Water traffic on the Hudson River around Statue of Liberty, New York. Image source: dbajurin © 123RF.com
U.S. Inflation Expected to Slow Down in July
Given the top-tier events in the calendar this week, the GBPUSD looks like the pair that is most likely to experience heightened price fluctuations. This is especially interesting given the expectations for a decisive reversal. Check out our last analysis of the pair for more information on the current bearish setup.
The Bureau of Labour Statistics (BLS) in the U.S. is scheduled to post the latest inflation data on Wednesday. The consumer price numbers for July will be the most important economic release this week.
According to the preliminary forecasts, the Consumer Price Index (CPI) is expected to slow down by 0.4 per cent from a month prior. Headline inflation is projected to appreciate by 0.5 per cent, taking a sizable U-turn compared to the 0.9 per cent uptick that was recorded in June.
U.S. MoM Inflation Rate. Image source: TradingEconomics.com
If these projections are realised, this will mark only the second instance of easing price pressures since October 2020. Furthermore, it would confirm the expectations of Jerome Powell and the FED regarding short term inflation behaviour.
This would also justify FOMC's somewhat laidback stance on short term inflation, despite notable increases in consumer prices over the last several months. In particular, a doubling down in inflation from a month prior would confirm the Committee's assertion that prices have been growing recently owing to temporary supply bottlenecks.
Wednesday's data is thus likely to strengthen the U.S. dollar because, if it meets the initial forecasts, it will signify FED's recovery projections. This would reassure traders and allow for the greenback to continue strengthening.
Germany's Economic Sentiment to Continue Worsening
The ZEW economic sentiment index in Germany is anticipated to continue diving for the third consecutive time in August amidst rising coronavirus cases and uneven vaccine rollout in the Eurozone. The ZEW will publish the numbers on Tuesday.
Germany ZEW Economic Sentiment. Image source: TradingEconomics.com
The market forecasts anticipate the index to depreciate from the 63.3 index points that were recorded in July to 54.9 points in August. Even though this would still underline positive expectations for economic expansion - being above the 50.0 benchmark - it would be the weakest reading since November 2020.
Investors' s sentiment is expected to wane in spite of the positive factory numbers that were recently recorded in the Eurozone's manufacturing sector. Once again, this divergence is ascribed to the persisting supply chain disruptions globally.
The euro is most likely to be affected negatively by Tuesday's release.
UK's Economy to Rebound in the Second Quarter
On Thursday, the Office for National Statistics in the UK is scheduled to release the preliminary GDP numbers for the three months ending in June. The initial forecasts expect the British economy to grow by 4.8 per cent, a sizable rebound from Q1's contraction of 1.6 per cent.
UK Preliminary QoQ GDP Growth Rate. Image source: TradingEconomics.com
These optimistic forecasts are inlined with BOE's forward-looking economic forecasts. At its August meeting, the Monetary Policy Committee (MPC) of the Bank showed more hawkishness than before, which is congruent with the forecasts for economic expansion.
This is likely to bolster the pound in the short term following the publication of the report. However, as can be seen on the 4H chart below, bearish pressure on the GBPUSD continues to increase.
As of late, the price action has been depreciating within a descending channel (FLAG) pattern, which typically entails probable bullish rebounds. However, the GBPUSD looks more likely to continue depreciating over the next several days under the current circumstances.
This is owing to the fact that before the close of last week's trading session on Friday, the price action reversed from the 300-day MA (in purple), the 50-day MA (in green), and penetrated below the 23.6 per cent Fibonacci retracement level at 1.38864.
Given the rising bearish momentum, as underpinned by the MACD indicator, the price is now likely to test the channel's lower boundary. The latter is currently converging with the 38.2 per cent Fibonacci at 1.38259, the 100-day MA (in blue) and the 200-day MA (in orange).
GBPUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
Other Prominent Events to Watch for:
Wednesday - Germany MoM CPI.
Thursday - U.S. MoM PPI.
Friday - U.S. MoM Preliminary Michigan Consumer Sentiment Index.
Over the past few weeks, the USD has lost nearly 800 pips against the JPY, driven by Japan's shift away from decades of negative interest rates. With the Bank of Japan raising rates for the second time in a row, investors are adjusting their positions to [...]
Despite its volatility, Silver remains in an uptrend. While not as dynamic as Gold, XAG often mirrors XAU’s movements. A Multiple Top has formed around $32.50, and history shows that the more a level is tested, the weaker it becomes, increasing the likelihood of a [...]
