Daily FX Analysis, Aug 19 –Major Trade Setups & EU CPI In The Limelight!

The summer calm will extend into this week as economic events will remain sparse. Nevertheless, meeting minutes from the central bank and the annual conference of central bankers at the Jackson Hole Economic Symposium should produce loads of headlines ahead of proposed policy easings in September. Besides, the trade and geopolitical tensions will also come to the fore as world leaders attend a G7 summit in France.

Bitcoin (BTC/USD) has restored the psychologically level $10,000 whole figure level (as part of its ongoing 2-month consolidation) after some profit-taking during the previous week. Whereas the buyers see BTC/USD recapitulating an up channel. Bulls are also suggested to closely monitor Ripple (XRP/USD) and Ethereum (ETH/USD) as these seem to reclaim (after breaking last week) major prior support at 0.3 and 200 respectively.

Economic Calendar – Eurozone's Inflation Report In Focus

EUR/USD – Inflation Figures Set to Drive Price Action

One of the most important fundamental today is the Eurozone’s July inflation figures which are due to kick the week off. Excluding any deviation from prelim numbers, the focus will be on the headline CPI figure.

Later, the investors focus will shift to August prelim private sector PMI numbers due out on Thursday. Expect the German manufacturing PMI and the Eurozone’s composite PMI to be the key drivers. Moreover, the Eurozone's service sector activity will need to extend support, though. Moderate growth in services and anticipate risk aversion to impact.

The single currency hasn't moved much as the EUR/USD pair continues to trade below support come resistance level of 1.1115. Previously, the EUR/USD declined to a new 2-week low of 1.1091, as US economic figures shocked to the upside, while ECB’s Rehn discoursed about “significant” stimulus required. US Retail Sales increased by 0.7% in July, more than doubling the 0.3% boost expected.

Investors are still likely to trade EUR/USD with a bearish bias, but most of the price action will be determined by the Final CPI data during the European session. Thus, we may see a further drop in the EUR/USD until 1.1060. The immediate resistance stays at 1.1115 today.

EUR/USD – Daily Technical Levels

Support Resistance

1.1118   1.1178

1.1094   1.1215

1.1034   1.1275

Pivot Point 1.1154

EUR/USD – Daily Forecast

On Monday, I will be looking to stay bearish below 1.1115 to target 1.1080 and 1.1060 support areas today. Below this, the EUR/USD can extend bearish rally until 1.1030 today.

GBP/USD – Sideways Trading Range Remains Intact

The GBP/USD ended the week up by 0.96% to $1.2149. This week, we don't have much fundamental news scheduled for Sterling, however, the August’s CBI Industrial Trend Orders may drive some price action in GBP/USD, which is due to be released on Tuesday. We will discuss it in more details tomorrow.

The GBP/USD pair has ended the week with gains, a handful of pips below the 1.2150 level. The GBP/USD spiked to place a high around 1.2140, breaking above the bearish trendline resistance area.

Bullish trend in Sterling continued for a third consecutive day, mostly supported by some headlines indicating that Labour leader, Jeremy Corbyn, has been in discussions with the Scottish National Party, on how to strive together to prevent a no-deal Brexit.

Technically, the GBP/USD has closed outside of downward trendline which was extending resistance at 1.2140. At the moment, this level is likely to work as a support for the Cable. The Relative Strength Index (RSI) has already crossed over 50, suggesting a strong bullish bias among traders.

On the upperside, resistance stays at 1.2207, while support is likely to be 1.2140 and below this, the 1.2100 level may underpin the GBP/USD.

GBP/USD – Daily Technical Levels

Support Resistance

1.2096 1.2186

1.2046 1.2226

1.1956 1.2316

Pivot Point 1.2136

GBP/USD – Daily Forecast

I’m looking to stay bullish above 1.2136 with a target of 1.2170 and 1.2200 on the upper side.

Gold – Choppy Trading In Narrow Range, Breakout Eyed

During the Asian session, the precious metal gold continues to trade is sideways, within a narrow trading range of around 1532 - 1508 as investors are in a phase of indecision whether to go short and do profit-taking in gold or to stay bullish amid U.S.- China trade war and a steep fall in U.S. bond yields. Besides that, the hopes of stimulus from major central banks eased fears of a steep global economic downturn.

During the weekend, China’s central bank revealed a key interest rate change to help drive borrowing costs lower for companies, and support a drop in economic growth. The yellow metal gold is supported amid trade war and other geopolitical tensions around the globe. Immediate resistance stays at 1517. It’s a crucial level as a violation of this open further room for buying until 1524.

On the lower side, gold is likely to gain support around 1,508 and 1,495.

Gold – Daily Technical Levels

Support Resistance

1483.43 1539.31

1453.42 1565.18

1397.54 1621.06

Pivot Point 1509.3

Gold – Daily Forecast

On Friday, let's keep an eye on 1,509.3 level as gold is likely to stay bearish below this and bullish above this level.

All the best and have a profitable day!