Important week for EURUSDOn Friday we saw the expected correction and pullback.
This week is coming the most important news for the market at the moment.
US Interest rate is coming on Wednesday.
After the news we expect good opportunities and longer-term trades.
We're looking at the exhaustion of the downside move, as the first support is 1.0609.
Current levels are not suitable for new entries.
Powell
inflation & yieldsThe Us 10 Year yield is one of the most important yields to follow.
It greatly impacts long term investment decisions in a vast array of markets; stocks, bonds, real estate.
A clear technical breakout is being observed & this could mean inflation is becoming entrenched.
Yields have a tendency to rally in parabolic fashion. if this breakout holds we can likely expect higher rates.
Fed's Rate Hike Looms Over US30US30 is likely to remain volatile in the coming weeks, as investors assess the risks to the economy. The latest macroeconomic news is not good for the market, with consumer sentiment falling and inflation remaining high. Fed officials have signaled that they are likely to raise interest rates by 0.75% next week, which could further dampen economic activity. Technical traders should be aware of these risks and use fundamental analysis to make informed trading decisions.
Market Update - September 1st 2023
Grayscale ETF ruling boosts BTC: A U.S.Court of Appeals ruled in favor of Grayscale in their lawsuit against the SEC, which challenged the agency’s denial of an application to convert Grayscale Bitcoin Trust (GBTC) to an ETF. GBTC is currently the largest Bitcoin fund with over $16.3 billion USD in AUM. The ruling led to higher prices for BTC.
Powell speech and cooling economic data led to higher market prices: Markets were higher following Jerome Powell’s speech at Jackson Hole last Friday, in which no surprises were indicated. Cooling GDP and jobs data further bolstered these gains.
PEPE trends down following rug pull rumors: PEPE experienced a sharp drop in price last week as rumors of a rug pull circulated. The anonymous developer who claimed to be in control of the funds now says that the remaining 10 trillion tokens are safe and will remain until a “use or burn arises.”
X receives Rhode Island payments license: Twitter Payments LLC, the payment branch of X, was approved by Rhode Island for a license request to store, transfer, and exchange Bitcoin and other digital assets on behalf of its users. This marks another step in Elon Musk’s quest to turn X into the “everything app.”
Read More Here ⬅️
EUR/USD slips to 10-week low after soft German business climateThe euro has posted limited gains at the start of the trading week. In the North American session, EUR/USD is trading at 1.0803, up 0.08%.
The week ended on a sour note as German Ifo Business Climate fell for a fourth straight month in August to 85.7, down from an upwardly revised 87.4 and shy of the market consensus of 86.7. Germany's GDP flatlined in the second quarter, after two straight declines. The eurozone's largest economy is sputtering and a string of weak data provides support for the ECB to take a pause at the September meeting.
Federal Chair Jerome Powell delivered the keynote speech at the Jackson Hole summit on Friday and his message was one of caution and on the hawkish side. Powell reiterated that the battle to lower inflation to the 2% target "still has a long way to go". The Fed has lowered inflation to around 3% but the hardest part could be bringing it down to 2%.
With regard to rate policy, Powell was cautious, saying that the Fed would "proceed carefully" in deciding whether to raise rates or pause and wait for additional data. There was no mention of rate cuts, a signal that the Fed isn't looking to trim rates anytime soon. The markets raised the odds of a rate hike in September in response to the speech, from 14% a week ago to 21% at the time of writing.
ECB President Christine Lagarde also attended the Jackson Hole meeting but like Powell, played it safe with remarks that we've heard more than once in the past. Lagarde said that the ECB's rate path would be data-dependent at each meeting and that it was critical that inflation expectations remained anchored at the 2% target. Lagarde tried to sound optimistic, saying she was confident that inflation numbers would look different at the end of 2023.
Eurozone inflation is heading in the right direction but is still high at 5.3%. The central bank meets next on September 14th and it's unclear whether the ECB will raise rates for an eighth straight time or take a pause and monitor how the economy is performing. The benchmark rate is relatively low at 3.75%, but the eurozone economy has not looked good and higher rates increase the chances of the weak economy falling into recession.
