The Euro switched to Jackson Hole

If the minutes of the July meeting of the ECB scared the bulls for the euro, then it was only for a little while. The European Central Bank expressed its concern about the future strengthening of the exchange rate, saying that the current EUR/USD movement is in line with the recovery process of the euro-zone economy. Actually, the GDP growth of the Euro monetary bloc, although not much, still outstripped the growth of its American counterpart, and the low level of political risks after the defeat of Eurosceptics in France contributes to the capital inflow. In contrast to the Old World, things in the New World are going, to put it mildly, not very well.

Positive data on the labor market and retail sales did not add optimism to the supporters of the US dollar. Judging by the minutes of the last meeting of the FOMC, the Fed's fears about inflation are still high. At the same time, the "dovish" rhetoric of the head of the Federal Reserve Bank of Dallas Robert Kaplan, urging the U.S. central bank to be patient in the conditions of slowing CPI and PCE, lowered the chances of a December monetary tightening from 48% to 42%.

Pressures on the USD index was created due to the political strife within the United States. Dissatisfied with the position of Donald Trump on a number of issues, business leaders began to leave the president's economic councils, which resulted in their liquidation. Discontent with the actions of the head of the White House was expressed not only by politicians, including representatives of their own Republican Party, but also by economists, which undermines confidence and contributes to the further collapse of the dollar. Correlation of these indicators convinces that the market has recently reacted more to rumors and gossip of a political nature than to macroeconomic statistics.

The dynamics of the dollar index and the mistrust index of Donald Trump

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Source: Bloomberg.

By August 26, the focus of investors' attention will be on the meeting of heads of central banks in Jackson Hole. Following the June speech of Mario Draghi about the victory over deflation, the markets praised the ECB excessively. The media called him a more influential figure than Janet Yellen, the man who provoked the minimum peak of hysterics. In this respect, the traditional summit at the end of August was compared with past events, when ex-Fed Chairman Ben Bernanke announced the end of the QE, and at the same Draghi announced the launch of the quantitative easing program. The record of the last meeting of the ECB has shown that there are no surprises waiting for the "bulls" for the euro.

The Governing Council examined the problem of communicating information. Supporters of the gradual preparation of investors for the normalization of monetary policy, led by Benoit Coeure, were forced to retreat. Considering this as the slightest signal about the winding up of the QE, raised EUR/USD quotes. Over the past three months, the trade-weighted euro rate has soared by 5%, which creates serious problems for inflation, export and financial conditions and allows the projection a slowdown in the euro area's GDP.

Technically, the exit of quotes beyond the descending short-term channel and a successful resistance push ahead of 1.181-1.182 will be the evidence of the completion of the retreat and will open the way for the EUR/USD upwards. On the contrary, the update of the corrective low near 1.167 will increase the risks of development of the bearish counterattack in the direction of 1.15.

EUR / USD, daily chart

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The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of USD/JPY for August 18, 2017

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USD/JPY is under pressure and expected to trade with bearish outlook. The pair remains in consolidation, and the nearest resistance at 109.25 maintains the strong selling pressure on the prices. Furthermore, the relative strength index is mixed to bearish below its neutrality area at 50.

To sum up, as long as 109.14 holds on the upside, look for a return to 108.30. A break below 108.30 would trigger a new drop towards 108.10.

Alternatively, if the price moves in the opposite direction, a long position is recommended above 109.25 with a target at 109.65.

Chart Explanation: The black line shows the pivot point. The current price above the pivot point indicates a bullish position, while the price below the pivot point is a signal for a short position. The red lines show the support levels and the green line indicates the resistance level. These levels can be used to enter and exit trades.

Strategy: BUY, Stop Loss: 109.25, Take Profit: 1

Resistance levels: 109.65, 109.90, and 110.25

Support Levels: 108.30, 108.10, 107.50

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of USD/CHF for August 18, 2017

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USD/CHF is expected to continue the downside movement. The pair is trading below its declining 20-period and 50-period moving averages, which play resistance roles and maintain the downside bias. The relative strength index is bearish below its neutrality level at 50.

To conclude, as long as 0.9660 is resistance, a further downside to 0.9550 and even to 0.9500 seems more likely to occur.

Chart Explanation: The black line shows the pivot point. The present price above the pivot point indicates the bullish position, and the price below the pivot points indicates the short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Strategy: SELL, Stop Loss: 0.9660, Take Profit: 0.9550

Resistance levels: 0.9685, 0.9715, and 0.9750

Support levels: 0.9550, 0.9500, and 0.9475

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of GBP/JPY for August 18, 2017

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All our targets which we predicted yesterday were met. GBP/JPY is still under pressure and expected to continue the downside movement. The pair remains weak below its falling 20-period and 50-period moving averages, and is expected to post further downsides. The process of lower highs and lows remains intact, which should confirm a negative outlook. Besides, the relative strength index is still bearish, without showing any reversal signals.

To conclude, as long as 141.20 is not surpassed, the risk of a slide below 139.20 remains high. Our next down target is set at 138.65.

Alternatively, if the price moves in the opposite direction as predicted, a long position is recommended above 142.25 with the target at 142.65.

Strategy: SELL, Stop Loss: 139.20, Take Profit: 138.65.

Chart Explanation: the black line shows the pivot point. The price above the pivot point indicates the bullish position; and when it is below the pivot points, it indicates a short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 141.50, 142.05, and 143.00

Support levels: 139.20, 138.65, and 138.00

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of NZD/USD for August 18, 2017

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NZD/USD is expected to trade with bullish outlook above 0.7275. The technical picture of the pair is positive as the prices are supported by a bullish trend line. The upward momentum is further reinforced by both ascending 20-period and 50-period moving averages. The relative strength index is bullish and calls for a further upside.

Therefore, while the price holds above 0.7275, look for a new challenge to 0.7350 and even to 0.7370 in extension.

The black line shows the pivot point. Currently, the price is above the pivot point which indicates the bullish position. If it remains below the pivot point, it will indicate the short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 0.7350, 0.7365, and 0.7400

Support levels: 0.7250, 0.7225, and 0.7175

The material has been provided by InstaForex Company - www.instaforex.com