The EUR/USD pair surged on Wednesday, regaining upside momentum and touched a daily top above the 1.036 mark during the US session after the release of upbeat CPI data. The pair is now trading at 1.03522, posting a 1.35% gain on a daily basis. EUR/USD stays in the positive territory amid renewed weakness witnessed in the US dollar, as the greenback collapsed to multi-week lows in the sub-105.00 region and provided strong support to the EUR/USD pair. The US CPI declined to 8.5% on a yearly basis in July, which came in lower than the market’s expectations and acted as a tailwind for riskier assets. For the Euro, the energy crisis and elevated inflation remain a key focus for the growth outlook in the Eurozone, which might limit the upside for the EUR/USD pair.
For the technical aspect, the RSI indicator is 55 as of writing, suggesting that the pair is facing heavy bullish pressure as the RSI stays in the overbought zone. As for the Bollinger Bands, the price moved out of the upper band so a strong trend continuation can be expected. In conclusion, we think the market will be slightly bearish as the RSI is entering overbought levels. The pair might witness some short-term technical corrections before climbing higher toward the next resistance at 1.0438.
Resistance: 1.0438, 1.0484
Support: 1.0158, 1.0082, 0.9991
The GBP/USD pair rallied on Wednesday, adding to its intraday gains and touched a daily high above the 1.226 mark in the US session amid a weaker US dollar across the board. At the time of writing, the cable stays in positive territory with a 1.37% gain for the day. The softer US CPI data today seems to have pushed back market expectations for a larger Fed rate hike move at the September policy meeting and exerted heavy bearish pressure on the safe-haven greenback. However, investors still expect more tightening from the Federal Reserve but the doors are open to less aggressive action, which means a rate hike of at least 50 basis points is still on the table. For the British pound, the fears of a possible recession and the BoE’s gloomy outlook could act as a headwind and cap the upside for the cable.
For the technical aspect, the RSI indicator stands at 68 as of writing, suggesting that the pair remains bullish in the short run as the RSI heads north almost vertically. For the Bollinger Bands, the price regained strong upside momentum and moved out of the upper band, therefore a continuation of the upside trend can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.2277 resistance line. The risk will remain skewed to the upside if the pair break above the aforementioned level.
Resistance: 1.2277, 1.2309, 1.2381
Support: 1.2186, 1.2068, 1.1940
As the US dollar came under heavy selling pressure amid the softer-than-expected US CPI report on Wednesday, the pair XAU/USD witnessed some buying but then retreated to the US$1,793 area to surrender most of its daily gains during the US trading session. XAU/USD is trading at US$1,797.42 at the time of writing, rising 0.16% on a daily basis. The post-US CPI broad-based US dollar sell-off and diminishing odds for a larger Fed rate hike have both acted as a tailwind for the dollar-denominated gold, as the odds for a 75 bps Fed Rate hike move in September tumble to just 35% now. However, the risk-on market mood and the strong rally in the US equity markets should limit the gains for the safe-haven metal.
For the technical aspect, the RSI indicator stands at 64 as of writing, suggesting that the upside is more favoured as the RSI indicator remains above the mid-line. For the Bollinger Bands, the price continued to rise toward the upper band, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the technical indicators head firmly higher within positive levels. On the upside, a break above the US$1,812 resistance could open the door for additional gains.
Resistance: 1812, 1822, 1831
Support: 1785, 1769, 1756