GBP/USD analysis for August 25, 2017

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Recently, the GBP/USD has been trading upwards. The price tested the level of 1.2840. Anyway, according to the 30M time frame, I found fake breakout of 2-day high and weakness in the background, which is a sign that buying looks risky. The weekly average 240SMA is also on the test. There is also an evening star formation, which is another bearish sign. My advice is to watch for potential selling opportunities. The downward target is set at the price of 1.2780.

Resistance levels:

R1: 1.2835

R2: 1.2870

R3: 1.2900

Support levels:

S1: 1.2765

S2: 1.2735

S3: 1.2700

Trading recommendations for today: watch for potential selling opportunities.

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EUR/USD analysis for August 25, 2017

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Recently, the EUR/USD has been trading upwards. The price tested the level of 1.1828. Anyway, according to the 30M time frame, I found a fake breakout of 2-day high and weakness in the background, which is a sign that buying looks risky. Stochastic oscillator showing an overbought condition, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward target is set at the price of 1.1775.

Resistance levels:

R1: 1.1820

R2: 1.1840

R3: 1.1860

Support levels:

S1: 1.1780

S2: 1.1760

S3: 1.1740

Trading recommendations for today: watch for potential selling opportunities.

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Fundamental Analysis of USD/CHF for August 25, 2017

USD/CHF is currently residing in a corrective volatile structure after bouncing off from the resistance level of 0.9770. Recently due to mixed economic reports, USD could not gain much momentum to break above the resistance level whereas CHF also showed positive economic reports this week which also helped the currency to hold USD for further gains as well. Recently CHF Trade Balance report was published which showed an increase to 3.51B from the previous figure of 2.76B which was expected to be at 2.88B. As the Trade Balance is the figure of export and import whereas an increased figure denotes to increase in export in comparison to importing which helps to develop the economy. On the USD side, today Core Durable Goods Orders report is going to be published which is expected to increase to 0.4% from the previous value of 0.1% and Durable Goods Orders report is expected to be negative at -6.0% from the previous positive value of 6.4%. Though the expectations are quite mixed today for USD any positive report with greater gap will provide the chance of breaking above the resistance in the coming days or else CHF will continue its gains further.

Now let us look at the technical view, the price is currently residing below 0.9770 resistance level and dynamic level of 20 EMA as well. As the price has been quite impulsive with the bearish pressure recently the pair is expected to have further bearish price action towards 0.9450 in the coming days. As the price remains below the 0.9770 resistance level the bearish bias is expected to continue further.

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Intraday technical levels and trading recommendations for EUR/USD for August 25, 2017

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Monthly Outlook

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2100 (multiple previous bottoms set in July 2012 and June 2010). Hence, a long-term bearish target was projected toward 0.9450.

In March 2015, EUR/USD bears challenged the monthly demand level around 1.0500, which had been previously reached in August 1997.

In the longer term, the level of 0.9450 remains a projected target if any monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0500.

However, the EUR/USD pair has been trapped within the depicted consolidation range (1.0500-1.1450) until the current bullish breakout was executed above 1.1450.

The current bullish breakout above 1.1450 allows a quick bullish advance towards 1.1850 and 1.2000-1.2100 where price action should be watched for evident bearish rejection and a valid SELL Entry.

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Daily Outlook

In January 2017, the previous downtrend reversed when the Head and Shoulders pattern was established around 1.0500. Since then, evident bullish momentum has been expressed on the chart.

As anticipated, the ongoing bullish momentum allowed the EUR/USD pair to pursue further bullish advance towards 1.1415-1.1520 (Previous Daily Supply-Zone).

The daily supply zone failed to pause the ongoing bullish momentum. Instead, an evident bullish breakout is being witnessed on the chart. The nearest supply level to meet the pair is located around 1.2080 (Level of previous multiple bottoms) where bearish rejection can be anticipated.

