SUMMARY

  • The LFO index, which reflects business confidence in Germany, is expected to come in at 89.4, similar to the previous month’s figure and indicating a medium level of confidence.
  • Net speculative positions in GBPUSD are expected to reach 52.1K contracts, indicating a predominance of long positions. Currently, GBP/USD is correcting -0.13% and trades at 1.2640.
  • The uptrend in USDJPY continues. On Friday, the currency closed +0.58% higher, trading at 159.82, very close to the possible BOJ intervention zone at 160.

 

Main events:

  • Singapore CPI
  • German LFO business confidence index
  • Eurogroup meeting
  • FOMC statements

EURUSD

Specifications

  • Leverage: 200
  • Units: 100,000
  • Margin requirement: USD$539
  • Example: 100 pips change in EURUSD price = USD1,000 potential PL.
  • Support 1: 1.0689
  • Support 2: 1.0687
  • Resistance 1: 1.0695
  • Resistance 2: 1.0699

Fundamental Analysis

  • The LFO index, which reflects business confidence in Germany, is expected to come in at 89.4, similar to the previous month’s figure and indicating an average level of confidence. In addition, the Eurogroup meeting continues, the main topics of which are the war in Ukraine, the reduction of interest rates in the eurozone and the economic outlook.
  • Today we will have statements from Nagel, as President of the Bundesbank, who will talk about the German and eurozone economy, following the first interest rate cut by the ECB. We will also have statements from the ECB leadership.
  • In the United States, FOMC officials are expected to continue to assess the behavior of inflation in the country, in order to start cutting interest rates.
  • EURUSD is below the resistance line. The RSI is at 44.08, in the neutral zone, which could lead to a further decline in the price of the currency.

GBPUSD

Specifications

  • Leverage: 200
  • Units: 100,000
  • Margin requirement: USD$686
  • Example: 100 pips change in GBPUSD price = USD1,000 potential PL.
  • Support 1: 1.2645
  • Support 2: 1.2642
  • Resistance 1: 1.2651
  • Resistance 2: 1.2654

Fundamental Analysis

  • Net speculative positions in GBP/USD are expected to reach 52.1K contracts, indicating a predominance of long positions. GBP/USD is currently correcting -0.13% and trades at 1.2640.
  • According to the BoE meeting minutes, the Bank is close to cutting interest rates. If the pre-August inflation report shows a downward trend, it is very likely that the BoE will start cutting rates at the August meeting.
  • Stock market analysts are assessing whether the BoE will be able to make three rate cuts between now and 2024. For the time being, the pound continues to weaken against the dollar.
  • The currency is below the resistance zone. The RSI is at 42.57, in the neutral zone, so the price could recover a few more points. The moving averages point to a massive sell-off.
  • The UK services PMI came in at 51.2, in the expansion zone, but below the 53 expected by the market.

USDJPY

Specifications

  • Leverage: 200
  • Units: 100,000
  • Margin requirement: USD$499
  • Example: 100 pips change in USDJPY price = USD1,000 potential PL.
  • Support 1: 159,55
  • Support 2: 159,50
  • Resistance 1: 159,63
  • Resistance 2: 159,66

Fundamental Analysis

  • The USDJPY uptrend continues. On Friday, the currency closed +0.58% higher, trading at 159.82, very close to the possible BOJ intervention zone of 160.
  • The dollar continues to strengthen on the back of rising US Treasury yields. Fed and FOMC leaders maintain a rigid stance on cutting interest rates, which depends solely on inflation reaching the 2% annual target level.
  • According to analysts, the likelihood of the Fed making two rate cuts in 2024, at the November and December meetings, remains medium.
  • Speculative positions on the yen are expected to fall to -138,000 contracts, indicating a higher volume of short positions, a sign that the market is beginning to anticipate an intervention by the Bank of Japan. In this scenario, the support to watch is at 158.68.

SOURCES

  • Thomson Reuters
  • Market watch
  • Bloomberg
  • Tradingview

 

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