Weekly Forex Outlook: August 27-31

Last week the US dollar continued its decline from August highs. The USD index dropped to 95.00.

The week ended with the Federal Reserve’s meeting at Jackson Hole. The head of American central bank Powell said that the Fed will continue to gradually raise interest rates despite President Donald Trump’s recent criticism of such policy.

Powell’s comments improved traders’ risk sentiment. As a result, risk-sensitive currencies like the AUD and the NZD rose, and the USD declined. Another blow to the USD may come from Donald Trump’s political problems. He seemed to survive the accusations made by his lawyer but the situation may worsen. 

EUR/USD is looking bullish despite some worries about Italy. The pair managed to close above the April-July resistance line on Friday. Upside targets lie at 1.1710, 1.1770, and 1.18. Support is at 1.1550.

GBP/USD recovered but traders may be reluctant to buy the GBP until there are some really good news about Brexit. Resistance is at 1.29 and 1.2950, support is at 1.2740.

Mexican peso is rising on the news of progress in the North American Free Trade Agreement. The CAD may also strengthen a bit. USD/CAD has support at 1.2970 and 1.2920. The AUD and the NZD remain within downtrend channels versus the USD as there’re are some negative domestic factors for them. The overall risk sentiment may worsen as the United States and China introduced new trade tariffs for each other.

Looking ahead, we have to admit that the economic calendar is light at this final week of summer. Trading may become calmer and the currency pairs may consolidate as investors readjust their positions and think what lies ahead. The most important economic releases of the upcoming days include US preliminary GDP on Wednesday, Australian private capital expenditure and Canadian GDP on Thursday, and China’s PMIs and euro area’s CPI on Friday.

 

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