However, a recent bearish pressure was expressed around lower price levels (1.1880) which managed to initiate the current bearish corrective movement.

On the other hand, the price zone of 1.1415-1.1520 stands as a prominent DEMAND zone to be watched for a valid BUY entry during the current bearish pullback.

Trade Recommendations:

Conservative traders can wait for a bearish pullback towards 1.1415-1.1520 for a valid BUY entry while risky traders can have a counter-trend SELL entry around the price level of 1.1880.

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NZD/USD Intraday technical levels and trading recommendations for August 25, 2017

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Daily Outlook

In February 2017, the depicted short-term downtrend was initiated around the depicted supply zone (0.7310-0.7380).

However, a recent bullish breakout above the downtrend line took place on May 22. Since then, the market has been bullish as depicted on the chart.

The price zone of 0.7150-0.7230 (Key-Zone) stood as a temporary resistance zone until a bullish breakout was expressed above 0.7230.

This resulted in a quick bullish advance towards the next supply zone around 0.7310-0.7380 which was temporarily breached to the upside.

The recent bearish pullback was executed towards the price zone of 0.7310-0.7380 (newly-established demand-zone) which failed to offer enough bullish support for the NZD/USD pair.

Re-consolidation below the price level of 0.7300 enhances the bearish side of the market. This brings the EUR/USD pair again towards 0.7230-0.7150 (Key-Zone) where recent weak bullish recovery was manifested on August 16.

On the other hand, an atypical Head and Shoulders pattern is being expressed on the depicted chart indicating a high probability of bearish reversal.

Breakdown of the neckline 0.7150 confirms the reversal pattern. Expected bearish targets are located around 0.7050, 0.6925 and eventually 0.6800.

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Fundamental Analysis of NZD/USD for August 25, 2017

NZD/USD has been quite bearish in nature but currently, it is showing some bullish intervention denoting certain retracement in the pair. Though NZD spending has been decreased a bit according to the recent economic reports but the Trade Balance showed better than expected which did help in some growth today. Recently NZD Trade Balance was published at 85M which was previously at 246M but it was expected to be negative at -200M. On the other hand, today's USD Core Durable Goods Orders report is going to be published which is expected to increase to 0.4% from the previous value of 0.1% and Durable Goods Orders is expected to be negative at -0.6% from the previous value of 6.4%. Along with these economic reports, FED Chair Yellen is going to speak today about the nation's interest rate decision and monetary policy which is expected to be hawkish in nature. To sum up, NZD has been recently heavily dominated by USD which is expected to continue further but NZD do seem to show some gain for the short-term due to positive trade balance report but the bearish trend is expected to continue further.

Now let us look at the technical view, the price is currently showing some bullish pressure which is expected to reach towards the dynamic level of 20 EMA before proceeding with the bearish trend. If the price rejects off the 20 EMA with a daily close then we will be looking forward to the price reaching the 0.7050 support level. As the price remains below the resistance area of 0.7370-0.7460 the bearish bias is expected to continue further.

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Technical analysis of USD/CHF for August 25, 2017

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Overview:

  • The USD/CHF pair is still trading upwards from the area of 0.9639/0.9600. The USD/CHF pair didn't make any significant movements yesterday. There are no changes in our technical outlook. The bias remains bullish in the nearest term testing 0.9693, 0.9763 or 0.9800. The market has been trading around the zone of 0.9639/0.9600. The pair rose from the levels of 0.9639 and 0.9600 (these levels coincide with the ratios of 61.8% Fibonacci retracement and 50%) to a top around 0.9733. The first support level is seen at 0.9639 followed by 0.9600, while daily resistance 1 is seen at 0.9763. The USD/CHF pair is still moving between the levels of 0.9693 and 0.9763 in coming hours. On the one-hour chart, the immediate resistance is seen at 0.9763 which coincides with the double top. Currently, the price is moving in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. The price is still above the moving average (100). Therefore, if the trend is able to break through the first resistance level of 0.9763, we should see the pair climbing towards the second daily resistance at 0.9800 to test it. On the other hand, in case a reversal takes place and the USD/CHF pair breaks through the support level of 0.9600, a further decline to 0.9515 can occur. It would indicate a bearish market.

