrument with targets around 1.0836 and below. I believe that the formation of the downtrend segment will continue. The wave pattern of the GBP/USD instrument suggests a decline. As the attempt to break the 1.3084 mark (from top to bottom) was successful, my readers were able to open short positions, as I mentioned in my recent reviews. The target was set at 1.2618 and the pair managed to reach this mark. There is a risk of completing the current downward wave if it is the 4th wave. In this case, a new upward movement will start from the current levels as part of the 5th wave. In my opinion, this is not the most likely scenario, and a successful attempt to break 1.2618 (or an unsuccessful attempt at 1.2840) will indicate the market's readiness to continue building the downward wave and trend segment.

US dollar comes on top as euro lags behind The American currency has once again taken the lead, pushing the European currency to the sidelines. The dollar was boosted by strong US consumer confidence data. Meanwhile, the euro has experienced a significant decline remains hopeful of a rebound in the near future. On the evening of Tuesday, July 25th, the greenback demonstrated significant growth against the euro, soaring higher after the release of encouraging consumer confidence data in the USA. According to latest reports, the consumer confidence index in the US increased to a 2-year high of 117 points in July, up from the revised 110.1 points in June. Against this backdrop, the US Dollar Index (USDX) performed well, reaching a peak of 101.65 points but later dipped slightly by 0.08%. It's worth noting that USDX exhibited a consistent uptrend over six consecutive trading sessions, nearly recouping 50% of its losses from early July. According to Sean Osborne, a leading currency strategist at Scotiabank, the prospects for the US dollar remain uncertain: "While the DXY rebound has extended a bit more than I expected the broader outlook for the USD remains somewhat challenging and I still rather look for the USD to weaken in H2," he commented. Nevertheless, the euro, the recent market favorite, was unable to take advantage of the dollar's moves and suffered a noticeable setback against it. However, most of the G10 currencies strengthened against the American currency, particularly the Australian dollar, the Swiss franc, and the Japanese yen. The unexpected driving force behind the surge of major currencies against the greenback was the optimism regarding the prospects of the Chinese economy. Recently, Chinese authorities outlined revised plans for additional economic support, extending their backing to troubled sectors such as the real estate market, while pledging to boost consumption and address regional government debts. Analysts argue that this newfound Chinese optimism weighed down on the dollar, which is now bearing the burden of China-inspired optimistic sentiment against its major G10 peers. As a result, the US dollar index retreated from its two-week highs after being previously supported by elevated PMI data. Furthermore, market participants' uncertainty about the Federal Reserve's forthcoming actions contributed to the dollar's decline. Investors and traders expect that on Wednesday, July 26th, the Federal Reserve will raise its key interest rate, marking the final move in the current tightening cycle. According to analysts, the monetary authorities will maintain the possibility of further maneuvers in the future, in case a return to tightening is deemed necessary. However, there are risks involved. "Policymakers will want to leave the door open to more tightening down the road but history shows markets are quite attuned to the top of the rate cycle when it comes and USD has generally weakened once peak rates are in," analysts at Scotiabank warned. In this complex situation, the euro finds it challenging to stay afloat. EUR has demonstrated weakness after the publication of Eurozone economic data. According to reports from the German research institute IFO, key indicators, namely the EU Business Climate Index and the Current Assessment Index, came in worse than previously forecast. In July, the business climate index in Germany dropped to 87.3 points from the previous 88.6 points, falling short of market expectations of 88 points. This ambiguous situation has negatively impacted EUR/USD. After rising to 1.1100, the pair reversed course and fell to the lowest level in two weeks around 1.1050. On Wednesday morning, July 26th, EUR/USD was trading between 1.1058 and 1.1059, gradually attempting to break free from the downward spiral. According to analysts, currently EUR/USD lacks momentum for growth, despite the rebound from the two-week low. The pair benefitted from the US dollar's short term retreat, but failed to attract bulls due to concerns about a recession in the Eurozone. The market's focus is now on policy meetings of central banks around the world, which are taking place this week. On Wednesday, July 26th, the Fed will announce the policy decision following the July meeting. The overwhelming majority of analysts expect the Fed funds rate to be hiked by 25 basis points to 5.25% - 5.5%. On Thursday, July 27th, the European Central Bank (ECB) will hold its meeting. Later, the ECB will publish its decision, which analysts also believe will lead to a 25 basis point rate hike to 4.25%. If the ECB's rhetoric turns out to be less hawkish than that of the Fed, EUR/USD may fall below the key psychological level of 1.1000. However, analysts still consider 1.1050 as the key support level. Additionally, on Thursday, the US will publish its first estimate of GDP growth for Q2 2023. Preliminary data indicate the American economy grew by 1.8% year-on-year during this period, following a 2% increase in Q1. Despite this, market participants remain primarily focused on the Federal Reserve and ECB meetings, their monetary policies, and the hints provided by the central bank heads regarding future actions.

