The dollar index is trading at 101.50. Market participants are still confident that last week the Fed raised its rate by 0.25 points for the last time in the current tightening cycle. If inflation continues to slow in the coming months, the Fed will announce the end of the rate hike cycle either at the Jackson Hole symposium in late August or at the September FOMC meeting. Until then, traders’ attention will be focused on macroeconomic data. This week data on the US labor market will be released, which is more likely to disappoint again. If expectations are confirmed, pressure on the dollar will increase again.
SELL STOP 101.40/TP 100.50/SL 101.70
USD/JPY
The USD/JPY pair is holding near 142.00. Market participants are analyzing the outcome of the BOJ meeting last week. The regulator kept its interest rate at -0.10%, and also announced that it would continue to control fluctuations in the yield of 10-year government bonds within 0.5% in both directions from the target level, but at the same time, the upper and lower limits of the resulting range would be perceived as benchmarks, and not as incentives for intervention. Traders saw this as a hint at policy tightening. Meanwhile, July data on inflation in the Tokyo metropolitan area showed that it is declining more slowly than experts expected: the consumer price index remained at 3.2% year on year instead of the forecasted decline to 2.8%. Given the above, we recommend shorting the USD/JPY pair.
SELL STOP 141.50/TP 140.00/SL 142.00
EUR/USD
The EUR/USD pair is trading around 1.1000 on Monday after falling at the end of last week amid a meeting of the European Central Bank (ECB), which raised interest rates to historical highs and kept the possibility of further tightening of monetary policy in case of continued growth in consumer prices. As a result, the key rate reached 4.25%, and the deposit rate reached 3.75%. ECB representatives believe that inflation will continue to decline until the end of this year, but will remain above the target of 2% for a long time, so the ECB will rely on macroeconomic publications when making further decisions on the rate. At the moment, the probability of a rate hike in September exceeds 70%. Against this backdrop, interest in the euro may persist, which will allow the European currency to resume its upward dynamics.
BUY STOP 1.1030/TP 1.1100/SL 1.1000