A combination of factors, including Trump-era tariffs, the emergence of DeepSeek, and a slowdown in GDP growth, has contributed to the recent pullback in the US30 from its record highs. From a technical standpoint, a Double Top pattern has formed around the [...]
Over the past month, Silver has experienced an impressive 13% surge, marking a strong bullish trend. Despite notable volatility and multiple pullbacks, the overall momentum remains firmly to the upside. This strength is further validated by the Golden Cross, a historically reliable [...]
The Swiss Stock Market has been on a remarkable rally, surging over 15% between December and January. At times, the price action resembled a near-vertical ascent. However, following the announcement of Trump’s tariffs over the weekend, Monday’s trading session opened with a [...]
Between October and January, GBPUSD experienced a significant decline, dropping by approximately 1300 pips. However, we now observe signs of a potential trend reversal. Over the past few weeks, the pair has rebounded by more than 400 pips, shifting momentum toward a [...]
For the past 1 month, the UK100 saw a fantastic 600 point rally! The occasional corrections only attracted more buyers, which is healthy for the current up trend and the RSI currently exhibits elevated demand. A 130 point correction started last week on Friday, dipped below the [...]
Over the past two weeks, Japan’s leading stock index surged 2,000 points, reflecting strong bullish momentum. However, this week saw a sharp sell-off, erasing nearly all gains since mid-January. Despite this drop, the decline stalled at the 61.8% Fibonacci retracement, a key [...]
There is a clear shift in the momentum in the Oil market, with the commodity dropping with nearly 10% for the past 2 weeks. The Death Cross, a classic sell signal, is indicating that sellers are indeed in control and we are lookin now at a strong [...]
The 350 pip rally for the past 2 weeks seems like a trend reversal for EURUSD, with buyers back in control. The strong bullish momentum is also confirmed by the Golden Cross, a historic buy signal. Corrections are healthy for the trend and we currently looking at [...]
For the past 2 weeks GBPUSD went up with 400 pips and this is why we believe we might be looking at a trend reversal. The strong bullish momentum is confirmed by the Golden Cross, a classic buy signal, which supports the hypothesis that [...]
The Death Cross formation in USDJPY signals a robust downward momentum, with the USD depreciating by 300 pips over recent weeks. Further declines exceeding 300 pips are anticipated, potentially reaching the 152.00 level. Despite several corrective pullbacks, the price has been unable to surpass the [...]
Following the formation of a Double Top pattern at the 21,930 level last Friday, the NASDAQ has experienced a significant decline, plummeting by nearly 800 points. This downturn has been primarily driven by unfavorable manufacturing data emerging from China, alongside the Bank of Japan's interest rate hike on Friday. The market reaction closely resembles the [...]
GOLD's uptrend has regained strength, with several factors supporting further gains. The RSI bounced from oversold levels and now stands at 65, signaling growing demand and increasing buying volume. Additionally, the appearance of a [...]
For the past few months, USDJPY gained 2100 pips! Then, about 10 days ago the USD started dropping and so far corrected with 300 pips, dropping down to 155.00. A local Double Bottom got formed and this level also aligns with the important [...]
For the past week, the US100 has surged by over 1,000 points, signaling strong bullish momentum. The RSI stands at 69, indicating high demand and buyer dominance. A bullish Golden Cross pattern has emerged, confirming the upward trend. Despite a brief correction yesterday, with the index dipping to [...]
The Descending Triangle on the 4-hour chart, typically a bearish signal, failed to materialize this time. Instead, the Triple Bottom support at 92,000 held strong, driving significant buying volume. A Golden Cross—a classic bullish indicator—confirms strong [...]
After a 300-point correction from its December highs, the SP500 appears to be rebounding as bulls regain control. This recovery is supported by positive economic data, including strong NFP numbers, low unemployment, and CPI readings meeting expectations—all favorable for stocks. Additionally, the earnings season began yesterday with [...]
For several months, the EUR has been trending downward, losing hundreds of pips. While occasional corrections to the upside occur, bears remain in control. The strong downward momentum is highlighted by the Death Cross pattern, a classic sell signal. Yesterday, we observed another [...]
The Dollar remains strong, with buyers firmly in control since the Fed's December comments hinting at fewer 2025 rate cuts. This drove a 400-pip rally in USDCAD, now facing resistance near 1.4450 as early buyers take profit. Corrections are part of healthy trends, and the pair is testing support at [...]
