Forex Daily Analyses

In an alternative scenario, there will be a rebound from these support levels, and a breakdown of the important resistance levels of 1742.00 (EMA200 on the 1-hour chart), 1746.00 (EMA144 on the weekly chart) will become a signal for the resumption of long positions. Breakdown of the key resistance level 1814.00 (EМА200 on the daily chart) will confirm the scenario of the resumption of the long-term bullish trend of XAU/USD. Support levels: 1700.00, 1690.00, 1682.00 Resistance levels: 1742.00, 1746.00, 1759.00, 1768.00, 1800.00, 1814.00, 1832.00, 1875.00

The tough rhetoric of the head of the Fed Powell regarding the prospects for monetary policy of the American central bank gave the dollar a new bullish momentum. Speaking at the opening of the Jackson Hole forum last Friday, he reaffirmed that the Fed's priority goal is to fight high inflation, and "the Fed should continue like this until the job is done." At the same time, "restoring price stability will take some time and will require the decisive use of central bank instruments." "We need to raise the discount rate to just above 4% by early next year and keep it there," and "containment of inflation will be painful in the short term; it will take a lot of stamina," Cleveland Federal Reserve Bank President and FOMC member Loretta Mester said today. "It will take several years to get back to 2% inflation," John Williams, another FOMC member and head of the New York Fed, said yesterday. In his opinion, inflation is still too high, financial conditions have tightened quite a lot since the beginning of the year, and this tightening is in line with the Fed's policy direction.

We are analyzing Fx HFT algorithms this morning and note that the NZDJPY pair is moving down and near the light HFT buying pressure zone that is located at 84.8 and below.

Today the GBP/USD reached a new local low of 1.1621. As the dollar continues to strengthen in the foreign exchange market, the pound is rapidly falling down. As follows from today's report from the Bank of England, the volume of mortgage lending rose in July by 5.05 billion pounds, consumer lending - by 1.425 billion pounds. At the same time, net lending to individuals rose by 6.5 billion pounds, which suggests that citizens are forced to increase borrowing in order to maintain their usual level of consumption - with inflation continuing to rise, consumer prices are also skyrocketing. Accordingly, the pound is nominally depreciating.

Market participants are already taking into account the further increase in the Fed's interest rates in prices. Nevertheless, the DXY dollar index cannot confidently gain a foothold in the zone above 109.00. Something is still worrying investors. This is probably a huge public debt of the United States, which is very close to the mark of 30 trillion. dollars, or increased risks of recession in the US. As follows from the second estimate released last week, US GDP contracted by -0.6% in the 2nd quarter of 2022, after falling by -0.9% in the 1st quarter. Although the US government does its best to avoid this word, but by definition, a recession is a relatively moderate, non-critical decline in production or a slowdown in economic growth, where the decline in production is characterized by zero growth in gross national product (stagnation) or its fall for more than six months. If so, tightening monetary policy by raising interest rates in a recession is suicidal. It is possible that before the end of this year, the Fed will again have to move from tightening to easing its monetary policy. Moreover, during the primary elections to the US Congress (in early November), Biden and the Democrats will have to somehow explain the sharp deterioration in the economic situation in the United States.

We are analyzing Fx HFT algorithms this morning and note that the USDJPY pair is consolidating following a strong move higher and is now approaching the light HFT buying pressure zone that is located at 137.82 and below.

This month, the pair hit the lowest level since January 2003, dropping to 0.9900, and the pressure on it remains. Probably, the matter will not be limited to a local minimum of 0.9900, and the price will go lower. The first target of the decline is the level 0.9840, through which the lower border of the descending channel on the weekly chart passes. Support levels: 0.9915, 0.9900, 0.9840, 0.9800 Resistance levels: 1.0000, 1.0018, 1.0105, 1.0160, 1.0220, 1.0300, 1.0355, 1.0575, 1.0735, 1.0800

Powell did not disappoint dollar buyers, promising that "restoring price stability will take some time and will require the decisive use of central bank instruments." And this means that the Fed's ultra-tight cycle of monetary policy tightening will continue for the time being, perhaps even at about the same pace. Thus, the trend of further strengthening of the dollar remains. The DXY dollar index opened the new week with a gap up and a new 20-year record at 109.44, having received a bullish momentum last Friday, starting to strengthen immediately after the start of the Fed Chairman Powell's speech. He confirmed that the priority goal for the Fed is to fight high inflation.

We are analyzing Fx HFT algorithms this morning and note that the EURGBP pair has reached the light HFT selling pressure zone that is located at 0.8518 and above.