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Market Analysis

Market Analysis: US Dollar Retreats from Key Resistance, CPI & PPI Data Incoming

📢 The US dollar is currently experiencing a sharp drop, with below-expected numbers causing a notable response.

📣 The Bank of Japan (BoJ) confirms that their recent adjustment to the yield curve is intended to maintain loose monetary policy in a sustainable manner.

✔️ The USD/JPY and GBP/JPY pair have risen steadily, while the bullish momentum of the GBP/JPY has stalled near its recent high.

✍️ The Canadian Dollar’s correlation with oil prices may be changing due to unprecedented interest rate hikes over the past 24 months.

💡 Gold is attempting to maintain support, while silver is targeting its moving average.

📊  EUR/USD has reclaimed 1.1000 amid improving risk sentiment, however risk remains skewed to the downside based on Momentum and RSI indicators on daily charts.

📉 US Treasury yields experienced a steep decline before rebounding today;

♻️ Hawkish comments from US Federal Reserve policymakers have fueled concerns for potential rate hikes if inflation progress stalls.

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Stay ahead of the curve with our assessment on EUR/USD, USD/JPY & GBP/USD price formations as the greenback retreats and CPI figures grab the spotlight.

Retaining Meaning and Intent:

Following a mixed US jobs report (NFP), the US dollar has experienced a sharp drop, erasing most of its weekly gains. This sets the stage for the upcoming US inflation data on Wednesday, which will be closely watched.

While non-farm payrolls were lower than expected, the unemployment rate fell and average hourly earnings were higher than anticipated.

This suggests that job demand is slowing but the labor market remains tight. It’s important to note that recent data has had a significant impact on the US dollar, with below-expected numbers causing a notable response.

However, positive data has failed to make a lasting impact. Despite this, the US Economic Surprise Index is currently at its highest level since early 2021.

Keep an eye on the DXY Index (US dollar index) as it hovers around its lows for the year.

BOJ Confirmation: Yield Curve Tweak Aimed at Sustainable Monetary Policy

  • USD/JPY: Rising 10-Year Yields Drive Broad USD Uptrend
  • The USD/JPY pair continues to trend upwards, driven by increasing 10-year yields
  • GBP/JPY: Bullish Momentum Stalls Near Recent High
  • The bullish momentum of the GBP/JPY pair has come to a halt, falling just short of its recent high.


The Bank of Japan (BoJ) clarifies that their recent adjustment to the yield curve is intended to maintain loose monetary policy in a sustainable manner.

Rather than capping the 10-year Japanese Government Bond yield at 0.5%, the Bank now allows it to trade flexibly above this level. This change, contrary to market expectations, does not signal immediate policy normalization.

The BoJ remains cautious about the demand-driven nature of inflation and the ability to sustain a level of over 2%. A change in course is still unlikely at this point.

Canadian Dollar Price, Charts, and Analysis: Is the CAD/OIL Correlation Dead?


Despite a strong rally in Oil markets, the Canadian Dollar has been struggling lately, raising questions about its correlation with Oil prices.

With unprecedented interest rate hikes in the past 24 months, the relationship between the USDCAD and Oil prices may be changing.

Market participants believe that the Bank of Canada (BoC) has reached its peak rate and may be done with further hikes.

The upcoming BoC meeting is expected to maintain steady rates with a 72% probability of no change. Meanwhile, other central banks may continue with interest rate hikes.

The week ahead lacks high impact events for the Canadian Dollar, but volatility may arise from the US CPI data release.

Keep an eye on key support and resistance levels for potential intraday movements.

Gold Struggles to Maintain Support, Silver Targets Moving Average

In a surprising turn of events, US Treasury yields experienced a steep decline towards the end of last week, following disappointing job numbers for July. Despite this, yields have rebounded today, possibly indicating traders’ desire for higher returns.

Gold currently sits at a crucial support level, but its price remains within a steady trading range. With volatility at multi-month lows and limited macro news on the horizon, it’s likely that this range will hold steady for the time being.

Don’t miss the latest analysis on gold and silver prices, including charts and insights. Stay informed and make smarter investment decisions.

EUR/USD Reclaims 1.1000 Amid Improving Risk Sentiment


The EUR/USD pair made a strong recovery towards the 1.1000 level on Monday as the market mood improved. With no significant data releases, the bullish opening on Wall Street weakened the US Dollar, allowing the pair to rise higher.

Although the pair pulled back slightly from its early high of 1.1014, it continues to trade above the 61.8% retracement level of the previous rally at around 1.1005. However, the risk remains skewed to the downside.

Chart tools

Looking at the daily chart, the Momentum indicator remains in negative territory, while the Relative Strength Index (RSI) has declined to around 47, indicating the potential for further downside.

