IC Markets Europe Fundamental Forecast | 08 August 2022

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What happened across the Asia session?

Most currencies traded in consolidation through the Asia session, with the AUDUSD trading higher towards the near-term resistance level.

What does it mean for Europe and US Sessions?

No major news events are scheduled for the major currencies, which could lead to prices continuing to retrace from Friday’s move. Look for a possible resumption of the trend following the completion of the current retracements.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

The DXY climbed off the 105.50 support level to reach the near-term resistance of 106.50 following the release of the US employment data on Friday. Look for the DXY to consolidate around the 106.50 support level, and possibly test lower briefly before testing higher towards the 107 resistance area. 

Central Bank Notes:

  • Federal Reserve hiked rates by 75bps taking interest rates to 2.50%
  • Next meeting on 22 September 2022
  • Balance Sheet reduction plan to continue at $60b (treasuries) and $35b (MBS) over a three-month timeframe

 

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Gold prices corrected sharply lower from the 1794 resistance level to test the 1770 support level on Friday. With Gold currently trading at 1775 and as it continues to trade inversely to the DXY, look for the price to consolidate at this support area. If the price continues to trade lower, look for price action to show possible rejection at this support to signal another climb towards the near-term resistance area of 1800. 

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

The EURUSD traded lower following the US NFP data release, with the price testing near term support of 1.01555. Although the EURUSD retraced higher at the end of the trading session last week, the price still remains under the 1.019 resistance level. Look for the EURUSD to trade lower, and if the DXY strengthens further, confirmation of a sustained move to the downside move is signaled if the EURUSD closes below the 1.012 support level.

Central Bank Notes:

  • Raised rate by 50bps 
  • Next meeting on 8 September 2022

 

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No Major News Events 

What can we expect from CHF today?

Overnight the USDCHF traded lower to reach the 0.9540 price level. However, as the price failed to break the support level, look for some upward correction from the current downtrend. If the price is able to trade above the 0.9550 price level, it could climb towards the near-term resistance level of 0.97 resistance level. 

The USDCHF bounced off the 0.9540 support level to climb higher towards the key resistance area of 0.9650, due to the DXY strength. Look for the price to break below the 0.96 support level to signal a deeper retrace towards the 0.9570 interim price level. 

Central Bank Notes:

  • Surprise rate hike by 50bps to -0.25%
  • Next meeting on 22 September 2022

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No Major News Events

What can we expect from GBP today?

On Friday, the GBPUSD traded lower but found support at the 1.2055 level. As price retraces, look for the GBPUSD to consolidate around the support level before a potential break to the downside. If the price closes strongly below 1.0255, the GBPUSD could trade lower towards the next support level of 1.1920. Alternatively, if the support level holds, the GBPUSD could correct strongly to the upside to retest the 1.22 resistance level. 

Central Bank Notes:

  • Interest rate currently at 1.75%
  • Peak inflation revised to more than 15% in 2023. 
  • Next meeting on 15 September 2022

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No Major News Events

What can we expect from CAD today?

The USDCAD traded significantly higher as it broke above the 1.29 resistance level to reach 1.2985. This move was due to weaker employment data for Canada and a surprisingly strong US NFP release. As the price retraces back towards the 1.29 level, look for a potential break of the support level to signal further downside, back towards the 1.28 price level.

Central Bank Notes:

  • Increased rates by 100bps, taking interest rates to 2.50% 
  • Indicated further rate increases likely.
  • Next meeting on 7 September 2022

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

During the Friday trading session, energy prices traded in consolidation at the key support level, with prices currently at 99 for Brent and 91 for WTI. Look for further retrace on Brent and WTI before a potential resumption of the downtrend, with 90 and 85 as the next key support levels for Brent and WTI respectively.

Next 24 Hours Bias

Medium Bearish