There are very few macroeconomic publications scheduled for Wednesday. The only noteworthy report is the ADP report on private-sector employment changes, but who cares about it now, especially given that last Friday the annual Nonfarm Payrolls report was released and another monthly report will come out this Friday? Thus, the market began a correction following a month of growth but is reluctant to force the issue, as important reports on the labor market and unemployment loom on the horizon.

Analysis of Fundamental Events:

Among the fundamental events on Wednesday, the speech by European Central Bank representative Claudia Buch is notable. Given the acceleration in European inflation and the lack of pressure on the ECB from Donald Trump, the ECB may well implement a second monetary policy tightening this year. Therefore, upcoming speeches by ECB Monetary Committee representatives may provide hints about whether a rate hike in September is expected. Unfortunately, the market is currently paying much more attention to the dollar, the Federal Reserve, and Donald Trump, and may start paying attention to geopolitics again. Thus, even a new tightening from the ECB may not produce the expected effect on the euro.

The geopolitical backdrop still leaves much to be desired. The U.S. and Iran are not currently engaged in any negotiations; the Strait of Hormuz remains closed or partially closed, and the Yemeni Houthis maintain a blockade of Saudi Arabia. Trump has decided to carry out an unprecedented economic operation to eliminate Iran and threatens to impose sanctions against all countries that interact with it in any way. However, so far, no one has supported Trump's plan to eliminate Iran, and whether it will be implemented remains unknown. It has become known that the first U.S. strikes in a month were on launch sites near the Strait of Hormuz. Iran has responded by announcing a military operation against the U.S. and its allies in the region. The situation in the Middle East is heating up once again.

General Conclusions:

During the third trading day of the week, currency pairs may trade rather weakly again. The euro can be traded today from the area of 1.1584-1.1594, while the British pound can be traded from the area of 1.3456-1.3476. Overall, we expect the decline to continue in the coming days, as the technical trends for both currency pairs have shifted to bearish.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are positioned too close to each other (within 5-20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance are levels that serve as targets when opening buy or sell trades, or as sources of signals.

Red lines indicate channels or trend lines that illustrate the current trend and show the preferred direction for trading.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly influence the movement of currency pairs. Therefore, during their release, trading should be approached with utmost caution, or traders should exit the market to avoid sudden reversals against the preceding movement.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.

1H Chart of the GBP/USD Pair

The GBP/USD pair resumed its downward movement on Tuesday, a move that is completely justified from a technical standpoint. Recall that at the end of last week, the British pound broke out of the ascending channel through the lower boundary. Thus, a new downward trend has begun. As for the fundamental and macroeconomic justifications for this movement, we do not see any. Yesterday, two reports were released in the U.S., neither of which could support the dollar. The ISM manufacturing index came in below forecasts, and the JOLTS report on job openings also fell short of expectations. Yet, the dollar strengthened.

Geopolitical tensions are starting to worsen again, which may theoretically support the U.S. dollar. Iran and the U.S. exchanged strikes, and Tehran officially announced the beginning of a military operation against the U.S. and its allies in the region. The specifics of this operation remain unclear, but it is clearly a new escalation of the conflict. Prices for oil, gas, and fuel have already surged.

5M Chart of the GBP/USD Pair

In the 5-minute timeframe, no trading signals were formed on Tuesday, as the pair did not engage with any levels or areas throughout the day. However, formally, traders can still maintain the short positions opened on Friday.

How to Trade on Wednesday:

On the hourly timeframe, the GBP/USD pair began a downward corrective trend. In our opinion, the British pound should continue to rise in the medium term, but for now, it is in correction. The movement from the lower boundary of the sideways channel to the upper boundary continues on the weekly timeframe, and it is not yet complete. Friday's improved sentiment for the American currency is unlikely to last long for the dollar.

On Wednesday, novice traders may consider holding short positions with a target of 1.3456-1.3476, following Friday's signal. Long positions can be opened if the price rebounds from the 1.3456-1.3476 area, targeting 1.3587-1.3598.

On the 5-minute timeframe, the following levels should be considered: 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, 1.3695, 1.3741. On Wednesday, no important events are scheduled in the UK, while the U.S. will release only the ADP labor market report, which is considered secondary. Thus, volatility may remain quite low today.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are positioned too close to each other (within 5-20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance are levels that serve as targets when opening buy or sell trades, or as sources of signals.

Red lines indicate channels or trend lines that illustrate the current trend and show the preferred direction for trading.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly influence the movement of currency pairs. Therefore, during their release, trading should be approached with utmost caution, or traders should exit the market to avoid sudden reversals against the preceding movement.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.

