The dollar extended its rally, buoyed by prospects of higher interest rates last week after the Fed reaffirmed its hawkish stance to rein in inflation during the Jackson Hole Symposium before paring recent gains on Monday. Traders are also anticipating a 75bps rate hike in its September meeting and will be keeping a close watch on the non-Farm payroll data due on Friday which could provide more insights into Fed’s moves going forward.
On the other hand, the Euro hovered near parity levels against the stronger greenback, supported by safe-haven demand flow and a hawkish Fed. Meanwhile, traders weigh between prospects of higher interest rates by the ECB in its September meeting to curb inflation against recession concerns in Europe, which is exacerbated by the deepening energy crisis, causing the currency to hover close to its 20-year lows. Markets are now anticipating a 50bps rate hike in its September meeting.
WTI oil extended its rally to trade at around $97 per barrel as supply constraints continue to outweigh slowdown fears which could dim the oil demand outlook. Saudi Arabia suggested last week that OPEC+ production might be reduced, with Congo and Libya supporting this idea. Elsewhere, concerns about supply disruption were exacerbated following violent confrontations between rival militias in Libya’s capital and delays at crucial Kazakhstani crude export facilities.
On the H4 time frame, a pullback to the resistance zone at 1759.80, in line with the Fibonacci confluence levels and graphical support-turned-resistance zone presents an opportunity to play the drop to the support zone at 1713.50. Prices are holding below the Ichimoku cloud as well showing signs of bearish pressure. Failure to hold below the resistance zone at 1759.80 could see prices push higher to the next resistance zone at 1782.80.
Before:
After:
On the H4 time frame, prices are facing bearish pressure from the resistance zone at 0.9680, in line with the 61.8% Fibonacci retracement and graphical support-turned-resistance zone. We could see further downside below this zone to the support zone at 0.9550. Stochastic is showing bearish divergence as well where we could see further downside in prices.
On the M30 time frame prices are approaching resistance at 0.61880 where we could see a reversal below this level. The 0.6188 resistance zone lines up with the graphical support-turned-resistance zone and 61.8% Fibonacci retracement. A pullback to this zone presents an opportunity to play the drop to the next support target at 0.6100.
On the H4 time frame, prices are facing bullish pressure from the support zone at 1724.50, in line with the 1.272% Fibonacci retracement where we could see further upside above this support zone, with 1783.80 as the next resistance target. Stochastic is showing bullish divergence as well as highlighted in green, indicating potential for more upside in prices.
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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