Observation:

  • The trend is still calling for a strong bullish market as long as the trend is still above the level of 0.9600.

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Technical analysis of NZD/USD for August 25, 2017

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Overview:

  • The NZD/USD pair fell from the price of 0.7238 again towards 0.7191. Then, it rebounded from the bottom of 0.7191. Right now, the price is set at 0.7225. It should be noted that volatility is very high for that the NZD/USD pair is still moving between 0.7238 and 0.7180 in coming hours. Furthermore, the price has been set below the strong resistance at the levels of 0.7257 and 0.7272. Additionally, the price is in a bearish channel now. Amid the previous events, the pair is still in a downtrend. From this point, the NZD/USD pair is continuing in a bearish trend from the new resistance of 0.7238 which acts as a daily pivot point. The price spot of 0.7238/0.7257 remains a significant resistance zone. Therefore, a possibility that the NZD/USD pair will have downside momentum is rather convincing and the structure of a fall does not look corrective. In order to indicate a bearish opportunity below 0.7238, sell below 0.7238 or 0.7257 with the first targets at 0.7207, 0.7180 and 0.7154. On the other hand, the stop loss should be located above the level of 0.7300. Alos, it should be noticed that the price of 0.7281 coincides with the golden ratio on the H1 chart.
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Fundamental Analysis of AUDUSD for August 25, 2017

AUD/USD has recently bounced off the support area of 0.7750-0.7830 and on the way to create more higher highs and higher lows in the coming days. USD has been quite mixed with the economic reports which lead to further gain on AUD having positive employment reports recently. This week AUD did not have any high impact economic reports but still managed to sustain the gain over USD. On the other hand, USD had been quite neutral in nature with economic reports recently. Today USD Core Durable Goods Orders report is going to be published which is expected to increase to 0.4% from the previous value of 0.1%, Durable Goods Orders are expected to be negative to -6.0% which previously was positive at 6.4% and FED Chair Yellen is going to speak about key interest rates and monetary policy decisions whereas the hawkish nature is quite expected today. Though USD has mixed economic expectations from the reports today whereas any positive result in the reports may lead to further gain on the USD side in the future. On the other hand, if USD reports come worse than expected than the AUD is expected to sustain its gain and show some impulsive bullish move in the pair.

Now let us look at the technical view, price is currently residing above the dynamic level of 20 EMA and the support area of 0.7750-0.7830. The bullish structure indicates the further bullish move is expected in this pair with a recent target towards 0.8050 resistance level. As the price remains above the support area of 0.7750-0.7830 the bullish bias is expected to continue further.

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Trading plan for EUR/USD and GBP/USD for August 24, 2017

Forex analysis review
Trading plan for EUR/USD and GBP/USD for August 24, 2017

Global macro overview for 25/08/2017

Global macro overview for 25/08/2017:

Other signs of inflationary pressures were revealed in the recent data. Japanese National CPI data were released at the level of 0.4%, unchanged from a month ago, but CPI minus fresh food – a key proxy for core inflation – increased from 0.4% to 0.5% in the reported month. The reading matched a median estimate of economists and marked the seventh consecutive monthly increase for the core price index. The biggest jump in inflation was noted in Tokyo, where core inflation, a leading measure of nationwide price trends, climbed 0.4%. Core prices in the capital city climbed 0.2% in June.