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EUR/USD is putting pressure on resistance at 1.0831. The next resistance line is 1.0896
1.0795 is a weak support level. Below, there is support at 1.0731
AUDCHF Finally we have the reaction!On AUD/CHF, we have a long setup after the price began to rotate in the 0.56-0.5630 zone, providing significant confirmations. Currently, we're in a demand zone, and the price seems to be supported by a strong trendline that holds considerable liquidity from the ascending price. Additionally, we have a price that broke two H4 swing highs; the first one lacks an interesting entry point, while the second presents an appealing entry at the 0.5657 level, where we have an H1 demand. Personally, I'll wait for the price to retrace into this zone before considering a long entry. In the case of a market entry, I would set the target around 0.5730, where we have an H4 swing high, and place a stop around 0.5602, below the market low. Happy trading to all.
USD/JPY breaks above 146, Tokyo Core CPI dips to 2.8%USD/JPY has posted small gains on Friday, enough to push above the symbolic 146 line. On the data calendar, Tokyo Core CPI dipped lower and Fed Chair Powell addresses the Jackson Hole Symposium later today.
Japan released the Tokyo Core CPI earlier today. This is the first inflation release of the month, making it a key event. In August, Tokyo Core CPI rose 2.8% y/y, down from 3.0% in July and just under the consensus estimate of 2.9%. Despite the drop in inflation, the indicator has remained above the Bank of Japan's 2% target for some fifteen months. Earlier in the month, the so-called "core-core index", which excludes fresh food and energy, remained at 4.0%. This points to broad inflationary pressure and raises questions about the BoJ's insistence that inflation is transient.
The BoJ has said it will not exit its ultra-loose monetary policy until wage growth rises enough to keep inflation sustainable around 2%. Still, the markets have been burned before by the BoJ making unexpected moves and are on guard for the BoJ tightening policy, especially with the yen at very low levels.
The markets are keeping a close eye on the Jackson Hole symposium, with Fed Chair Powell and BoJ Governor Ueda both attending. Powell delivers a key speech on Friday and Ueda will participate in a panel discussion on Saturday. If either one provides insights into future rate policy, it could mean some volatility from USD/JPY on Monday.
What does the Fed have planned? That depends on which Fed member is addressing the media. Philadelphia Fed President Patrick Harker said on Thursday that he didn't see a need to raise rates further, absent any unexpectedly poor data, but added that the Fed wouldn't be lowering rates anytime soon. However, Boston Fed President Susan Collins said that rate increases might still be necessary. The Fed is likely to pause at the September meeting, but what happens after that is unclear.
USD/JPY is facing resistance at 146.41, followed by 147.44
There is support at 145.54 and 144.51
DLTR drops after earnings follows the market down DLTR dropped on a mild earnings beat. It is now below a volume shelf at 128.
Indicators including the MACD suggest a reversal as bullish divergence is showing.
The mass index supports a reversal. On the dual time frame RSI, the low TF green line
is above the higher TF black line which is weaker. Overall, DLTR could retrace to 133
based on the Fib retracement tool However, I will not take this trade until price crosses
above the POC line. !33 will be the first target and 134.5 the second target being the mean
VWAP. I will take a call on options trade as well. I will only enter if the general market indices
appear to be upgoing which is a challenge given the upcoming Powell speech at Jackson Hole
If the market is down turning, the trade will be paused and reassessed at early next week.
US2000 BEARISH SCENARIOAll focused on the forthcoming remarks by Jerome Powell, set to disrupt the situation tomorrow, which could potentially shift investor sentiment from buying to selling. The US2000, also known as the Russell 2000, represents a small-cap index that follows behind the larger indices such as DJIA, S&P, and Nasdaq. In recent months, the Russell has demonstrated weaker performance in contrast to its counterparts. The impending increase in interest rates might introduce new challenges to the market. Indicated by a symmetrical parabolic pattern, there's a suggestion that a bearish trend could extend around 130-150 points, mirroring the height of the curve. Nevertheless, the equation "Powell = Power" still holds true.
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Central banks know how to establish nice channelsThis weekend we have Jackson Hole meeting. Uncle Powell and aunt laggard will sit together and decide what will happen to FX:EURUSD . Let's see if they allow Euro to bounce from here.
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📈MY TAKE ON THE FED, INFLATION AND CREDIT📊
TLDR: I think the price increase we are seeing is not inflation, the economy is going from bad to worse and the FED's actions don't make any sense.
At the peak of the great inflation of the 70s in USA while both long and short term interest rates were going up together with inflation, so was the aggregate credit.