The global recession is getting closer. USD, EUR, GBP overview CFTC data reflects a significant deterioration in sentiment towards the US dollar. The overall short position on the USD increased by 7.39 billion during the reporting week, reaching -19.88 billion, marking the largest weekly change since 2020, and the highest bearish bias since 2021. Significant adjustments were observed in positions on the euro and yen. In addition, it is worth noting that the net long position on gold increased by a substantial 6.231 billion, reaching 38.258 billion. Buying gold while simultaneously selling the dollar often signifies expectations that the dollar will weaken. The Federal Reserve's rate hike on Wednesday is considered a done deal, and the market's primary focus will be on the forecasts. The Fed's main goal is to lower inflation expectations and reduce demand, so far this goal has not been achieved. Retail sales data for June indicates high consumer activity, suggesting a potential threat to the sustainability of core inflation. The prospects for the dollar remain unclear for now. Either tightening financial conditions will lead to a sharp decline in consumption, creating conditions for a recession, or the transition will be more gradual. In the first case, the dollar will weaken, while in the second, any corrective decline may be short-lived, as the eurozone economy is closer to a recession than the US economy. EUR/USD: The European Central Bank meeting will take place on Thursday, and a 25 bps rate hike is considered a done deal, as Council members have repeatedly communicated in their comments. The rate hike itself is unlikely to cause a significant movement. The main focus will be on the forecasts, from which the market will obtain information about the plans for the September meeting - either the central bank signals another rate hike, or it decides to take a pause. These post-meeting data will be the factor that either pushes the euro higher or fuels the corrective decline. The eurozone economy is slowing down, and the PMI data published on Monday came out worse than expected in all sectors - both in manufacturing and services. The slowdown in activity suggests that inflation deceleration will continue, and the September meeting will be the last one where the ECB raises rates. If the market confirms this assumption, the euro will fall, and the uptrend will come to an end. The net long position on the euro increased by 5.8 billion during the reporting week, marking the most significant improvement in sentiment towards the euro since September of last year. The calculated price has yet to move up. Investors seem to be anticipating the end of the Fed's rate hike cycle, as well as the US dollar's bullish momentum. The FOMC meeting will take place on Wednesday, and the expected rate hike is already fully priced in. As a result, the yield spread will start to favor the euro, as the ECB is still far from the end of its rate cycle. It is assumed that the end of the Fed's tightening cycle will be accompanied by hawkish comments, which could push EUR/USD to fall towards the support level at 1.1010/20. Considering the significant change in sentiment on futures after the formation of a local base, the euro will likely attempt to bring back its upward movement. GBP/USD: The retail sales data for June came out better than expected, supporting the pound as maintaining high consumer demand also implies the preservation of high inflation expectations and, consequently, an increase in the Bank of England's rate forecasts. At the same time, business activity is slowing down faster than expected - the manufacturing PMI fell from 46.5 to 45 in July, while the services PMI fell from 53.7 to 51.5. The composite PMI also slowed down from 52.8 to 50.7. Considering that GDP growth is minimal and the UK economy is half a step away from a recession, maintaining high consumption while PMI activity declines implies a transition to a stagflation regime, which combines high inflation and recession. This is an awful scenario for the BoE, which they would like to avoid. Inflation in the UK is higher than in the eurozone and the US, which suggests further rate hikes by the BoE even before the threat of a recession. This factor will support demand for the pound in the short term. The net long position on GBP increased by 499 million during the reporting week, reaching 5.192 billion, reflecting bullish positioning. The calculated price is currently pointing downwards, which suggests an attempt to develop a corrective decline. The pound has fallen below the support level at 1.2847, which technically indicates the possibility of a downward movement. The next support is at 1.2770/90, where the lower band of the long-term bullish channel lies. Considering that speculative positioning in futures is shifting in favor of the pound, we assume that the bearish attempts are of a corrective nature, and the pound is unlikely to fall below 1.2770. After forming a local peak, we expect the pair to resume its uptrend.