Despite the fact that the inflationary pressures in Japan are increasing, the inflation is still well below the Bank of Japan official target of 2.0%. According to the latest BoJ statements, as long as the target is not achieved, the BoJ monetary policy will remain highly accommodative (monetary easing will remain the norm for the foreseeable future). This decision was made even after the good data from the Japanese economy had been delivered throughout the whole 2017 ( better than expected GDP, low unemployment, etc ). Japan's run of six straight quarters of growth marks the longest expansion since 2006.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. After rejection at the level of 111.00, the market slid towards the technical support at the level of 108.79 and tested it three times already. Nevertheless, no new lower close was made and so far the market is trading in a narrow range between the levels of 109.84 - 108.59.

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Global macro overview for 25/08/2017

Global macro overview for 25/08/2017:

The central banker's symposium in Jackson Hole has a long story of crucial banking declarations in the past. Yellen's predecessor, Ben Bernanke, who signaled an Operation Twist, or one of the QE program's previews, liked this place very much. Mario Draghi in 2014 also suggested the inevitability of aggressive continuation of loosening policies, citing negative trends in inflation expectations. Nevertheless, the crucial declarations are highly unlikely this year, but investors will continue to scrutinize the slightest suggestions on the future of major central bank monetary policy. Recent ECB leaks from the Reuters agency indicate that all waiting for Mario Draghi's announcement of the end of the era will be disappointing. In addition, the ECB Minutes revealed some concern to the ECB Governing Council by the Euro currency strength. Direct, open verbal interventions are not in the hands of European policy makers, but such a state of affairs should guarantee greater restraint in optimistic statements. For this reason, Draghi in his speech should stick to the dovish rhetoric emphasizing the calm, patience and caution of the ECB Governing Council.

Let's now take a look a the EUR/CHF technical picture at the H4 time frame. Taking into account the late hour of the Mario Draghi speech, most market participants will discount the information obtained by the symposium next week. The end of the New York session trading may be chaotic and jerky. Just like the other Euro related pairs, the EUR/CHF is trading in a narrow range between the levels of 1.1423 - 1.1260 in a neutral market condition. The golden trend line acts as a dynamic resistance for the price and only a sustained breakout above the level of 1.1423 might be considered bullish.

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Trading plan for 25/08/2017

Trading plan for 25/08/2017:

It was a very peaceful Asian session. EUR/USD yesterday was closed in a narrow trading range, it should come as no surprise that at the Asian session on the day of Yellen and Draghi's speech, the volatility was limited to just a few pips around the level of 1.1800. The flat session of the Wall Street does not bother a clear, over 1.0% increases in the indices in Hong Kong and Shanghai. The Nikkei 225 goes up 0.6% so far.

On Friday 25th August, the event calendar is busy with important data release. Germany will issue GDP figures and Ifo Business Climate, Current Assesment and Expectations sentiment data. Then, during the US session, the US will post Durable Goods Orders data and Baker Hughes U.S. Rig Count data. At the afternoon there is an anticipated speech by FED Chairperson Jannet Yellen. Later, late in the evening, the ECB President Mario Draghi will give a speech as well.

EUR/USD analysis for 25/08/2017:

Waiting for critical appearances at Jackson Hole will also reveal important macro data from the Eurozone. The German Ifo index should stabilize at a very high level and forecast expectations should only slightly decrease (from 107.3 to 106.8 points) according to the median market forecasts. Such scenario would also be a peculiar result of disappointment with the value of the ZEW index and positively surprised by PMI values. The Ifo Business Climate data is set to decrease slightly from 116.0 to 115.5 points, together with Ifo Current Assessment, which is expected at the level of 125.0 points from 126.0 points a month ago. The German GDP for the second quarter was released at the level of 0.6%, as expected. Overall, after two-quarter, the German GDP is at the yearly level of 0.8%.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market is still trading inside of a narrow range between the levels of 1.1660 - 1.1845 as the market participants expect the Yellen and Draghi Jackson Hole speeches. So far the macroeconomic data did not influence the market much. The key technical levels are techcnial support at the level of 1.1660 and technical resistance at the level of 1.1845. Larger time frames outlook remains bullish.

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Market Snapshot: USD/CAD in a falling wedge formation?

