- ECB’s rate cut is expected with EURUSD staying below 1.1200
- US CPI data may be another sign before Fed’s decision
- GBPUSD may plunge further if UK employment data disappoint
ECB interest rate decision –> EURUSD
Several important economic data releases and events may affect market sentiment in the next few days, following a gloomy week. The focus will be on the European Central Bank’s (ECB) rate decision on Thursday, as the bank is expected to decrease interest rates for the second time this year while portraying it as a “hawkish cut.” The argument for additional policy easing has strengthened since the last meeting in July, when the bank left rates unchanged.
EURUSD is declining, despite an unsuccessful attempt to hold above the 1.1100 round number. The 1.1030 barrier could provide immediate support ahead of the 50-day simple moving average (SMA), which overlaps with the 1.0950 barrier. If the market remains well above the long- and short-term ascending trend lines, the outlook is still bullish.US CPI data –> USDJPY
Following the NFP report on Friday, which showed an increase in payrolls of 142k and a decrease in unemployment to 4.2% from 4.3%, the US CPI data on Wednesday will provide additional insight before the September interest rate decision. In July, the headline CPI rate dropped to 2.9% y/y and is expected to drop again to 2.6% in August. The core rate, on the other hand, is expected to have stayed the same at 3.2%.
USDJPY battled with the more-than-seven-month low of 141.60 on Friday and is currently rising near the inside swing low of 143.40. More increases could take the price towards the 146.45-147.15 resistance zone, which encapsulates the 23.6% Fibonacci retracement level of the down leg from 161.94 to 141.60. On the other hand, a dive below the previous trough could open the way for a test of the 140.20 support.UK employment report –> GBPUSD
In June, the unemployment rate decreased by 4.2% and is forecasted to fall to 4.1% in July. However, an additional substantial decrease may not be as advantageous, as wage growth is finally approaching levels that are more in accordance with inflation of 2.0%. A surge in employment could impede the BoE’s efforts to combat inflation and exacerbate wage pressures.GBPUSD is losing some momentum, holding near the 1.3100 psychological level and slightly above the support area of 1.3045-1.3085. A drop below this zone could energize the bears to drive it until the 50-day SMA at 1.2935 and the rising trend line around 1.2870. However, a rally beyond the almost two-and-a–half-year high could send the price towards the March 2022 peak at 1.3310.
Source by: XM Global