Trading Signal for GOLD (XAU/USD) for July 25-26, 2023: buy if breaks $1,963 (200 EMA - 21 SMA) Early in the European session, gold (XAU/USD) is trading at 1,962.61. It is located above the 21 SMA and above the 200 EMA. The 1-hour chart shows that gold is trading within a downtrend channel formed since July 20 when it reached the high of 1,987. With a sharp break of this downtrend channel and a daily close above 1,963, we can expect the price to rally and reach 3/8 Murray, so its first target is seen at about 1,968. If bullish force prevails, the metal could reach 1,985 and ultimately the psychological level of $2,000. On the other hand, in case XAU/USD falls below 1,960, we could expect a downward acceleration and the instrument could reach 1,953 and finally, it could fall to 1,943, a level that coincides with the 200 EMA on the 4-hour chart. Investors are waiting for the FED to increase its interest rate by 0.25% to 5.50%. The policy announcement could generate strong volatility in gold. If the data is favorable, gold could fall until it reaches 1,937 and 1,906. On July 24, the Eagle indicator reached a 5-point low, which represents an oversold zone. Since then, we can observe a technical rebound in gold from the 1,953 low. In the next few hours, we expect gold to break sharply the downtrend channel and reach 1,968 and 1,985.

Intriguing trends in the US stock market: Dow Jones confidently grows by 0.47%, but what awaits other indices? Shares of Johnson & Johnson became the real stars of the day, gaining 6.07%, closing at 168.38. Significant growth was also noted in the shares of Goldman Sachs Group Inc, rising by 3.03% and closing at 350.86, while Boeing Co showed a price increase of 2.40%, settling at 213.61. Meanwhile, some sectors, such as technology, consumer goods, and consumer services, experienced negative dynamics. It's surprising, as the market is such that today some sectors may experience a decline, while tomorrow becoming the leaders of growth. It is interesting to note that the markets evaluate ambiguous macro-statistics, and this affects the overall picture. The number of initial jobless claims in the US for the week surprised experts by decreasing by 9 thousand to 228 thousand, while the forecast suggested an increase to 242 thousand. However, the number of home sales transactions in the secondary market in the US decreased by 3.3% in June compared to May, reaching 4.16 million transactions, against the forecast of 4.2 million. The New York Stock Exchange also didn't stay away from the market's diverse movements. The Dow Jones index demonstrated a slight increase of 0.47%, reaching a 52-week high. Meanwhile, the S&P 500 index slightly fell by 0.68%, and the NASDAQ Composite index decreased by 2.05%. Days like these, full of volatility and opportunities, always keep investors on their toes. It's precisely during such moments that unique chances and advantageous opportunities arise for true adventurers in the financial markets. At the top of the growth were the shares of Johnson & Johnson (NYSE: JNJ), showing unwavering strength, with a gain of 6.07%, equivalent to 9.64 points, and closing at 168.38. In second place were the quotes of Goldman Sachs Group Inc (NYSE: GS), which, like sprinters, rose by 3.03% or 10.31 points, finishing the session at 350.86. We cannot overlook Boeing Co (NYSE: BA), which added 2.40% or 5.01 points to the price of its shares, closing at 213.61. While growth characterized the leaders, there were also those who faced challenges and dropped from the top. Among the declining stocks, Intel Corporation (NASDAQ: INTC) drew attention, losing 3.16% or 1.09 points, closing the session at 33.37. However, the shares of Salesforce Inc (NYSE: CRM) demonstrated strength and growth of 2.65% or 6.21 points, closing at 228.16. Microsoft Corporation (NASDAQ: MSFT) encountered some difficulties, losing 2.31% or 8.21 points but still holding at 346.87. Impressive growth is also characteristic for some components of the S&P 500 index. For example, the shares of Zions Bancorporation (NASDAQ: ZION) rose by a significant 9.98%, reaching the mark of 37.90. And, of course, our growth leader of the day is Johnson & Johnson (NYSE: JNJ), showing remarkable growth of 6.07% and closing at 168.38. Finally, let's not overlook the shares of Allstate Corp (NYSE: ALL), which rose by 5.85% and closed at 111.98. On the other hand, the leaders of decline were the shares of Discover Financial