EUR/USD Price Analysis: Upside remains capped by 1.0100

 

• EUR/USD fades the initial bull run to 0.9985/90.
• The resumption of the selling pressure could retest the YTD low.

EUR/USD climbed to the proximity of 0.9990 earlier in the session, just to deflate afterwards and return to the 0.9930 region.

Against that, the inability of the pair to regain serious upside traction should keep the door to further retracement open in the near term. Extra losses face the immediate target at the 2022 low at 0.9877 (September 5) seconded by 0.9859 (December 2002 low) and then 0.9685 (October 2002 low).

The continuation of the downtrend remains in the pipeline, as the daily RSI around 36 still allows for some weakness prior to reach the oversold territory.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0780.

When is the Canadian monthly jobs report and how could it affect USD/CAD?

 

Canadian employment details overview

Statistics Canada is scheduled to publish the monthly employment details for July later this Friday at 12:30 GMT. The Canadian economy is anticipated to have added 20K jobs during the reported month, up sharply from the 43.2K decline reported in June. Meanwhile, the unemployment rate is expected to edge higher to 5.0% in July from the 4.9% previous.

Analysts at TD Securities (TDS) are more optimistic about the report and explain: “We look for job growth of 38k in July, driven by a partial rebound for trade services and natural resources after their sharp decline in June. Full-time hiring should lead the increase, while stronger labour force participation should keep unemployment stable at 4.9%. We also expect to see wage growth firm to 6.0% y/y in July, although AHE (Average Hourly Earnings) should slow on a m/m basis.”

Indonesia: Inflation accelerated in July – UOB

 Enrico Tanuwidjaja, Economist at UOB Group, comments on the latest inflation figures in Indonesia.

Key Takeaways

“July’s headline inflation jumped to 4.9% y/y, breaching Bank Indonesia (BI)’s 4% target upper bound for the second month in a row and currently at 7-year high, while core inflation rose to 2.9% y/y, a 28-month high, from June’s 2.6%.”

“Inflation in July continued to be driven by upward pressures from food services and restaurants and transport, in addition to housing, water, electricity and household fuel.”

“We revised our 2022 inflation forecast now to average 4% viz. 3.3% previously and for BI to hike rates now in Sep instead of in Jul.”

US Dollar Index Price Analysis: Further losses not ruled out

 

• DXY accelerates the corrective decline to the 105.30 zone.
• Immediate to the downside appears the 55-day SMA at 104.75.

DXY navigates the fourth consecutive session with losses and revisits the 105.30 region at the beginning of the week.

The index broke below the multi-session pre-FOMC consolidative theme and in doing so it has paved the way for extra decline in the short-term horizon. That said, the immediate support now turns up at the interim 55-day SMA at 104.75 ahead of the 5-month support line around 103.85.

The near-term outlook for DXY remains constructive while above this 5-month support line near 104.00.

In addition, the broader bullish view remains in place while above the 200-day SMA at 99.49.

Fed's Bostic: Fed is going to have to do more with interest rates

  "The Federal Reserve is going to have to do more with interest rates but details depend on the flow of data in coming months," Atlanta Fed President Raphael Bostic said on Friday, as reported by Reuters.

Additional takeaways

"The country is not in recession, but the real question is whether current conditions are creating hardship, inflation needs to be addressed."

There is still more work to be done on bringing demand and supply into balance."

"Rate hikes could hurt job growth, but so far seems there is momentum for continued hiring."

"Possible to control inflation while limiting the number of families who have really bad outcomes."

"The US is a ways from a recession, though concerned that recession fears could become self-fulfilling."

Market reaction

These comments don't seem to be having a significant impact on the greenback's performance against its rivals. As of writing, the US Dollar Index was down 0.25% on the day at 105.92.

Malaysia: Inflation surprised to the upside in June – UOB

 UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest inflation figures in the Malaysian economy.

Key Takeaways

“Headline inflation breached the 3% level for the first time this year at 3.4% y/y in Jun (from 2.8% in May). It came in higher than ours and Bloomberg consensus of 3.2%. Price pressures broadened with more consumer price index (CPI) components recording larger price increases last month compared to the preceding month, led by food and transport components.”

“We expect CPI growth to jump above 4.0% in 2H22 after averaging 2.5% in 1H22. Our 2H22 inflation outlook largely rests on high commodity prices, year-ago low base effects, persistent currency weakness, changes in some staple food prices (i.e. chicken, eggs and cooking oil), and recovering domestic demand. The new targeted fuel subsidy mechanism, which is currently under pilot testing, will pose upside risks to our inflation outlook should it be implemented over the next few months.   As such, our current full-year inflation forecast of 3.0% is subject to upward revision next month when the Jul CPI reading is released (vs. 2.5% in 2021, BNM est: 2.2%-3.2%).”

“The combination of factors including broadening second-round effects on inflation, firmer domestic economic recovery, and diminishing real interest rate gap with US continue to suggest a need for further policy normalisation. We expect Bank Negara Malaysia to deliver another 25bps rate hike at the next MPC meeting on 7-8 Sep, taking the Overnight Policy Rate (OPR) to 2.50%.

Germany's Habeck: We want to prevent a domino effect in gas market

  

German Economy Minister Robert Habeck said on Tuesday that they will stick to their plan of prioritizing private households in case of a gas emergency, as reported by Reuters.

"The gas market situation is tense, cannot say whether more protection measures will be needed," Habeck added. "We want to prevent a domino effect in the gas market."

Market reaction

Safe-haven flows continue to dominate the financial markets following these remarks. As of writing, Germany's DAX 30 Index was down 1.5% on the day at 12,580.50 points.

EUR/USD eyes 2020 lows at 1.0637 as USD regains poise

 

 The latest candle on the four-hour chart closed below 1.0700. The Relative Strength Index (RSI) indicator on the same chart stays near 40 and the descending line coming from April 21 stays intact, highlighting EUR/USD's bearish bias in the near term. 

It's worth noting that EUR/USD will touch its weakest level since April 2017 with a drop below 1.0635. Sellers might see such a move as a profit-taking opportunity and trigger a correction in the pair. In that case, 1.0700 (psychological level) aligns as the next recovery target before 1.0730 (static level) and 1.0760 (static level).

On the downside, a daily close below 1.0640 is likely to open the door for additional losses toward 1.0600 (psychological level) and 1.0570 (static level from March 2017).

Prediction on Gold on 22/02/2022:

- In yesterday's trading session Gold only fell slightly to 1887 then bounced back to around 1905, closing the day session with a bullish candle around 1903. With the Russia-Ukraine crisis escalating. The high again makes the prospect of reconciliation between the parties dim at the moment, so in my opinion, Gold will continue to be pushed up in today's session.

- Switching to a smaller time frame of H4 we can see that Gold is unlikely to have a big correction and the 1905-1902 price zone is the closest support area to push this precious metal up with a safe target. will be 1916-1921, expect to be 193x in today's trading session.

📕 Prediction on Gold on February 17, 2022:

- In yesterday's trading session, precious metal Gold went right in its analysis when it bounced up from 1850 to 1872, closing yesterday's session with a bullish candle around 1869. With Gold in today's trading session. Yesterday, it regained its upward momentum after having 1 previous decline, in my opinion, it is likely that in today's session, Gold will still be supported by this increase.

 - Switching to the H4 time frame, we can see that the increase of the last 3 candles is relatively good and if in the beginning of today's session, Gold has a slight correction around 1862, this is an opportunity. so that ace can establish a buy position with a safe target in the "old top" zone 1872-1878.