Title: Where Has the Dust Settled in the Forex Market?
Original article by Adam Button, ForexLive
Rewritten and Expanded by [Your Name]
As global markets continue to digest a flurry of economic data, central bank commentary, and geopolitical developments, forex traders are keenly observing where key currency pairs are stabilizing. The start of this trading week has brought fresh shifts in sentiment, as well as technical signals that help define short-term momentum and longer-term trends. Below, we take a comprehensive look at where the dust has settled so far in the major forex pairs and what technical analysts are focusing on to navigate the current market environment.
The Overview
The previous week culminated with several impactful developments that influenced FX flows including:
– A softer-than-expected US CPI report, hinting at further cooling inflationary pressures.
– Mixed messaging from Federal Reserve officials regarding the timeline for potential interest rate cuts.
– Economic data out of Europe and Asia pointing to divergent growth trajectories.
– Moderate risk sentiment across risk assets, with equity markets showing resilience.
As the new week begins, the dust is beginning to settle, and technical setups across major pairs point to some pivotal levels and potential breakouts. Below, we categorize the technical conditions of several key forex pairs and important crosses.
EUR/USD: Rebounding After CPI Relief
The euro has bounced back from recent lows against the dollar following softness in US CPI data. This suggests that the market is starting to recalibrate expectations for the Federal Reserve.
– The pair rebounded to 1.0885, testing previous resistance zones.
– Immediate support rests at 1.0810, coinciding with last week’s breakout point.
– A sustained break above 1.0900 would trigger bullish momentum toward the 1.1000 round number.
– RSI indicators on the 4-hour chart suggest ongoing recovery momentum, though not yet overbought.
Technically, the EUR/USD appears to be building a higher base. If dollar weakness persists in tandem with easing US yields, more upside could be unlocked.
GBP/USD: Flattening Near Resistance
The British pound surged following the US CPI dip but has since paused, hovering just below medium-term resistance.
– The pair tested 1.3000, a psychological and technical barrier.
– Above 1.3015 lies the 2024 high resistance zone.
– Support comes in around 1.2870 and then 1.2800.
– The 21-day moving average remains upward sloping, suggesting continued short-term strength.
However, unless there is a breakout above 1.3000, a consolidation phase could ensue. Traders are holding off ahead of UK GDP and labor market data, which could tilt sentiment either way.
USD/JPY: Watching for a Top
The dollar has struggled to sustain gains against the yen. This is especially true after the softer US CPI figures increased the likelihood of a Fed pivot on interest rates, while the Bank of Japan remains patient on tightening policy.
– USD/JPY touched intraday peaks near 159.80 before retreating.
– Resistance remains heavy near 160.00, a level repeatedly defended by markets and seen as a potential trigger for Japanese intervention.
– Initial support is around 158.30 followed by 157.40, the June low.
– MACD divergence on the daily chart suggests bullish fatigue.
Japanese officials have remained verbal about monitoring FX volatility, raising the risk of jawboning or actual intervention.
AUD/USD: Gaining on Risk Sentiment
The Australian dollar is showing resilience, benefiting from improving risk appetite and commodities markets. The dovish shift in US rate trajectory has also helped commodity-linked currencies.
– AUD/USD has reclaimed 0.6750, marking the upper boundary of its recent range.
– A breakout above 0.6800 would bring 0.6840 into focus.
– Support lies at 0.6670, previously seen as short-term resistance.
– Bullish crossover evident in shorter
Read more on EUR/USD trading.