Services (NYSE: DFS), which decreased in price by 15.92%, closing at 102.45. Tesla's shares (TSLA.O) fell by 9.74%, marking the largest one-day percentage decline since April 20, after the electric vehicle manufacturer reported a drop in second-quarter gross profit to a four-year low, and CEO Elon Musk hinted at further price cuts. The quotes of Equifax Inc (NYSE: EFX) also dropped by 8.89% to 216.37. Among the components of the NASDAQ Composite index, the growth leaders in today's trading were the shares of Guardforce AI Co Ltd (NASDAQ: GFAI), which increased by 57.46% to 6.44, Evelo Biosciences Inc (NASDAQ: EVLO), gaining 52.40% and closing at 9.86, and Sirius XM Holding Inc (NASDAQ: SIRI), rising by 42.26% and finishing the session at 7.81. Despite the mixed trends, some stocks stand out with their extraordinary dynamics. Shares of Discover Financial Services (NYSE: DFS) faced challenges this time around and fell a hefty 15.92% to close at 102.45. Similarly, the shares of Tesla (TSLA.O) also attracted attention with a loss of 9.74%. This marked the largest one-day percentage decline since April 20. The drop was attributed to the announcement of a decline in gross profit in the second quarter to a four-year low, as well as hints from CEO Elon Musk about possible price reductions. Meanwhile, the shares of Equifax Inc (NYSE: EFX) also experienced a decline, dropping by 8.89% to 216.37. However, not only the decline is noteworthy in the market. Among the components of the NASDAQ Composite index, some stocks stand out as strong growth leaders. For example, the shares of Guardforce AI Co Ltd (NASDAQ: GFAI) astonished with a surge of 57.46%, reaching 6.44. They were followed by the shares of Evelo Biosciences Inc (NASDAQ: EVLO), which rose by 52.40% and closed at 9.86, and the shares of Sirius XM Holding Inc (NASDAQ: SIRI), showing growth of 42.26% and finishing the session at 7.81. On the other hand, the shares of Vir Biotechnology Inc (NASDAQ: VIR) drew attention with a significant price drop of 44.90%, closing at 12.70. The shares of Netcapital Inc (NASDAQ: NCPL) also experienced a decline of 41.88%, ending the session at 0.68. Additionally, the quotes of Durect Corporation (NASDAQ: DRRX) also suffered a decrease of 33.13%, reaching 3.29. It is interesting to note that Netflix (NFLX.O) shares faced a major challenge, falling 8.41%. This marked the largest one-day percentage decline since December 15, and it happened after the company's quarterly revenue in the streaming video sector did not meet market expectations. Despite the decline in the Nasdaq index, the Dow (.DJI) continues to delight investors with its steady performance. It registered its ninth consecutive session of growth, making it the longest winning streak since September 2017. The situation on the New York Stock Exchange also left its mark. The number of declining stocks (1710) exceeded the number of those closing in the positive (1240), and 80 stocks remained virtually unchanged. The Nasdaq stock exchange also experienced fluctuations: shares of 2246 companies declined, 1286 rose, and 131 remained at the same level as the previous closing. The stock market is showing an increase in volatility, reflecting the instability and fluctuations in the market. The CBOE Volatility Index, which is based on S&P 500 options trading, rose by 1.67% and reached a level of 13.99. This indicates that investors are expecting increased uncertainty and more unpredictable movements in the near future. Currently, there are mixed trends in the commodity market. August gold futures lost 0.45% or $9.00, closing at $1,000 per troy ounce. Meanwhile, September WTI crude oil futures rose by 0.61% or $0.46, reaching $75.75 per barrel. September Brent crude oil futures also showed an increase of 0.29% or $0.23, reaching $79.69 per barrel. In the currency market, the EUR/USD pair is experiencing a decline of 0.61%, leading to a drop to 1.11. At the same time, USD/JPY quotes rose by 0.29% and reached 140.07. USD index futures also demonstrated growth by 0.56%, settling at 100.54. This indicates a strong position of the US dollar in the market and investors' interest in this currency. Thus, the current data in the market speaks of unpredictability and warns investors to be more attentive and cautious when making decisions. In such a situation, it is especially important to keep track of global events and economic news to make informed decisions in the market.