In fact loans to businesses were growing faster than inflation.
Whereas now, while the short term rates are going up the aggregate credit is going down. Businesses aren’t borrowing and the banks aren’t lending.
And as it was established by Milton Friedman, inflation is exclusively a MONETARY phenomenon.
Therefore price increase followed by unchanged or decreased aggregate credit in not inflation. Which is exactly what we are seeing right now.
It might be attributed to the ongoing effects of the Covid era supply shock which created long lasting bottlenecks, the war in Ukraine or some other fundamental systemic economic problem but it’s not conventional inflation which means that raising interest rates will do nothing but further damage the already weak economy (which is reflected in the unprecedented drop in demand for credit)
So, the further rate hikes that were hinted yesterday by the FED don’t make any sense and we should be expecting a fast race to the zero with more QE when the economic sh*t hits the political fan.
But, let’s wait and see.
Yields Surging / TLT FallingThe technical weekly uptrend that yields have formed is rather astonishing.
The sheer power of this move suggests likely more upside yields. Some basic measured moves suggest a potential whopping 5.7% on the 20 year.
Imagine TLT long bond traders!
Nothing is probable but it makes you wonder if inflation is becoming more entrenched since the bond market is very forward looking.
GOLD TO TEST SUPPLY AT $1980Gold price is higher above $1970 during early New York trading session ahead of the Fed. Fed Powell’s speech will be crucial for gold buyers as 0.25% rate hike priced in. XAUUSD tested 1950 support and bounced yesterday which opened the path to $1970. However, a supply zone from May, around $1983 - 1987, appears a tough nut to crack for the XAUUSD bulls. We will be looking for Fed Powell press conference later today for trading opportunities.
EUR/USD quiet ahead of Fed decisionThe euro is showing limited movement for a second consecutive day. In Wednesday's European session, EUR/USD is trading at 1.1063, up 0.07%.
The Federal Reserve meets later today, and it's close to a certainty that the Fed will raise rates by 0.25%, which would bring the Fed Funds rate to a range of 5.25% to 5.50%. The FOMC will not be releasing any economic forecasts, which means investors will have to comb the rate statement and Jerome Powell's follow-up press conference for clues about future rate policy.
The money markets remain confident that today's rate hike will be the last in the current tightening cycle, which is a more dovish stance than what we've been hearing from Powell & Co. The Fed has reiterated that although inflation is heading in the right direction, it remains too high and more work needs to be done to bring inflation back to the 2% target.
Powell does not want the markets to become complacent about inflation, and for this reason, he is unlikely to close the door on future rate hikes, even if he hints at a pause after today's expected increase. We can expect Powell to stick to the well-worn mantra of basing future rate decisions on economic data, in particular inflation and the strength of the labour market.
The ECB will announce its rate decision on Thursday, and like the Fed later today, it's a virtual certainty that the ECB will raise rates by 0.25%. What happens after that? The minutes of the June meeting, released earlier this month, signalled that a September hike is a strong possibility. Members noted that "monetary policy had still more ground to cover" and "the Governing Council could consider increasing interest rates beyond July, if necessary."
ECB policy makers will make their rate determinations based on economic data, but that doesn't mean the decision will be clear-cut. The eurozone economy is struggling, which would support a pause. At the same time, inflation dropped to 5.5% in June, which is almost triple the ECB's target of 2%. Inflation remains the ECB's number one priority, which could mean another rate hike in September unless there is a sharp drop in inflation or a serious deterioration in economic growth.
EUR/USD is testing resistance at 1.1063. The next resistance line is 1.1170
There is support at 1.1002 and 1.0895
EURUSD before FEDInterest rates will be announced by the FED today.
The news is at 21:00 Bulgarian time, and the press conference 30 minutes later.
The only thing certain before the news is that there will be big fluctuations.
Therefore, it is advisable to reduce the risk on active positions and not to hurry with new entries.
The main option where we will look for trades is on a break below 1.1000 after the news and pullback.
EURUSD correction continuesInterest rates from the FED and ECB are coming up this week.
This will determine the next move in EURUSD.
After reaching 1.1274, a correction was initiated, which we expect to continue until the news.
The next important support is at 1.1004.
We will be watching for a pullback from these levels and buying opportunities.