The price of USD/CAD is trading inside of a narrow range which looks like a falling wedge formation. The market conditions are oversold and there is a bullish divergence between the price and the momentum indicator. Both of this factors support the bullish bias. The next technical resistance is seen at the level of 1.2770.

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Market Snapshot: DXY ready for a breakout?

The price of US Dollar Index is trading in a narrow range just before the key Jannet Yellen speech. The price got stuck below the golden trend line, in a range between the levels of 93.02 - 93.63. A clear breakout above the level of 93.63 will open the road towards the nearest technical resistance at the level of 94.11, which is a key level for bulls.

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Ichimoku indicator analysis of USDX for August 25, 2017

The Dollar index continues to trade sideways. Technically we have a breakdown of short-term support that should eventually bring price towards 91.60. Short-term trend is neutral. Medium-term trend is bearish.

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Red lines -bullish channel (broken)

The Dollar index is heading towards the Kumo (cloud) resistance in the 4-hour chart at 93.60. If price breaks this resistance we should expect the lower channel boundary at 93.70-93.80 to be tested. At these resistance levels, short-term traders could try to open short positions as risk reward favors the bearish side.

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Red lines - trading range

On a daily basis we see the kijun-sen (yellow line indicator) cross below the tenkan-sen (red line indicator). Although this would normally be a bullish sign, this is the result of the sideways movement of prices. Moreover, a cross below the cloud diminishes the strength of a bullish signal. I continue to expect that prices will break down towards 91.50. For this scenario to be confirmed we need to see new weekly lows.

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Trading plan for August 25, 2017

Trading plan for August 25, 2017

All the attention to Jackson Hole.

Markets are ready to respond to the main event of the week and perhaps a month. The meeting of the heads of the largest securities in Jackson Hole. The meeting will be held in two days, Thursday and Friday. Speech of the heads of the ECB and the Fed today, at 15.00 London time.

In the center of attention are Yellen's speeches and most importantly, the heads of the ECB Draghi.

According to the policy of the Fed, there is no mystery. The Fed took the path of raising rates, slowly but surely. At the end of the year, liquidity (surplus) will begin to be withdrawn from the markets.

But the ECB's course is unclear. When will the ECB turn the policy toward normalization from the current pumping of the market?

On Wednesday, everyone waited for something important from Draghi to perform in Germany but the head of the ECB did not say anything on the subject.

Suddenly, the representative of Estonia in the ECB made a speech and said that the growth of the euro does not arouse his fears. (Estonia is still not Germany or France).

What do we see in the picture of the euro?

EUR/USD

It still seems to us that a breakthrough is more probable.

We will buy at the break of 1.1830 - 1.1850. We expect a breakthrough to the top of 1.1910 - and further to 1.2000.

An alternative option is to sell for a breakthrough down 1.1660.

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Ichimoku indicator analysis of gold for August 25, 2017

Gold price continues to move sideways. It is trapped between $1,295 and $1,282. The trend is neutral in the short term but bullish overall. We continue to see $1,320 as a short-term target.

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Magenta line - expected path

I expect Gold price to respect support and start a new upward move soon. Short-term support lies at $1,282 and the resistance is found at $1,295. Short-term target is minimum at $1,320. Breaking below $1,275 will put short-term trend in danger and will likely push the price towards $1,250.

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Black line - long-term resistance (broken)

Blue line - long-term support

Gold price has broken out and above the black trend line resistance and the Ichimoku cloud. We could see another back test of the breakout area at $1,250 but overall trend is bullish and we are targeting above $1,400 over the coming months.

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EUR/JPY remain bearish for a further drop

The price continues to rise and we're now seeing major resistance at 129.40 (Fibonacci retracement, horizontal pullback resistance, Fibonacci extension) where we expect a strong reaction from to fuel the drop to at least 127.56 support (Fibonacci extension, horizontal swing low support).