The 20 Simple Moving Average (SMA) has become directionless but remains above the current level, providing support, while the 100 SMA acts as dynamic support around 1.0920.

In the short term, a bearish extension seems unlikely, according to the 4-hour chart. The EUR/USD pair found buyers around the flat 20 SMA, while the 100 SMA continues to show downward momentum well above the current level.

Additionally, technical indicators are pointing upwards within neutral levels, suggesting a decrease in selling pressure for now.

Key support levels to watch are 1.0960, 1.0920, and 1.0870, while resistance levels are at 1.1005, 1.1065, and 1.1105.

The US Dollar has regained strength, bringing EUR/USD down to around 1.0980 from its daily low of 1.0964. Concerns about potential rate hikes in the US have pushed government bond yields higher, although they still remain below last week’s highs. The 10-year Treasury note currently yields 4.11%, up 5 basis points.

Stock markets in Asia and Europe have started the week on a negative note, adding to the cautious sentiment. Hawkish comments from US Federal Reserve policymakers have fueled concerns, with Governor Michelle Bowman stating the need to raise interest rates if inflation progress stalls.

In terms of data, Germany’s June Industrial Production came in weaker than expected, while the Eurozone’s August Sentix Investor Confidence improved.

The US calendar for the week does not have any significant data scheduled, with the next important release being the July Consumer Price Index (CPI) on Thursday.

Why Market Analysis is Crucial for Traders

In the fast-paced world of trading, staying ahead of the curve is essential for success. To make informed decisions and maximize profits, traders need to have a deep understanding of the market. This is where market analysis comes into play.

By analyzing various aspects of the market, traders can gain valuable insights that can guide their strategies. In this blog post, we will explore why market analysis is crucial for traders and how it can help them navigate the complexities of the financial markets.

Understanding Market Trends: The Key to Success

One of the primary goals of market analysis is to identify and analyze market trends. By studying historical data, traders can spot patterns and trends that can influence future price movements. Whether it’s an uptrend, downtrend, or sideways movement, understanding market trends is essential for traders to make informed trading decisions.

To assess market trends, traders utilize key indicators and tools such as moving averages, trendlines, and chart patterns. These tools help them identify the overall direction of the market and make predictions about potential price movements. By incorporating market trend analysis into their decision-making process, traders can increase their chances of success.

Assessing Supply and Demand: Timing is Everything

Supply and demand dynamics play a crucial role in determining market prices. As a trader, analyzing the balance between supply and demand can help you identify potential market imbalances and predict price fluctuations. By understanding the forces that drive supply and demand, traders can time their entry and exit points more effectively.

To assess supply and demand, traders analyze factors such as inventory levels, production data, and consumer demand. By keeping a close eye on these indicators, traders can spot opportunities to buy low and sell high, maximizing their profits.

Evaluating Competitor Analysis: Staying Ahead of the Game

In the competitive world of trading, knowing what your competitors are doing is vital. By studying competitor behavior and strategies, traders can identify potential threats and opportunities. Competitor analysis allows traders to understand the market dynamics and adjust their trading strategies accordingly.

Traders often monitor competitor news, earnings reports, and market share data to gain insights into their competitors’ positions in the market. This information can help traders anticipate market movements and make informed decisions.

Risk Management: Protecting Investments

Market analysis is not only about identifying profitable opportunities but also about managing risks. Traders need to assess market volatility and potential risk factors to protect their investments. By incorporating market analysis into risk management strategies, traders can minimize losses and safeguard their capital.

Risk management techniques such as setting stop-loss orders, diversifying portfolios, and using proper position sizing are crucial for successful trading. Market analysis provides traders with the necessary information to make calculated risk management decisions.

Market Research: Uncovering Profitable Opportunities

In addition to analyzing market trends, supply and demand dynamics, and competitors, traders must conduct thorough market research. Market research involves gathering data on market size, growth potential, and other relevant factors. By understanding the broader market landscape, traders can identify profitable trading opportunities.

Market research can involve studying consumer behavior, economic indicators, industry trends, and regulatory changes. By staying informed about market developments, traders can adapt their strategies and capitalize on emerging opportunities.

Takeaway

Market analysis is a fundamental aspect of successful trading. By understanding market trends, assessing supply and demand dynamics, evaluating competitor analysis, managing risks, and conducting thorough market research, traders can make informed decisions and increase their chances of success.

Incorporating market analysis into trading strategies empowers traders to navigate the complexities of the financial markets and seize profitable opportunities. To thrive in the world of trading, traders must embrace the importance of market analysis and continuously refine their skills in this critical area.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.