NQ1! Supply Demand Levels 6/28-6/29We broke from our bull flag/cup and handle on the 4HR timeframe. Looking for a possible continuation into 15268-15300 zone as BULLS target. We had our pull back this morning during NY session to retest the flag breakout. If we do another retest and back into the downtrend, BEARS target is 14925-14970 gap. Powell speech is on at 2:30am EST 6/29. This may help with further momentum like it did today for my intraday targets.
USD/CAD pares gains, Canadian inflation easesThe Canadian dollar spiked and gained 50 points after Canada released the May inflation report but has pared these gains. USD/CAD is unchanged at 1.3158.
Canada's inflation rate fell sharply in May to 3.4%, down from 4.4% in April. As expected, much of that decline was due to lower gasoline prices. Still, this is the lowest inflation rate since June 2021.The core rate, which is comprised of three indicators, fell to an average of 3.8% in May, down from 4.2% a month earlier.
The decline should please policy makers at the Bank of Canada, as inflation slowly but surely moves closer to the 2% target. The BoC cited the surprise upswing in inflation in April as one reason for its decision to hike rates earlier this month. With headline and core inflation falling in May, will that be enough to prevent another rate increase in July? Not so fast. The BoC has said its rate decisions will be data-dependent, and there is the GDP on Friday and employment next week, both of which will factor in the rate decision.
The US released a host of releases today, giving the markets plenty to digest. Durable Goods Orders jumped 1.7% in June, up from an upwardly revised 1.2% in May and crushing the consensus of -1%. The core rate rebounded with a 0.6% gain, up from -0.6% and above the consensus of -0.1%. Later today, the US publishes the Conference Board Consumer Confidence and New Home Sales.
Wednesday is a light day on the data calendar, with the Fed will in the spotlight. Fed Chair Jerome Powell will participate in a "policy panel" at the ECB Banking Forum in Sintra, Portugal, and investors will be looking for some insights into Fed rate policy. As well, the Fed releases its annual "stress tests" for major lenders, which assess the ability of lenders to survive a severe economic crisis. The stress tests will attract more attention than in previous years, due to the recent banking crisis which saw Silicon Valley Bank and two other banks collapse.
There is resistance at 1.3197 and 1.3254
1.3123 and 1.3066 are providing support
NQ1! Supply Demand Levels 6/25I am expecting more movement from Wednesday to Friday due to Powell speaking. Staying open minded to what may happen as we have been consolidating and getting tighter in range.
BULLS: 15264 as we hit this area multiple times, it is the double top of Jan/March 2022, and we can't seem to break over it now. We have a 3HR supply and 15M supply to break through. If we can get through this area, looking for a push to 15475 6/16 highs to retest by EOW or by next week.
BEARS: 14910 is the next 1HR S1 pivot target that I would like to see hit first. This would retrace some of the bull move from 6/12 and seems like a solid retracement. If we can break through this level, 14780-14800 looks like a solid 4HR demand area and where we consolidated before the big break to the upside. This seems like a promising bounce area.
These targets may seem out of reach if based on a slow volume week, but with news speeches, we may get the momentum to move 300-500 pts this week (.5-1% a day).
Link to chart: www.tradingview.com
SPY Outlook 06/26-30/2023Last week’s newsletter, we leaned bearish and the market made lower lows 4 out of the 4 trading sessions. With more fed speakers this week, PCE and Consumer Confidence data releases, and political turmoil in Russia, uncertainty can cause volatility in the market bringing down equities.
Technical Analysis:
AMEX:SPY is still due for a retest of the bull flag and daily channel breakout around 429.57. Should this area not hold, a .618 retrace would suggest we pullback to the gap below at 424-423. I do think we revisit that, and possibly test the daily fair value gap below 419.
Bulls will want price action to stay above the weekly 432.03 level. If this holds, we can target the gap above at 437.45-438.97.
Bears will want to try and and break below the red uptrend trendline. If we cannot hold 432.03, we can target the previous bull flag breakout at 429.61. If that doesn’t hold, we could target the 50% retracement where we bullflagged in the beginning of the month around 426.70. An even deeper target is the the daily gap below at 423.95-422.92. Should this gap fill, I would flip long.
Upside Targets: 436.00 → 437.45→ 438.97 → 441.21 → 443.90
Downside Targets: 432.03 → 429.61 → 428.78 → 426.70 → 425.14