Stochastic (34,5,3) is once against testing our 93% resistance level where we expect a drop from.

Sell below 129.40. Stop loss is at 129.86. Take profit is at 127.56.

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USD/CHF remain bearish for a further drop

The price continues to make lower lows whilst retracing each time. We remain bearish looking to sell on strength below 0.9669 resistance (Fibonacci retracement, horizontal overlap resistance) for a further drop to at least 0.9589 support (Fibonacci retracement, Fibonacci extension, horizontal swing low support). We also shift our stop loss to 0.9701 to protect our profits.

Stochastic (55,5,3) is dropping nicely from our 97% resistance and has good downside potential.

Sell below 0.9669. Stop loss is at 0.9701. Take profit is at 0.9589.

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NZD/USD right on major support, remain bullish for a bounce

The price is now testing our major support buying area. We remain bullish looking to buy above major support at 0.7202 (Fibonacci extension, horizontal swing low support) for a bounce up to at least 0.7331 resistance (Fibonacci retracement, horizontal swing high resistance).

Stochastic (34,5,3) is seeing major support above 3.3% where we expect a further bounce from.

Buy above 0.7202. Stop loss is at 0.7153. Take profit is at 0.7331.

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USD/JPY bouncing nicely above major support, remain bullish

The price has bounced off nicely from our buying entry area yesterday. We remain bullish looking to buy above major support of 108.85 (Fibonacci extension, horizontal swing low support) for a push up to at least 110.28 resistance (Fibonacci retracement, horizontal overlap resistance).

Stochastic (34,5,3) sees an ascending support line holding up our bullish movement really well.

Buy above 108.85. Stop loss is at 108.28. Take profit is at 110.28.

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AUD/JPY bounced perfectly from our buying area, remain bullish for a further rise

The price has touched our buying area before shooting up perfectly as expected. We remain bullish above 86.37 support (Fibonacci retracement, horizontal overlap support, bullish exit) for a further push up to at least 87.01 resistance (Fibonacci retracement, horizontal overlap resistance) before 87.38 resistance (Fibonacci retracement, horizontal overlap support, Fibonacci extension). We also move our stop loss to 86.01 to protect our profits.

Stochastic (34,5,3) sees a recent bullish exit of its descending resistance-turned-support line signal a change in momentum to bullish.

Buy above 86.37. Stop loss is at 86.01. Take profit is at 87.01 and 87.38.

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AUD/USD bounced perfectly from our buying area, remain bullish for a further rise

The price has touched our buying area and shot up perfectly. We remain bullish on a further rise above 0.7882 support (Fibonacci retracement, Fibonacci extension, bullish divergence) towards 0.7928 resistance (Fibonacci retracement, Fibonacci extension, horizontal overlap resistance). We move our stop loss to 0.7869 to protect our profits.

Stochastic (55,5,3) is seeing bullish divergence vs price signaling that a reversal is impending.

Buy above 0.7882. Stop loss is at 0.7869. Take profit is at 0.7928.

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Fundamental Analysis of EUR/CAD for August 24, 2017

EUR/CAD has been quite corrective and volatile recently above 1.4730 support level. CAD has been mixed with the economic reports this week which made the market sentiment favoring CAD gains a bit confused. Recently CAD Core Retail Sales report was published with a positive value at 0.7% from the previous value of -0.1% which was expected to be at 0.0% and Retail Sales report showed decrease to 0.1% from the previous value of 0.5% which was expected to decrease to 0.2% but it showed worse result. On the other side, EUR has been quite positive with the Flash Manufacturing PMI but was negative with the Flash Services PMI report which also put the market into bitter confusion as well. Even today EUR Belgian NBB Business Climate report was published with more deficit at -2.1 from the previous figure of -1.5 which was expected to be at -1.6. The greater deficit in NBB Business Climate report did make EUR lose some grounds against CAD today which made the corrective bias more complex. To sum up, until any economic reports of EUR or CAD show any high impact positive changes the pair is expected to be corrective in nature.