Stock rally may resume over fresh US data Market balance returned, as indicated by the slight weakening in dollar and consolidation of Treasury yields, as well as the attempts of stock markets to resume a rally following the release of data indicating a sharp decrease in consumer inflation in the US. It seems that investors realized that the Fed could just be using verbal interventions, and that further rate hikes may not happen anymore since inflation continues to decline. Accordingly, expectations that the US economy will plunge into a deep recession dropped noticeably, while the economy's current precarious balance shows real possibilities for recovery. The release of important economic data today, namely the data on retail sales and their volumes in the US, could serve as an additional positive signal for the markets. Forecasts say the core index will sharply rise from the May value of 0.1% to 0.3% in June, while the volume of retail sales will increase 0.5% m/m, from 0.3% a month before. In addition to these data, the volume of industrial production in the US will also attract attention. In monthly terms, the indicator may demonstrate zero dynamics, in contrast to the 0.2% decrease in May. However, in annual terms, a sharp increase to 1.10% may be seen, from 0.25% in the previous period. If these important indicators do not disappoint, they may stimulate a new wave of demand for risk assets, accompanied by a weakening of dollar and increase in commodity assets. After all, positive news from the US indicates the gradual recovery of the local economy and move away from the edge of recession. In such a situation, major players will start to respond unequivocally by purchasing previously undervalued assets in anticipation of their prospective growth. Forecasts for today: XAU/USD Gold rose in price as dollar demand weakened amid decline in expectations for further interest rate hikes in the US. Continued positive market sentiment may provoke a breakdown of 1963.20, which will lead to a rise towards 1981.20. USD/CAD Further growth may occur if inflation data in Canada shows a decrease, since such a situation may mean that the Bank of Canada will pause its interest rate hikes at the next meeting. If that happens, the pair will rise above 1.3230 and head towards 1.3375.

Stock rally may resume over fresh US data Market balance returned, as indicated by the slight weakening in dollar and consolidation of Treasury yields, as well as the attempts of stock markets to resume a rally following the release of data indicating a sharp decrease in consumer inflation in the US. It seems that investors realized that the Fed could just be using verbal interventions, and that further rate hikes may not happen anymore since inflation continues to decline. Accordingly, expectations that the US economy will plunge into a deep recession dropped noticeably, while the economy's current precarious balance shows real possibilities for recovery. The release of important economic data today, namely the data on retail sales and their volumes in the US, could serve as an additional positive signal for the markets. Forecasts say the core index will sharply rise from the May value of 0.1% to 0.3% in June, while the volume of retail sales will increase 0.5% m/m, from 0.3% a month before. In addition to these data, the volume of industrial production in the US will also attract attention. In monthly terms, the indicator may demonstrate zero dynamics, in contrast to the 0.2% decrease in May. However, in annual terms, a sharp increase to 1.10% may be seen, from 0.25% in the previous period. If these important indicators do not disappoint, they may stimulate a new wave of demand for risk assets, accompanied by a weakening of dollar and increase in commodity assets. After all, positive news from the US indicates the gradual recovery of the local economy and move away from the edge of recession. In such a situation, major players will start to respond unequivocally by purchasing previously undervalued assets in anticipation of their prospective growth. Forecasts for today: XAU/USD Gold rose in price as dollar demand weakened amid decline in expectations for further interest rate hikes in the US. Continued positive market sentiment may provoke a breakdown of 1963.20, which will lead to a rise towards 1981.20. USD/CAD Further growth may occur if inflation data in Canada shows a decrease, since such a situation may mean that the Bank of Canada will pause its interest rate hikes at the next meeting. If that happens, the pair will rise above 1.3230 and head towards 1.3375.

