IC Markets Europe Fundamental Forecast | 16 August 2022

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What happened across the Asia session?

Most currencies continued with the current consolidation with price action indicating potential breakouts to the downside.

What does it mean for Europe and US Sessions?

Look for the DXY to trade higher towards the 107 price level to take the EURUSD and GBPUSD lower from the current consolidation area.

The Dollar Index (DXY)

Key news events today

No major news events. 

What can we expect from DXY today?

The DXY climbed steadily higher towards the key resistance area of 106.50. With no major news events for the US, the DXY could retrace briefly before trading higher again. Look for the price to bounce off the 106 area, and if the price closes above 106.50, the next key resistance area is at 107.30.

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

Medium Bullish

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

The overnight correction in Gold brought the price lower towards the 1770 support area. With Gold currently trading at 1780, look for a potential rebound towards the 1790 price area before a possible retest of the support level again. If the price breaks below 1770, the next key support area is at 1750. 

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

EUR ZEW Economic Sentiment 

What can we expect from EUR today?

Overnight, the EURUSD continued to trade lower, beyond the 1.019 support level. Currently trading at the 1.01550 level, further upside could be resisted by the 1.019 price level. Further dovish sentiment could be expected if the ZEW economic sentiment is released as expected (Forecast: -52.0 Previous: -51.1). If the price closes below 1.015, further downside towards the next key support level of 1.010 can be expected.

Central Bank Notes:

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

 

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No Major News Events 

What can we expect from CHF today?

The USDCHF trades higher above the 0.9450 price area as the DXY continues to strengthen above the 106.50 price level. If the price closes strongly above 0.9475, the USDCHF could continue climbing towards the next key resistance area of 0.9550.

 

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Pound (GBP)

Key news events today

GBP Claimant Count
GBP Unemployment
GBP Average Earnings Index 3m/y 

What can we expect from GBP today?

The GBPUSD continues to trade lower as it breaks below the 1.2055 support level. Employment data from the UK showed mixed results as claimant count change was less than expected with the average earnings index higher at 5.1% (Forecast: 4.5%). look for the GBPUSD to trade below the 1.20 level to signal further downside potential, towards the 1.19 key support level.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish 

The Canadian Dollar (CAD)

Key news events today

CAD CPI m/m
CAD Trimmed CPI y/y 

What can we expect from CAD today?

The USDCAD was driven higher by the strength of the DXY and currently trades at the 1.29 resistance level after bouncing off the 1.28 support area. Anticipation for the Canadian CPI m/m (Forecast: 0.1% Previous: 0.7%) and Trimmed CPI (Forecast: 5.4% Previous: 5.5%) likely to indicate a slowdown and possible slight decline in inflation, the USDCAD could find some stability. Although the USDCAD currently trades at the 1.29 level, look for the price to close above 1.2930 to signal a continuation of the uptrend towards the 1.3030 key resistance 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?

Overnight, Brent dropped significantly towards the 95 support level before bouncing sharply back towards the interim resistance of 97. The volatility of Brent is likely to remain between the price range of 95 and 97. Similarly, the WTI traded lower to test the 87.40 price level. With the price currently at 89.50, WTI could continue to trade between the range of 88 and 92. 

Next 24 Hours Bias
Weak Bearish