The forex markets are likely to hold steady on Wednesday as traders await significant economic data releases, including FOMC Meeting Minutes and Canada’s RMPI data. The USD is expected to maintain its recent strength, bolstered by expectations that the FOMC minutes will reveal more insights into the Federal Reserve’s future policy moves. Broader Asian currencies might remain under pressure due to ongoing concerns about global economic growth, particularly with key indicators from the US and Japan on the horizon.
The Canadian Dollar may face increased volatility on Wednesday as markets digest the New Housing Price Index and Raw Materials Price Index (RMPI) data for July. The CAD saw a slight dip earlier as lower-than-expected inflation figures hinted at subdued economic growth. The USD/CAD pair could see further movement, particularly as crude oil inventory data from the US are set to be released, impacting commodity-linked currencies like the CAD.
The Japanese Yen is likely to remain in focus on Wednesday after a sharp decline against the USD on Tuesday. The USD/JPY pair could continue to experience volatility as traders await Japan’s Jibun Bank Services PMI for August, due later in the day. Any significant deviation from expectations could prompt further movements in the Yen, especially with the backdrop of a stronger USD.
The Swiss Franc may experience downward pressure as markets react to recent remarks from the SNB Chairman and expectations from the broader market. The USD/CHF pair could remain volatile, particularly if the USD strengthens further on expectations of hawkish FOMC minutes. The pair may hover around recent lows if risk sentiment continues to favor the greenback.
The Euro might see limited movement on Wednesday ahead of the release of the FOMC Meeting Minutes. The EUR/USD pair could remain subdued as traders remain cautious, awaiting more clarity on the Federal Reserve’s policy direction. The pair could see some volatility if the minutes suggest a more hawkish stance, potentially pushing the Euro lower.
Broader Asian currencies are expected to remain in a tight range, with the New Zealand Dollar facing particular scrutiny as recent data showed a slowdown in retail sales. The NZD/USD pair might face further downward pressure if the global risk sentiment continues to favor the USD.
AUD/USD
Technical Analysis
AUD/USD on Tuesday made an intraday low of 0.6700, a high of 0.67450, and settled the day up by 0.268% to close at 0.67451. On daily charts, prices are sustaining above the 200DMA (0.6720), which acts as a strong support level. The 14-D RSI is showing a bullish divergence, and MACD is also trending above the zero line, with histograms in increasing mode, supporting a bullish outlook.
Trading Strategy: Neutral to Buy
Buy above 0.6740-0.6750 with a target of 0.6800-0.6850 and stops below 0.6720. Sell positions below 0.6720 targeting 0.6700-0.6680 and stops above 0.6750.
EUR/USD
Technical Analysis
EUR/USD on Tuesday made an intraday low of 1.10470, a high of 1.11170, and settled the day up by 0.245% to close at 1.11110. On daily charts, prices are sustaining above the 100DMA (1.1060), with immediate support seen at 1.1080. The 14-D RSI is currently in the neutral region, while the MACD is above the zero line, with histograms increasing, supporting a bullish outlook.
Trading Strategy: Neutral to Buy
Buy above 1.1100-1.1120 with targets of 1.1150-1.1200 and stops below 1.1080. Sell positions below 1.1060 targeting 1.1020-1.1000 with stops above 1.1100.
USD/CAD
Technical Analysis
USD/CAD on Tuesday made an intraday low of 1.36100, a high of 1.36850, and settled the day down by 0.276% to close at 1.36273. On daily charts, the pair is approaching the 50DMA (1.3630), which is providing immediate support. The 14-D RSI is currently neutral, while MACD is above the zero line but with decreasing histograms, suggesting potential downside risk.
Trading Strategy: Neutral to Sell
Sell below 1.3630-1.3650 with risk above 1.3680, targeting 1.3580-1.3550. Long positions above 1.3650 with targets of 1.3700-1.3750 and stops below 1.3630.