US greenback technical evaluation

• EUR/USD is driving greater on the Shopper Worth Index (CPI) wave. Euro bulls proceed to say no (CoT report)
• Pound dangers overheating after UK election, US CPI catalyst
• Australian greenback momentum slows after China slows
• Enhance your buying and selling abilities and achieve a aggressive benefit. put your hand on Greenback Immediately’s outlook for the third quarter offers unique insights into key market catalysts that each dealer ought to be watching:

EURUSD follows U.S. client value index (CPI) wave greater

With the French legislative elections over, the euro has seen renewed vigor – largely as a consequence of a pointy fall within the greenback as expectations for a September fee reduce from the Federal Reserve are virtually totally priced in.

EUR/USD has gained about 250 factors from its late-June lows, simply surpassing the 50-day and 200-day easy shifting averages (SMA). The pair now sees a significant resistance zone – the world between 1.0942 and 1.0960. These two ranges correspond to the 50% and 61.8% Fibonacci retracement ranges of the 2021-2022 decline and the primary 2023 decline, respectively. The resistance zone has contained bullish momentum for a lot of the yr, with solely two temporary breaks — albeit solely on an intraday foundation.

After hitting the June swing excessive of 1.0916, the bullish momentum might hit resistance forward of the primary zone, with the RSI indicator dangerously near overbought territory.

Jerome Powell’s speech later this afternoon may increase EUR/USD if he maintains the marginally dovish tone he adopted throughout his two days of testimony final week. Nevertheless, doubtlessly weak ZEW financial sentiment tomorrow may weigh on the pair, aiding a pullback.

EURUSD day by day chart

Supply: TradingView, written by Richard Snow

The EUR/USD place exhibits a definite lack of bullish curiosity, which is comprehensible given decrease rate of interest expectations and uncertainty surrounding the French election.

Issues could also be completely different subsequent week as the present positioning knowledge doesn’t keep in mind any adjustments on both aspect of the US Shopper Worth Index (CPI).

EURUSD chart with speculative place knowledge from the U.S. Commodity Futures Buying and selling Fee (CFTC)

Supply: CFTC, CoT report, ready by: Richard Snow

Cables susceptible to overheating after UK election, US CPI catalysts

GBP/USD has soared greater than 350 factors since its unstable lows in late June. The UK election outcomes are largely educational, because the pole factors counsel a landslide victory for Labor. Markets despise uncertainty, which is why UK belongings reacted effectively following the outcomes.

The sharp sell-off within the US greenback has solely strengthened the bullish pattern in GBP, taking the pair to contemporary yearly highs. The following important resistance lies on the July 2023 swing excessive of 1.3142, however because the RSI seems to be recovering from overbought territory, the chance of overheating has turn into extra obvious. It is commonplace for markets to take a breather after such a speedy rise, that means a short-term correction can’t be dominated out at this stage.

GBP/USD day by day chart

Supply: TradingView, written by Richard Snow

Speculative lengthy positions held by massive speculators and hedge funds, that are obliged to reveal their positions to the Commodity Futures Buying and selling Fee, have surged, widening the hole between longs and shorts. There’s a clear choice for GBP, with bulls growing considerably whereas bears stay subdued. The latest fall within the US greenback has helped the pound turn into one of many main winners within the FX area.

GBP bulls speed up net-long enlargement

Supply: CFTC, CoT report, ready by: Richard Snow

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Australian greenback momentum slows after China’s financial slowdown

In contrast with the second quarter of final yr, China’s second quarter GDP progress fee was decrease than anticipated. In contrast with the primary quarter of 2024, it additionally elevated by 0.7%, decrease than the anticipated 1.1%, and decrease than the 1.5% of the primary quarter of 2024. .

Whereas danger belongings are performing effectively, worse-than-expected knowledge may weigh on AUD/USD’s bullish features. The Australian greenback tends to trace the S&P 500, which has outperformed thus far in 2024 due to a handful of shares. The Federal Reserve can be anticipated to chop rates of interest for the primary time because the fee hike cycle started in September, in sharp distinction to the Reserve Financial institution of Australia’s (RBA) considering within the face of cussed inflation.

Optimistic and widening rate of interest differentials between Australia and america are serving to the Australian greenback stay elevated, however the pair has not too long ago entered overbought territory, opening the potential for a short-term pullback. Potential help is seen at 0.6730, and if the bullish momentum resumes greater, an upward extension would happen on the late December excessive of 0.6870.

AUD/USD day by day chart

Supply: TradingView, written by Richard Snow

AUD sentiment has not too long ago turned constructive (internet lengthy) as a consequence of latest rate of interest differentials between Australia and the US, with bears stalling and bulls accelerating.

Speculative lengthy and quick positions in AUD/USD

Supply: CFTC, CoT report, ready by: Richard Snow

—Written by Richard Snow for DailyFX.com

Join and comply with Richard on Twitter: @RichardSnowFX