During the Asia session, the yen surged, and oil prices rebounded. Markets reacted in mixed ways, with USD/JPY rising while the DXY remained steady.
What Happened in the Asia Session?
Japan’s markets were closed today for Mountain Day, resulting in potentially thinner trading conditions this morning. The yen has significantly surged over the past five weeks, with USD/JPY reversing from a high of 161.80 in mid-July to as low as 141.69 last Monday. This currency pair stabilized around 144.20 last Tuesday but has since climbed closer to the 148 level. However, demand for the yen appears to be waning as USD/JPY edged above 147 by midday in Asia.
What Does It Mean for the Europe & U.S. Sessions?
The dollar index (DXY) was hovering above 103 this morning. With no major news events scheduled for the European and U.S. trading hours, markets might experience relative calm today. The greenback has seen a slight uptick in demand since last Tuesday. However, it continues to face overhead pressures, particularly with upcoming U.S. inflation data releases scheduled for Tuesday and Wednesday.
Oil prices remain elevated, buoyed by a strong rebound last Wednesday. This morning, WTI oil climbed toward $78 per barrel. Moreover, Geopolitical tensions in the Middle East keep crude markets on edge and serve as a significant price tailwind.
The Dollar Index (DXY)
Key News Events Today: None.
What Can We Expect from DXY Today?
Following a drop to 102.15, the DXY rebounded to close at 103.15, remaining relatively unchanged for the week. Recent weaker-than-expected U.S. macroeconomic data has contributed to a 1.1% loss in the DXY over this period. As markets opened today, the DXY was trading above 103. Key support and resistance levels for today are:
- Support: 102.30
- Resistance: 103.65
Central Bank Notes:
- Therefore, the Federal Reserve’s target range for the Federal Funds Rate remains unchanged at 5.25% to 5.50% for the eighth consecutive meeting.
- The Committee monitors economic activity and inflation, emphasizing that it anticipates reducing the target range once inflation shows a more sustainable move toward 2%.
- The Fed will keep its monthly redemption caps on Treasury and agency securities and adjust the pace of its balance sheet reduction accordingly.
- Next meeting: 17-18 September 2024.
Next 24 Hours Bias: Weak Bearish
Gold (XAU)
Key News Events Today: None.
What Can We Expect from Gold Today?
Gold prices have been range-bound between approximately $2,360/oz and $2,470/oz since mid-July, closing at $2,431.07/oz last Friday. Also, this morning, gold opened at $2,428.48/oz and edged lower. Key support and resistance levels for today are:
- Support: $2,380/oz
- Resistance: $2,470/oz
Next 24 Hours Bias: Weak, Bullish
The Australian Dollar (AUD)
Key News Events Today: None.
What Can We Expect from AUD Today?
Initially, the Australian dollar faced a three-week decline. However, it rebounded and rose nearly 1%, closing at 0.6572 on Friday. This morning, it opened slightly lower at 0.6565 but climbed towards 0.6600. Key support and resistance levels for today are:
- Support: 0.6440
- Resistance: 0.6635
Central Bank Notes:
- In addition, the RBA kept the cash rate target at 4.35%, marking the sixth pause in its monetary policy.
- Moreover, inflation remains above the target range, with projections for it to return to the target range of 2-3% by late 2025.
- The central bank will continue to monitor economic activity and inflationary pressures.
- Next meeting: 5 November 2024.
Next 24 Hours Bias: Medium Bullish
Yen Surge and Oil Rebound Shape the Asian Session
The Kiwi Dollar (NZD)
Key News Events Today: None.
What Can We Expect from NZD Today?
The Kiwi dollar rose for the second consecutive week, hitting a high of 0.6034 before closing at 0.5999. This morning, it opened slightly lower at 0.5995 but climbed above 0.6000. Key support and resistance levels for today are:
- Support: 0.5915
- Resistance: 0.6090
Central Bank Notes:
- Furthermore, the Monetary Policy Committee has kept the OCR unchanged at 5.50% for the eighth consecutive meeting.”