1H Chart of the EUR/USD Pair

The EUR/USD currency pair traded very calmly on Tuesday, even though quite important data was published in both the Eurozone and the U.S. yesterday. It started with inflation in the Eurozone, which rose to 3.3% in August. Although the actual figure matched the forecast, we believe that this report could have provoked a rise in the European currency. The consumer price index increased by 0.4% in just one month, and given recent news from the Middle East and the new rise in oil prices, inflation is likely to continue rising. Therefore, the European Central Bank may further tighten monetary policy as early as September.

In the U.S., the reports were also significant. For example, the manufacturing PMI decreased from 55.6 to 54.6, contrary to higher expectations. Thus, both of these reports could have contributed to a rise in the pair. The only downturn for the euro came from the unemployment rate, which unexpectedly rose to 6.4%. However, given the previous day's volatility, the market seemed uninterested in any of the reports.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe on Tuesday, no trading signals were formed. Throughout the day, the price steadily decreased and eventually tested the support area of 1.1584-1.1594. Consequently, new trading signals are expected to form today. However, if volatility remains weak again as it has over the past month, it will be very challenging to achieve profits.

How to Trade on Wednesday:

On the hourly timeframe, the EUR/USD pair began a correction after a month of growth. Considering all the events of recent months, we believe the European currency should continue its steady growth even without local support. The American currency currently has no factors for growth, so we continue to expect upward movement. However, corrections are also necessary.

On Wednesday, novice traders may consider short positions targeting 1.1527-1.1531 if price consolidates below the 1.1584-1.1594 area. Long positions can be opened on a rebound from the 1.1584-1.1594 area, targeting 1.1655-1.1665.

On the 5-minute timeframe, the following levels should be considered: 1.1366-1.1377, 1.1461-1.1474, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1665, 1.1745-1.1754, 1.1830-1.1837. On Wednesday, no macroeconomic or fundamental events are scheduled in the Eurozone, while the U.S. will publish the ADP labor market report, which we consider secondary. The market will once again be waiting for the Nonfarm Payrolls report.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The shorter the time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are positioned too close to each other (within 5-20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance are levels that serve as targets when opening buy or sell trades, or as sources of signals.

Red lines indicate channels or trend lines that illustrate the current trend and show the preferred direction for trading at the moment.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly influence the movement of currency pairs. Therefore, during their release, trading should be approached with utmost caution, or traders should exit the market to avoid sudden reversals against the preceding movement.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.

Critically low storage levels exacerbate the situation. British gas storage was only 39% full as of August 21 — the lowest figure in Europe. By August 26, this figure had increased to 46%, but it remains significantly below those of European neighbors.

The problem is that the UK is a net energy importer. With the ongoing conflict in the Persian Gulf and shipping restrictions, gas and oil prices will remain high, putting pressure on inflation and real household incomes. Analysts note that even after negotiations over the Strait of Hormuz resumed, prices quickly rebounded, reflecting ongoing geopolitical uncertainty.

After Federal Reserve Chair Warsh's speech at Jackson Hole, markets raised expectations for a Fed rate hike this year to more than 70%. Forecasts for the Bank of England's rate remain unchanged, with consensus expecting the rate to stay at 3.75% until 2027. The BoE's long-term pause works against the pound amid rising forecasts for the Fed's rate. Still, it's quite possible that Warsh did not necessarily imply that the rate would be raised, merely conducting verbal intervention for another purpose. The probability of such a scenario still needs to be assessed; for now, the market has responded only with a strengthening dollar, without a change in the interest rate spread.

The net short position on GBP decreased by 0.73 billion pounds to -3.88 billion pounds during the reporting week; the dynamics remain weak, but the calculated price is moving upward with confidence.

Last week, we noted that the pound had no other growth driver except for dollar weakness and expected GBP/USD to continue rising. Warsh has thrown a spanner in the works, but we still assume that the pound will reclaim the initiative, with support at 1.3440/60, where the pair will meet the trendline. We expect market participants to seek buying opportunities as they approach this level, with the pound potentially reversing towards the summer high of 1.3674.

Key Drivers

Hawkish Shift from the Fed Puts Significant Pressure on Gold. The primary reason for gold's decline has been comments from Kevin Warsh at the Jackson Hole symposium on Friday. He indicated that the central bank may need to continue raising rates if there is no confidence in a sustainable return of inflation to the target level of 2%. Markets reacted immediately: the probability of a rate hike at the FOMC meeting on September 15-16 surged to about 65-66% from around 40% just a week earlier. This led to a rise in 10-year Treasury bond yields to their highest levels since January 2025 and a strengthening of the U.S. dollar index.

