Should we keep an eye on the euro-dollar exchange rate, which has yet to break out of its trading range?
08.08.2022
- No major economic indicators are scheduled for release in either Europe or the United States
- Be on the lookout for sudden spikes in volatility due to Japan’s Obon holiday
Last weekend, the U.S. dollar emerged as the strongest currency following a significant improvement in July’s U.S. employment data. Additionally, Federal Reserve Governor Bowman stated that “a 0.75% rate hike should be considered until a sustained decline in inflation is confirmed,” which further fueled the dollar’s strength.The EUR/USD pair fell by approximately 110 pips from 1.0251 to 1.0140. As the EUR/USD has been trading within a range on a daily basis since July 19, we should focus on price movements within the 1.0106–1.0286 range.
Among European currencies, the pound, along with the euro, weakened against the U.S. dollar, with GBP/USD falling by as much as 160 pips from 1.2169 to 1.2003. In Asian trading at the start of the week, GBP/USD has rebounded slightly and is currently trading around 1.2076; however, the 20-period moving average on the hourly chart is acting as resistance, so we need to carefully assess whether the pair will resume its downward trend.
No major economic indicators are scheduled for release today during either European or U.S. trading hours. Since this week marks the Obon holiday period in Japan, trading volume is expected to be light; therefore, we should remain vigilant for sudden spikes in volatility during periods of low liquidity. Additionally, with the U.S. CPI set to be released the day after tomorrow, we should carefully monitor the U.S. dollar’s movements leading up to the release.
Author: Keisuke Sakurai