- Inflation is also expected to reach the 1-3% target range in the second half 2024.
- The Committee is cautious about economic activity and pricing pressures.
- Next meeting: 14 August 2024.
Next 24 Hours Bias: Medium Bullish
The Japanese Yen (JPY)
Key News Events Today: Mountain Day (Bank Holiday).
What Can We Expect from JPY Today?
With Japan’s markets closed for Mountain Day, trading could be lighter than usual. The yen has strengthened considerably over the past five weeks, but with demand waning, USD/JPY could edge higher as the day progresses. Key support and resistance levels for today are:
- Support: 142.20
- Resistance: 150.80
Central Bank Notes:
- The Bank of Japan maintains the uncollateralized overnight call rate of around 0.25% while reducing JGB purchases.
- Projections also show inflation reaching around 2.5% for fiscal 2024 and 2% for fiscal 2025 and 2026.
- Next meeting: 20 September 2024.
Next 24 Hours Bias: Weak, Bullish
The Euro (EUR)
Key News Events Today: None.
What Can We Expect from EUR Today?
The Euro opened at 1.0915 this morning and has steadily risen since then. As a result, the key support and resistance levels for today are:
- Support: 1.0865
- Resistance: 1.0990
Central Bank Notes:
- The ECB’s key interest rates remain unchanged following a 25 basis points cut in June.
- The ECB aims to maintain restrictive financing conditions while addressing high domestic price pressures.
- Next meeting: 12 September 2024.
Next 24 Hours Bias: Weak, Bullish
The Swiss Franc (CHF)
Key News Events Today: None.
What Can We Expect from CHF Today?
After a five-week decline, the Swiss Franc saw demand wane. Consequently, USD/CHF reversed from a low of 0.8432 and closed at 0.8651 on Friday. Furthermore, this morning, it was trading around 0.8650. Key support and resistance levels for today are:
- Support: 0.8560
- Resistance: 0.8730
Central Bank Notes:
- Furthermore, the SNB lowered its key policy rate to 1.25% in June.
- Inflation remains below target but is projected to stay moderate, with GDP growth around 1% in 2024.
- Next meeting: 26 September 2024.
Next 24 Hours Bias: Weak Bearish
The Pound (GBP)
Key News Events Today: None.
What Can We Expect from GBP Today?
Despite a recent decline in greenback demand, the Pound has lost ground, marking its fourth consecutive week. It closed at 1.2757 on Friday and increased at 1.2752 this morning. Key support and resistance levels for today are:
- Support: 1.2675
- Resistance: 1.2810
Central Bank Notes:
- The Bank of England reduced its Official Bank Rate to 5.00% on 1 August 2024.
- However, CPI inflation can rise to around 2.75% in the latter half of the year.
- Next meeting: 19 September 2024.
Next 24 Hours Bias: Weak, Bullish
The Canadian Dollar (CAD)
Key News Events Today: None.
What Can We Expect from CAD Today?
Canada’s labor market report, released last week, revealed a second consecutive month of employment decline. Despite this, the Loonie remained strong, with USD/CAD stabilizing around 1.3729. Key support and resistance levels for today are:
- Support: 1.3700
- Resistance: 1.3800
Central Bank Notes:
- The Bank of Canada reduced its overnight rate to 4.50% while normalizing its balance sheet.
- Economic growth is forecasted to increase during the latter half of 2024 and into 2025.
- Next meeting: 4 September 2024.
Next 24 Hours Bias: Weak Bearish
Oil
Key News Events Today: None.
What Can We Expect from Oil Today?
Crude oil prices rebounded from recent lows, with WTI oil gaining nearly 4.8% to close at $77.48 per barrel on Friday. Subsequently, it opened at $77.38 this morning and gradually edged toward $77.50. Key support and resistance levels for today are:
- Support: 75.00
- Resistance: 79.65
Next 24 Hours Bias: Medium Bullish
Stay Updated with the Latest Market News. Visit our YouTube Channel for the Latest Forex Analysis.
Leave a comment