The British monthly GDP is announced on Friday at 09:00 MT time.
Market updates on August 1
Key events ahead:
Monetary policy summary by the BOE, BOE inflation report – 14:00 MT time
ISM manufacturing PMI for the US – 17:00 MT time
- Yesterday, the Federal Reserve cut the interest rate by 25 basis points. The market had fully priced in this decision and expected more hints on the further path of the interest rate’s cut. However, the Fed Chair Jerome Powell failed to be as dovish as the market wanted him to be. The statement was mostly the same as the previous one, and the USD rose higher. EUR/USD has tested the support at 1.1033. If this level is broken, the pair will slide lower to the 1.0982 level. If the USD weakens, the pair will have a chance to rise above the 1.1056 level. The next resistance will lie at 1.1137. After that, pay attention to the 1.1155 level.
- The British pound has tested fresh lows at the 1.2108 level and is awaiting the bank of England to determine the further direction for the cable. If the current support is broken, the next level will lie at 1.2017. If the central bank supports the pound, GBP/USD may rise to the 1.2177 level. The next resistance will be placed at 1.2248. Technically, the price formed a bullish divergence with MACD on H4, which may signal a rebound soon.
- USD/JPY has risen after the Fed decision. After the test of the 109.31 level, the pair fell to the support at 109.08. If the pair continues to weaken, the next support will be placed at 108.71. After that, pay attention to the levels at 108.51-108.45, as there will be high chances of reaching these levels. From the upside, if bulls retest the 109.31 level, the next resistance will lie at 109.61.
- The Brazilian central bank unexpectedly cut its interest rate to the record low of 6% since 1986. The rate cut pushed USD/BRL higher above the 50-period SMA on H4 to the resistance at 3.8270. The next resistance will lie at 3.8470. From the downside, pay attention to 3.7604 and 3.7317 level.
The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
The US unemployment claims are out on Thursday at 15:30 MT time.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.