The dollar train has already left The Federal Reserve has clearly won the fight against inflation. Victory is not inevitable, and its timing is not determined, but no one is talking about stagflation or hyperinflation at the moment. The markets responded favorably to the June consumer price index, fueling the dollar sell-off. EUR/USD surged to 15-month highs, and this is far from the limit. Economists at Deutsche Bank expect EUR/USD to rise to 1.15 by Q4 2023, while Eurizon SLJ Capital suggests the 1.2 level. When the divergence in monetary policy between the European Central Bank and the Federal Reserve is accompanied by heightened global risk appetite and the decline of American exceptionalism, the US dollar is forced to raise the white flag. Currently, the gap between consumer and producer prices is at a record high. When such situations have occurred in the past, stock markets have risen. This has happened either in the very late stages of a recession or in the early stages of an upturn. Dynamics of final demand and finished goods prices in the US It is quite possible that the United States will be able to avoid the recession that has been talked about for so long. The markets are envisioning a Goldilocks scenario—a combination of slowing inflation and steady GDP growth just below trend. It's no wonder that the S&P 500 reached a 15-month peak. It is difficult for the US dollar, as a safe-haven asset, to withstand such a significant improvement in global risk appetite. The Fed's aggressive policies will eventually start to slow down the economy. Meanwhile, China is likely to accelerate the recovery of its GDP, which will have a favorable impact on the export-oriented eurozone. As a result, the bullish factor of American exceptionalism for the US dollar will become a thing of the past. The hawkish comments from FOMC officials don't help the EUR/USD bears either. Christopher Waller still expects a federal funds rate hike to 5.75% and claims that making decisions based on a single inflation report is reckless. We can't sit and wait for the economy to cool down. It's like waiting on the platform for a train that has already left. At the same time, the euro is supported by the minutes of the June ECB meeting and a speech by Isabel Schnabel. The ECB official said that despite the slowdown in inflation, markets are sending different signals. They reflect investors' concerns about whether the central bank has done enough to tackle high prices. In the latest Governing Council meeting, one official voted for an immediate 50 bps rate hike. It seems that the ECB is not planning to stop, while the Fed may force a significant inflation slowdown. Along with heightened global risk appetite and the loss of American exceptionalism, this allows us to expect that the euro will continue to rally against the US dollar. Technically, on the EUR/USD daily chart, reaching targets at 127.2% and 224% based on the AB=CD pattern increases the risk of a pullback. For this to happen, the pair would need to drop below the pivot level of 1.1215. Any decline should be used to form long positions.

EUR/USD and GBP/USD: Trading plan for beginners on July 10, 2023 Details of the economic calendar on July 7 U.S. labor market continues to show strength. Statistical data on the U.S. labor market indicates that the number of non-farm payrolls increased by 209,000 in June, slightly below the expected growth of 225,000. The unemployment rate also decreased to 3.6%, in line with expectations. These indicators indicate the ongoing strengthening of the American labor market. Analysis of trading charts from July 7 The EUR/USD currency pair has nearly fully recovered its value after a recent correction. However, a resistance level around 1.1000 still stands in the way of buyers. The GBP/USD pair has reached a local high in the process of inertial movement within a medium-term upward trend. As a result, there has been a reduction in long positions, leading to a price pullback. Economic calendar for July 10 Monday is traditionally accompanied by an empty macroeconomic calendar. No important statistical data is expected to be published in the European Union, the United Kingdom, and the United States. Therefore, investors and traders intend to rely on the incoming flow of information and news. EUR/USD trading plan for July 10 Due to the technical overbought signal of the euro in the short-term and intraday periods, a price pullback is possible. To continue the current upward cycle, market participants need to overcome the resistance level around 1.1000. If the price remains consistently above this level, it may stimulate an increase in long positions. GBP/USD trading plan for July 10 In this situation, the return of the price to the local high indicates a prevailing bullish sentiment among market participants. The pullback we are observing can serve as a stage for regrouping trading forces before further growth. To confirm the continuation of the upward trend, it is necessary to keep the price above the level of 1.2850, which may trigger a technical signal for further growth. What's on the charts The candlestick chart type is white and black graphic rectangles with lines above and below. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time frame: opening price, closing price, intraday high and low. Horizontal levels are price coordinates, relative to which a price may stop or reverse its trajectory. In the market, these levels are called support and resistance. Circles and rectangles are highlighted examples where the price reversed in history. This color highlighting indicates horizontal lines that may put pressure on the asset's price in the future. The up/down arrows are landmarks of the possible price direction in the future.

