All eyes on Fed Chair Powell

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should be well supported ahead of 1.2500.

• R2 1.3143 – 14 July/2023 high – Strong
• R1 1.3131 – 22 August/2024 high – Medium
• S1 1.2974 – 20 August low – Medium
• S2 1.2848 – 16 August low – Medium

GBPUSD – fundamental overview

UK PMIs were strong and CBI total orders were less bad which helped to drive more demand for the surging Pound. Sights are now set on a break of the 2023 high. Key standouts on Friday’s calendar come from Canada retail sales, US new home sales, and a number of noteworthy central bank speak highlighted by a Fed Chair Powell appearance.

USDJPY – technical overview

The market has entered a period of correction after extending the uptrend to a multi-year high through 160.00. Critical support comes in around 140.00, with only a monthly close below the barrier to compromise the bullish outlook. A higher low is ideally sought out above 140.00 in favor of a bullish continuation.

• R2 149.40 – 15 August high – Strong
• R1 148.06 – 19 August high – Strong
• S1 144.45 – 21 August low – Medium
• S2 143.62 – 6 August low – Medium

USDJPY – fundamental overview

Stronger Japan PMI data was shrugged off and mostly as expected inflation data ignored, with the Yen selling off as yield differentials came back front and center. BOJ Ueda was out on the wires talking monetary policy but didn't really offer up any surprises. The central bank could hike rates more if necessary but won't be looking to do anything more any time soon. Key standouts on Friday’s calendar come from Canada retail sales, US new home sales, and a number of noteworthy central bank speak highlighted by a Fed Chair Powell appearance.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6799– 11 July high – Strong
• R2 0.6762 – 21 August high– Medium
• S1 0.6637 – 19 August low– Medium
• S2 0.6563 – 15 August low – Strong

AUDUSD – fundamental overview

A breakdown in metals prices and some profit taking in US equities are responsible for the latest round of setbacks in the Australian Dollar. Key standouts on Friday’s calendar come from Canada retail sales, US new home sales, and a number of noteworthy central bank speak highlighted by a Fed Chair Powell appearance.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area, with a break to open a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3685 – 19 August high – Medium
• R1 1.3642 – 20 August high – Medium
• S1 1.3571 – 21 August low – Medium
• S2 1.3500 – Psychological – Strong

USDCAD – fundamental overview

The Canadian Dollar has sold off into the end of the week on commodities weakness, US equities profit taking and some developments on the local front. The railroad strike has left things more uncertain and freight delays have been worrying for market participants. Key standouts on Friday’s calendar come from Canada retail sales, US new home sales, and a number of noteworthy central bank speak highlighted by a Fed Chair Powell appearance.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6223 – 12 June high – Medium
• R1 0.6179 – 21 August high – Medium
• S1 0.6038 – 19 August low – Medium
• S2 0.5974 – 15 August low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has stumbled into the end of the week as profit taking in US equities kicks in. Meanwhile, a weaker than expected New Zealand retail sales showing has added to the downside pressure. The latest result represents the ninth contraction over the past 10 quarters. Key standouts on Friday’s calendar come from Canada retail sales, US new home sales, and a number of noteworthy central bank speak highlighted by a Fed Chair Powell appearance.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5093, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a retest and break back above the record high.

• R2 5679 – 16 July/Record high – Strong
• R1 5647 – 22 August high – Medium
• S1 5516 – 16 August low – Medium
• S2 5398 – 25 July low – Strong

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite a much bigger disruption to stocks than what we've already seen.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2200 on a monthly close basis.

• R2 2600 – Psychological– Strong
• R1 2532 – 20 August/Record high – Medium
• S1 2350 – 4 July low – Strong
• S2 2287– 7 June low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.