Market Focus: Dollar Gains, Oil Prices Slide, and Euro Under Pressure

Market Focus: The dollar gains strength, oil prices slide under $77, while the Euro faces selling pressure.

Asia Session Overview

In the Asia session, the U.S. dollar demonstrated robust demand, propelling the Dollar Index (DXY) higher towards 104.70. The index’s immediate resistance level is around 105.15. In contrast, crude oil prices experienced significant selling pressure, with WTI crude approaching a critical support level near $76.50 per barrel.

Impact on Europe & U.S. Sessions

Euro Area: Germany’s inflation rate has notably eased over the past ten months, with headline and core CPI slowing to 2.2% and 2.9%, respectively, year-over-year in June. Should this trend continue throughout the Euro Area, the Euro may face selling pressures today.

Dollar Index (DXY): Key news events to watch include the JOLTS Job Openings report and the C.B. Consumer Confidence Index, both scheduled for 2:00 pm GMT. Recent trends indicate a significant moderation in U.S. job vacancies since mid-2022, with May showing 8.14 million openings and June expected to decrease slightly to 8.02 million. Additionally, the Conference Board Consumer Confidence Index has shown some weakness, with July’s estimate suggesting a further decline. Should job vacancies fall more than expected and consumer confidence weaken, this could cap the recent gains in the DXY.

Central Bank Notes: The Federal Reserve maintained its federal funds rate target range at 5.25% to 5.50% for the seventh consecutive meeting. The Committee remains focused on achieving maximum employment and a 2% inflation rate while continuing to assess economic data and risks carefully. Starting in June, the Fed plans to slowly reduce its Treasury securities and agency debt holdings.

Gold (XAU): The JOLTS report and Consumer Confidence Index will also be critical for gold. If job vacancies decline more than anticipated and consumer confidence continues to deteriorate, this could dampen recent gains in the DXY and support gold prices.

Market Focus: Dollar Gains, Oil Prices Slide, and Euro Under Pressure

Australian Dollar (AUD): The Aussie stabilized around 0.6550 after recent declines. Overhead pressure remains, with today’s support at 0.6465 and resistance at 0.6580. Moreover, the Reserve Bank of Australia (RBA) has kept the cash rate target unchanged at 4.35%, reflecting a cautious approach amid moderate inflation and economic activity.

New Zealand Dollar (NZD): The Kiwi Dollar experienced significant weakness, falling nearly 4.1% over the past three weeks but stabilized around 0.5880. With ongoing downside risks, today’s support is at 0.5800 and resistance at 0.5980. The Reserve Bank of New Zealand (RBNZ) has maintained its OCR at 5.50% while focusing on reducing domestic demand and inflation pressures.

Japanese Yen (JPY): The Yen has recently strengthened significantly, causing USD/JPY to fall over 4.1%. It found support around 153 and edged towards 154 in the Asia session. Today’s support is at 152.00, and resistance is at 154.00. The Bank of Japan continues its QQE policy with Yield Curve Control while inflation expectations remain steady.

Euro (EUR): With Germany’s inflation easing significantly, the Euro may face selling pressure today. The ECB’s recent decision to keep key interest rates unchanged reflects ongoing concerns about inflation, with rates held steady at 4.25%, 4.50%, and 3.75%, respectively. The ECB will hold its next meeting on September 12, 2024.

Swiss Franc (CHF): Stronger demand for the dollar has pushed USD/CHF above 0.8850, with the pair edging towards 0.8870. Today’s support is also at 0.8800, and resistance is at 0.8920. The Swiss National Bank (SNB) has recently eased monetary policy, lowering its key policy rate to 1.25% and forecasting moderate economic growth.

Pound Sterling (GBP): The Pound faced downward pressure as the greenback strengthened, pushing Cable to a low of 1.2807 before rebounding above 1.2850. Current support is at 1.2776, and resistance is at 1.2885. The Bank of England held its rate at 5.25%, with recent inflation falling to 2.0% in May and expected to rise slightly later.

Canadian Dollar (CAD): Robust dollar demand lifted USD/CAD above 1.3850, with the pair climbing towards 1.3870. Support is at 1.3780, and resistance is at 1.3880. The Bank of Canada also recently reduced its target overnight rate to 4.50% and forecasts a gradual easing of inflation.

Oil: Crude oil prices dropped nearly 2.1% after Israeli officials expressed intentions to avoid a broader Middle East conflict, with WTI falling below $77 and nearing $76.50 per barrel. Despite higher-than-expected drawdowns in U.S. oil inventories, the commodity faces bearish pressure.

Subsequent 24 Hours Bias:

• DXY: Medium Bullish
• Gold (XAU): Medium Bearish
• AUD: Weak Bullish
• NZD: Weak Bullish
• JPY: Weak Bullish
• EUR: Medium Bearish
• CHF: Medium Bullish
• GBP: Medium Bearish
• CAD: Medium Bullish
• Oil: Medium Bearish

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