Focus on Key Price Levels

The USD is gaining strength after S&P Global and existing home sales data came in better than expected. This has lowered the chance of a September rate cut to 75%, down from a full 100% last week. Fed Chair Powell is scheduled to speak tomorrow, and the September data will be crucial before the mid-month rate decision. Despite calls for rate cuts, weak job numbers make a full cut seem unlikely. EURUSD reached a new low, entering the swing area of 1.16098 to 1.16309. The 50% retracement level at 1.16098 is a significant target on the downside. Resistance appeared at 1.1661, halting further gains. If the price drops below 1.16098, it would indicate stronger selling pressure, suggesting a deeper retracement ahead. For GBPUSD, attention is on the 100-day moving average near 1.34078. Earlier, it reached 1.3436 before bouncing back above the 50% midpoint at 1.3463, peaking at 1.3481 before falling again. Current momentum is shaped by these key price levels. USDJPY saw a strong recovery today, moving back above 147.50. This momentum pushed into the resistance area of 147.95 to 148.166. If it breaks above 148.166, it would indicate a bullish trend, opening up potential for further gains in the upcoming sessions.

Signals and Strategies

The strong US dollar is backed by solid economic data, which should influence our trading strategies. The S&P Global Composite PMI for August hit 51.5, exceeding expectations, while July’s existing home sales were at an annualized rate of 4.25 million, also better than predicted. The CME FedWatch Tool now indicates a 75% chance of a September Fed rate cut—down from certainty last week. We shouldn’t expect Fed Chair Powell to announce a definitive rate cut in his speech tomorrow. Although he will refer to the weaker July jobs report, which showed only 155,000 new jobs, he is likely to emphasize that future decisions will depend on incoming data before the mid-September meeting. This cautious approach mirrors the Fed’s slow easing cycle in 2019 amidst mixed economic signals. For EURUSD, the trend appears to be downward, especially after recent data showed a 0.5% drop in German industrial production, putting pressure on the Euro. Traders should see the 1.16098 level as a crucial point. If the price sustains a break below this level, it may trigger buying put options to benefit from a potential drop toward the August 1 lows. The outlook for GBPUSD is also negative as it approaches its 100-day moving average at around 1.3407. Recent UK data has been discouraging, with persistently high inflation and declining retail sales creating tough economic conditions. If it fails to maintain this key moving average, it would indicate increasing control by sellers, suggesting bearish positions are advisable. On the other hand, USDJPY continues to show strength due to the widening interest rate gap between the US and Japan, where the Bank of Japan remains committed to its easy monetary policy. The key question is whether the pair can break and hold above the 148.166 resistance area, which has been tested four times in the last seven sessions. A decisive move above this level would signal a good opportunity to consider buying call options, anticipating a rise toward higher targets. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now