Weekly Technical Analysis For August 13th to 17th, 2018
EUR/USD: The US dollar has extended gains last week and hit a 13-month high versus all major currencies. Strong USD is dominated in the market as emerging market turmoil stokes haven demand. US tensions with Iran, Turkey, and Russia remain unresolved and trade war worries continue to escalate.
If we look at last week's US inflation number; in the 12 months through July, the CPI increased 2.9%, matching the increase in June. The underlying trend continued to strengthen, pointing to a steady increase in inflation pressures that keeps the Federal Reserve on track to gradually raise interest rates.
Looking ahead; among next week's US data; Building Permits, Housing Starts, NY Empire State and Philadelphia Fed Manufacturing Index as well as Retail Sales will be closely followed by traders.
The US retail sales are expected to come out at 0.2%, lower than the June number's 0.5%. However, Core Retail Sales excluding auto and gas are expected to stay at 0.4% m/m. A lower than expected reading should be taken as negative for the greenback.
Additionally, eurozone Consumer Inflation and GDP numbers will be significant this week. The 2nd quarter GDP is expected to come out at 0.3% q-o-q growth as the same as the previous number. This would lead to an annual realization of 2.3%. On the year-on-year basis, the eurozone CPI is expected to remain stable at 2.1%. A higher than expected reading will support the single currency.
The Euro continued to lose traction and the EUR/USD hit its weakest level since July 2017. In the event that the fall continues, we will see 1.1367 as the daily support level. Moreover, in order for the bearish action to gain more momentum, it needs to break down 1.1367 and stay below that level on a daily basis. Otherwise, we will see resistance levels at 1.1446 and 1.1531
Support: 1.1367 - 1.1262 - 1.1188
Resistance: 1.1446 - 1.1531 – 1.1607
GBP/USD: The Sterling dropped to its lowest in a year amid speculation Britain will leave the European Union without an agreement regarding its future relationship with Brussels. However, the good news is that the UK economy saw growth bounce back in the second quarter, after a weak start to the year, official preliminary data showed on Friday. UK economic growth expanded 1.3% in the second quarter, in line with estimates.
In the upcoming week, The UK CPI Inflation and Unemployment Rate will be important releases for Sterling. The UK CPI inflation is expected to rise at 2.5% year-on-year, while core inflation is forecast to stay at 1.9%
In the event that the downward movement continues, we will face the 1.2712 major support level. In order for the fall to gain more momentum, it needs to break down 1.2712. Otherwise, we will see 1.2844 as a resistance level.
Support: 1.2712 – 1.2624 – 1.2494
Resistance: 1.2844 – 1.2961 - 1.3050
USD/JPY: The USD/JPY pair closed last week just above 110.86 key level. As long as the price stays above 110.86 on a four hourly basis, we will follow the daily resistance level of 111.66. On the other hand, if the price drops below 110.86, the support level can be found at 109.90
Support: 110.86 - 109.90 - 109.35
Resistance: 111.66 - 112.46 - 113.63
Gold: The Gold price tightened last week between 1215 and 1207. In order for the selling pressure to gain more momentum, it needs to break down 1207 and stay below that level on a daily basis. At this point, the next support level can be found at 1197. Otherwise, we will follow 1215 and 1225 as resistance levels.
Support: 1207 – 1197 - 1177
Resistance: 1215 - 1225 – 1235