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FX Analysis: The Euro, Cable And The Aussie

Published 08/21/2017, 06:06 AM
Updated 07/09/2023, 06:31 AM

EUR/USD

Forex Analysis EUR/USD; August 21, 2017 | sgtmarkets.com

Fed’s policymakers agreed a fall in longer-term inflation expectations would be undesirable. They disagree on whether inflation expectations were well-anchored. Most of them expected inflation to pick up in next few years, but many saw rising chances of inflation remaining below target (2%).

Another hit to U.S. administration following an exodus from and eventual disbanding of U.S. President Donald Trump's manufacturing council and strategic policy forum. Turbulence surrounding U.S. President Donald Trump’s administration following the backlash over his statements on the white supremacist rally in Charlottesville.

Eurozone CPI data came as expected while last German GDP (Preliminary release) was worse than expected.

U.S. Core Inflation figures ticked down again (for the fourth time in a row). Also, U.S. PPI (another Inflation data) worse than expected.

On the other hand, the ECB's big dilemma is that while the euro zone economy has grown for 17th straight quarters and employment is rising faster than expected, wage growth remains anaemic, keeping a lid on consumer prices. Economists are now trying to figure out whether wages are showing an unexpectedly delayed response or whether wage setting dynamics may have fundamentally changed in the post-crisis, globalized economy.

As we wrote previously, we expected first a re-test back to 1.1756, and it happened both the 7th and the 15th of August. Now eyes on the continuation of this retracement down to 1.1655 (First important Support, tested first time on the 17th).

Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:

Weekly Trend: Overbought
1st Resistance: 1.1756
2nd Resistance: 1.1856
1st Support: 1.1655
2nd Support: 1.1590


GBP/USD

Forex Analysis GBP/USD; August 21, 2017 | sgtmarkets.com

Growing expectations that the Bank of England will keep interest rates on hold in the coming months amid concerns over the economic fallout from Brexit. UK Retail Sales better than expected and UK Job Market better than expected too: UK unemployment falls to lowest since 1975.

On the other hand, the greenback fell following the announcement from Trump via Twitter about the eventual disbanding of U.S. President Donald Trump's manufacturing council and strategic policy forum.

Furthermore, Federal Reserve policymakers were split on the outlook for future rate hikes, as Fed members struggled to balance concerns about the slowdown in inflation with the growth in the labor market.

As we expected, the break below 1.2978 led GBP/USD straight down to our Support 1.2830. We still are bearish until 1.27 area, but a consolidation around 1.283 is occurring.

Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2001:

Weekly Trend: Bearish
1st Resistance: 1.2978
2nd Resistance: 1.3099
1st Support: 1.2830
2nd Support: 1.2705


AUD/USD

Forex Analysis AUD/USD

Last Australia Employment Change was seen better than expected but Full Employment Change was negative. The Reserve Bank of Australia minutes painted a possible stronger than expected growth spurt in the coming year in an otherwise light data day with North Korea a bit toned down on firing missiles at or near U.S. territory Guam.

Market players have recently registered OPEC’s difficulties in holding to their production cut agreement as those members exempt from the reduction accord such as Libya or Nigeria continue to increase output. Recent data on overall compliance hit its lowest percentage this year.

The Reserve Bank of New Zealand held its official cash rate at a record low 1.75% as expected and said that it expects a neutral view to persist with inflation projections well anchored around 2%. Australia Retail Sales were better than expected. Australia Trade Balance was again on the downbeat but building approvals for June jumped 10.9%, far outpacing a 1.5% gain seen month-on-month.

Turbulence surrounding U.S. President Donald Trump’s administration following the backlash over his statements on the white supremacist rally in Charlottesville. Market players see the recent political turmoil as an obstacle to Trump being able to follow through on infrastructure spending and tax reforms.

As we wrote previously, breakout of 0.7916, important level, led down to 0.783 area, our first target. We are still bearish until 0.774 area, but first 0.783 has to be successfully violated again.

Our special Fibo Retracements are confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:

Weekly Trend: Overbought
1st Resistance: 0.7916
2nd Resistance: 0.8034
1st Support: 0.7828
2nd Support: 0.7735

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