Pressure on the dollar may intensify. USD, CAD, JPY overview The highly anticipated speech of Fed Chair Powell in the House of Representatives did not bring any new information. Powell justified the decision not to raise rates in June by saying that the speed of interest-rate increases is "not very important," now and outlined the criteria for sustainable inflation reduction. The dollar had a minimal reaction to Powell's speech, with slight selling pressure that resulted in a shallow correction. The main cause of high inflation in the United States is considered to be the high level of consumption, as demand does not allow prices to start a sustainable decline. However, adjusting the overall accumulated household wealth for inflation shows that the "excess wealth" created by pandemic stimulus measures has already been eroded. The decrease in consumption is inevitable, which will lead to a recession by the end of the year. As a result, in order to manage inflation expectations, the Federal Reserve will be forced to change its rhetoric to a more dovish stance, which will intensify pressure on the dollar. The Bank of England held its regular monetary policy meeting on Thursday, and after its unexpected inflation report for May, there are no doubts that the Bank of Canada will raise rates. This increase has already been priced in by the markets and is unlikely to cause a rise in GBP on its own. However, the probability of another rate hike has increased, and if the meeting minutes are sufficiently aggressive, the pound may have grounds for another upward trajectory. USD/CAD The Canadian dollar strengthened after the release of the minutes from the Bank of Canada's latest meeting on June 7, as the markets received confirmation that the Bank of Canada is ready to consider further rate hikes and that the June hike was not a one-time action. It was noted that GDP growth in the first quarter exceeded forecasts (3.1% versus 2.3%), with consumption growth being very strong at 5.8%, not only in the services sector but also in interest rate-sensitive goods. Consumption growth in Canada was stronger than expected, even considering population growth, and business investment and exports were stronger and more widespread than anticipated. There is clearly excess demand in the economy, and the measures implemented so far are not sufficiently restrictive. The Bank of Canada expected inflation to decrease to 3% in the summer, but an unexpected increase from 4.3% to 4.4% was recorded in April. Trends in core inflation data raised doubts about the strength and longevity of the ongoing disinflation and heightened concerns that inflation could remain significantly above the 2% target. Therefore, by raising rates on June 7, the Bank of Canada has left the door open for at least one more rate hike. If the inflation data for May (to be released on June 27) do not show a significant decrease, which is quite likely, the chances of another rate hike will increase. Accordingly, the Canadian dollar has grounds for further strengthening. The net short position on CAD decreased by 106 million during the reporting week, reaching -2.753 billion. The positioning remains confidently bearish, and the estimated price has turned downward again. A week earlier, we speculated that the USD/CAD could extend its decline if it receives a good reason. Now it has such grounds, and the main scenario is that the pair will continue to fall, with the nearest target being the lower band of the 1.3050/70 channel. A corrective upward retracement may stop near the resistance at 1.3225, followed by a downward reversal and a build-up of the downward momentum. USD/JPY The Bank of Japan left its current monetary policy unchanged, but the markets were more interested in whether there would be any explicit hints of a readiness to tighten in the future. From this perspective, the comments from BoJ Governor Kazuo Ueda appear ambiguous. Ueda directly linked the possibility of policy change to two factors. The first factor is the deterioration in the functioning of the money market, which was the reason for expanding the yield curve control in December of last year. The second factor is the trend of inflation growth. There is no reason to intervene in policy due to the first factor, as the market is much more stable after the yield control policy change. The second factor is too uncertain, and there are no clear signs of inflation strengthening. Accordingly, there are no grounds to expect changes from this perspective. Another factor that could influence the BOJ's stance is the sustained growth in average wages. The position here is that wage growth should not exceed 2% plus productivity growth, but