Now let us look at the technical view, the price is currently residing inside the range of 1.4730 to 1.4970 area. In this scenario, if price breaks below 1.4730 with a daily close we will target 1.4450 support level. As the price remains above the 1.4730 there are chances of some bullish pressure towards 1.4970 resistance level as well. As the price remains above 1.4730 support level with a daily close the bullish bias is expected to continue further.

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Daily analysis of USDX for August 25, 2017

USDX stays in sideways across the board and looks like it can remain in the same path ahead of Jackson Hole's event. The support zone of 93.28 is still providing a solid barrier for sellers and if that level gives up, we might expect bearish continuation towards 92.97. To the upside, the pair remains contained by the 93.72 level.

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H1 chart's resistance levels: 93.72 / 94.11

H1 chart's support levels: 93.28 / 92.97

Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USD Index breaks with a bullish candlestick; the resistance level is at 93.72, take profit is at 94.11 and stop loss is at 93.33.

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Daily analysis of GBP/USD for August 25, 2017

GBP/USD remained steady during Thursday's session, despite U.K data released early in the morning. Currently, the support level of 1.2761 remains on hold and the pair should challenge it in order to aim for a consolidation lower and to target towards the 1.2647 level. Overall, price action continues to favor the bears. MACD indicator is entering the neutral territory.

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H1 chart's resistance levels: 1.2843 / 1.2958

H1 chart's support levels: 1.2761 / 1.2647

Trading recommendations for today: Based on the H1 chart, sell (short) orders only if the GBP/USD pair breaks a bearish candlestick; the support level is at 1.2761, take profit is at 1.2647 and stop loss is at 1.2873.

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Euro Will Ask Permission From Oil

The single European currency failed to take advantage of the positive effect of business in the euro area on August.

It is improbable that the heads of central banks will talk about exchange rates directly, so the markets will try to catch the slightest clues. Draghi's statement about the risks of a strong euro for inflation or GDP will indicate a "bearish" signal for the EUR/USD pair. However, further concern of Yellen is due to financial stability. It can be regarded as a signal that the Fed continues to adhere with the plan and will raise the rate on federal funds for the third time in 2017.

The opinions of the major banks on further dynamics for the main currency pair diverged. Hence, Barclays believes that the market is running ahead of itself and clearly overestimated the possibility of normalizing the monetary policy of the ECB. Inflation in the euro area will remain low for a longer time and the central bank will keep its commitment to QE regarding negative rates. The divergence in monetary policy will allow us to rely on the EUR/USD falling in the direction of 1.123 in case of a successful move above the 1.157 support. The National Australia Bank (NAB) also pays attention to inflation, arguing that the growth of the trade-weighted euro rate by 10% slows the CPI by 0.4-0.5% for 2-3 years. Nevertheless, the bank considers the potential correction limited to 1.1475-1.625.

On the contrary, the Bank of Tokyo-Mitsubishi UFJ (BTMU), is confident in the formation of a wide trading range at 1.15-1.25, which will be relevant throughout the next year. At the same time, euros can pass the $1.2 mark as early as 2017. While BofA Merrill Lynch objects, saying that EUR/USD prices are unlikely to rise above 1.22, given the close relationship between the pair and oil prices. To continue the euro rally, Brent needs to rise above $60 per barrel, which in the current situation looks impossible.

Dynamics of Brent and EUR / USD

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Source: Trading Economics.

From my perspective, there is no reason to doubt the development of an uptrend in EUR / USD pair.

Technically, the EUR / USD pair deals with the "Splash and Regiment" pattern.

EUR / USD Daily Chart

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

Attention to Jackson Hole

Markets are already prepared with the main event of the week which is the meeting of the heads of largest securities in Jackson Hole. The meeting will be held in two days, Thursday and Friday. Fed Chair Yellen will have her speech tomorrow.

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