Forex Market Outlook: 11 August 2022

Updated August 11, 2022

The dollar weakened after the US inflation retreated from its 40-year high of 9.1% in June and fell more than anticipated to 8.5% in July of 2022, which was lower than market expectations of 8.7%. Core inflation was stable at 5.9%, below market estimates of 6.1%, providing some assurance that inflation has peaked, easing pressure on the Fed for more aggressive moves ahead.

Euro rallied higher on the back of the Dollar’s weakness to a fresh month’s high as traders scaled back on Fed rate hikes. Markets are also expecting ECB to hike rates by 50 basis points in its September meeting to rein in inflation. The currency’s upside remains limited in the long run weighed down by stagflation risks and the energy crisis which could cause the Eurozone to suffer further negative shock considering how the region is reliant on energy imports.

Sterling extended its rally before retreating from its recent highs, benefiting from yesterday’s selloff in the Dollar. Looking ahead, notable publications include the Q2 GDP data which could determine whether the country is entering a recession. Supply-driven inflation and political uncertainty could continue to weigh on the Sterling and leave the BoE less room to manoeuvre as inflation continues to climb despite four consecutive rate hikes.

Trade ideas that played out on Tuesday: 9 August 2022

XAUUSD H1: Bullish outlook has seen, further upside above 1779.00

On the H1 time frame, prices are holding above an ascending channel and approaching the support zone at 1779.00, in line with the Fibonacci confluences and ascending channel’s support. This presents an opportunity to play the bounce to the next resistance target at 1802.80. Prices are holding above the 50 EMA as well, supporting the bullish bias.

Before:

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/XAUUSD/w3XNWZW7-XAUUSD-H1-Bullish-outlook-seen-further-upside-above-1779-00/

After:

Today’s trade ideas: 11 August 2022

GBPUSD H1: Bearish outlook seen, further downside below 1.2230

On the H1 time frame, prices are facing bearish pressure from the resistance zone at 1.2230, in line with the 38.2% Fibonacci retracement and a pullback to this resistance zone presents an opportunity to play the drop to the support target at 1.2120. Stochastics is testing resistance at 95.66 as well where we could see further downside, in line with prices.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/GBPUSD/B9CtyVWn-GBPUSD-H1-Bearish-outlook-seen-further-downside-below-1-2230/

USDCAD H4: Bearish outlook seen, further downside below 1.2840

On the H4 time frame, prices broke its previous ascending trend line where we could see further downside risks. A pullback to the resistance zone at 1.2840, in line with the support-turned-resistance area and Fibonacci confluences could see a reversal below this zone to the support zone at 1.2680. Prices are holding below the 50 EMA as well, supporting the bearish bias.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDCAD/7WjpQCv1-USDCAD-H4-Bearish-outlook-seen-further-downside-below-1-2840/

XAUUSD H4: Bearish outlook seen, further downside below 1802.80

On the H4 time frame, prices are facing bearish pressure from the resistance zone at 1802.80 in line with the Fibonacci confluence levels where we could see further downside below this zone. A pullback to the resistance zone at 1802.80 presents an opportunity to play the drop to the support target at 1759.50. Stochastics is testing resistance at 95.30 as well where we could see more downside, in line with prices.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDCAD/7WjpQCv1-USDCAD-H4-Bearish-outlook-seen-further-downside-below-1-2840/

Past performance is no indication of future performance. This report is provided by Zeta Labs, a specialized Forex Fintech Consultant and Technical Advisor who provides white-label solutions for FX Market Analysis, trading insights and education webinars. The team has a wealth of industry experience, with our analyst being part of the team recognised by The Technical Analyst Awards as Finalist for the Best FX Research for 4 consecutive years (2019, 2020, 2021, 2022). 

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