since it is difficult to calculate productivity growth and it is quite volatile, we can conclude that the BOJ does not intend to take unexpected actions even in the case of higher wage growth. Therefore, the market currently sees low chances of monetary tightening, which suggests that we shouldn't expect the BOJ to take significant actions to strengthen the yen in the near future. The net short position on JPY slightly adjusted by 114 million during the reporting week, reaching -9.269 billion. The bearish bias is unquestionable. The estimated price is above the long-term average, indicating a bullish trend. USD/JPY, as expected, continued its rise and stopped a few points away from the technical resistance at 142.50. Considering that the estimated price has slowed down its growth, the chances of a corrective decline have increased, with the nearest support at 140.90. In the event of hawkish hints from the BOJ, a decline towards the middle of the 138.50/90 channel is possible. However, the long-term trend remains confidently bullish, so a deep correction is not expected. The nearest goal is to consolidate above 142.50, followed by a transition into a sideways range, as there are also few grounds for a strong continuation of the upward movement.

Is the FOMC being overly cautious? Powell's speeches The dollar is going through difficult times, and it is pretty clear to everyone. However, there's a good chance of improving its situation in the near future. In this article, we will try to understand why. First and foremost, I would like to mention that both instruments are currently in positions from which downward waves can start forming. Wave analysis is currently quite objective and unambiguous. There's a possibility of further growth, but there's still a higher probability of a decline. Another important fact to mention is the prolonged decline of the USD. This is only a speculative assumption as trends can take on a very prolonged form, especially when supported by the news background. And the current news background allows for the dollar's growth. To answer the question "why?" We need to try to look at the big picture. If the euro and the pound have been rising for almost a whole year, it is clear that the market has been responding to some news background. This could be the interest rate hikes by the Bank of England and the European Central Bank. For example, last year, when the Federal Reserve was raising rates faster and stronger, the dollar was getting stronger. Sooner or later, there will come a moment when the ECB and the BoE will finish tightening their monetary policies. In my opinion, this moment is approaching. Fed Chairman Jerome Powell may announce in Congress this week that the interest rate will increase one more time if the situation requires it. However, the dollar is not particularly affected by this announcement, as it has been declining for almost a whole year. One rate hike will not lead to a significant appreciation of the dollar. The FOMC is steadily moving towards its goal. Inflation has already decreased to 4%. At this level, the ECB or the BoE could relax and let inflation return to the target level on its own. But not the Fed. The goal is to bring inflation back to 2% as soon as possible. Therefore, it is possible that the Fed is being overly cautious in case the decline in the consumer price index is interrupted. However, this fact does not mean much for the dollar. Based on everything mentioned above, I believe that at the moment, it is highly probable that the tightening cycles in the UK and the EU will come to an end, as well as the wave analysis, which is currently providing very good sell signals for both instruments. Based on the analysis conducted, I conclude that a new downtrend is currently being built. The instrument has enough room to fall. I believe that targets around 1.0500-1.0600 are quite realistic. I advise selling the instrument using these targets. I believe that there is a high probability of completing the formation of wave b, and the MACD indicator has formed a "downward" signal. You can sell with a stop loss placed above the current peak of the presumed wave b. The wave pattern of the GBP/USD instrument has changed and now it suggests the formation of an upward wave that can end at any moment. Currently, it would be advisable to recommend buying the instrument only if there is a successful attempt to break above the 1.2842 level. You can also sell since the first attempt to break through this level was unsuccessful, and a stop loss can be set above it. However, be cautious on Thursday since there's a chance that the market's reaction to the BoE meeting may provoke sharp movements.