Inflation Risks from Oil. The resumption of military actions between the U.S. and Iran in the Strait of Hormuz has pushed oil prices higher, exacerbating inflationary concerns. In the current market environment, this is viewed as a factor that strengthens the Fed's arguments for tightening policy, adding pressure on non-yielding gold. The rise in oil prices outweighs the traditional demand for gold as a safe haven.

Structural Support from Demand. Despite the short-term pressure, Goldman Sachs and Wells Fargo reaffirm their positive forecasts, expecting prices to rise to 4900.00 by the end of 2026. They attribute this to the ongoing purchases of gold by central banks, diversification of reserves, and steady demand from Asian investors. Wells Fargo also points out that these factors create a "floor" for prices, despite cyclical obstacles.

Brief Technical Analysis

The technical picture remains predominantly bearish. The price is consolidating near a key support zone, and at the time of publication, indicators signal "Strong Sell." However, the price remains above key moving averages (50-, 144-, and 200-day), preserving the potential for a resumption of growth.

Indicators and Moving Averages:

• EMA144/200 are situated at around $4,365.00/$4,315.00, forming strong long-term barriers for potential recovery.
• EMA50 at $4,335.00 serves as additional intermediate support.
• RSI (14) at level 48 is in the selling zone but not yet oversold, indicating potential for further decline.
• OsMA and Stochastic confirm strong bearish momentum.

Key Levels:

• Resistance: $4,400.00 (psychological level and short-term barrier), $4,455.00, $4,500.00 (psychological level), $4,508.00 (EMA200 on H1 and short-term resistance level).
• Support: $4,365.00 (EMA144 on D1 and key area), $4,335.00 (EMA50), $4,315.00 (EMA200 on D1), $4,300.00 (psychological level).

Key Events to Watch

Conclusion and Recommendations

Gold is undergoing a serious correction after the August rally, driven by a sharp change in expectations regarding the Fed's rate. Pressure on the metal remains high, and key labor market and inflation data this week will be decisive in determining XAU/USD's near-term trajectory.

For Short-Term Traders:

Trading from current levels is risky. The preferred scenario is to sell on a breakdown below support at $4,365.00 with targets at $4,295.00-$4,300.00 and a stop-loss above $4,400.00.

Short positions can be opened upon a breakdown at $4,350.00 with targets at $4,315.00 and $4,300.00.

Long positions may only be considered in the event of recovery and consolidation above $4,400.00, targeting $4,450.00 and $4,500.00.

For Mid-Term Investors:

Potential declines toward the $ 4,200.00–$ 4,250.00 zone can be used for careful accumulation of long positions.

Wells Fargo and Goldman Sachs still see potential for growth to $4,900.00–$5,100.00 by the end of 2026.

Risk Management:

Be aware of increased volatility leading up to the publication of NFP and CPI data.

Strictly adhere to stop-losses, especially when trading in oversold zones.

Monitor geopolitical situations — unexpected escalations can trigger sharp reversals.

At first glance, the report appears quite hawkish. Overall inflation in August accelerated to 3.3% year-on-year, after rising to 2.9% the previous month. The index was once again above the psychologically significant 3% mark, reaching its highest level since September 2023. Isn't this a reason to strengthen hawkish expectations regarding further actions from the ECB?

However, as the saying goes, the devil is in the details — the report's structure explains the negative market reaction (for the euro).

The main issue for the euro is that the energy component almost entirely drives the acceleration in overall inflation for August. The rate of increase in energy prices accelerated to 14.3% year-on-year in August (up from 10.3% in July). In comparison, services, which have the largest weight in the Eurozone's consumer basket (approximately 47%), saw growth slow to 3.0%, down from 3.3%. Prices for non-energy industrial goods increased from 0.9% to 1.2%, while food, alcohol, and tobacco maintained their July growth rate of 1.2%.

The dynamics of core inflation are even more telling. The core index, which excludes energy, food, alcohol, and tobacco, fell to 2.4% from the previous 2.5%. Most analysts were confident that this indicator would remain at July's level in August.

A broader indicator — excluding energy and unprocessed foods — slowed to 2.1%. This figure is often referred to as "core" inflation, as it excludes not only energy resources but also fresh food items (vegetables, meat, fish), whose prices largely depend on seasonality and weather conditions.

In other words, the inflationary impulse in the Eurozone (for now) is not spreading evenly throughout the economy — it is concentrated primarily in the energy segment. For the European Central Bank, this is a significant, arguably decisive moment, as sustained inflationary pressure typically manifests more in rising prices for services, wages, and other components of domestic demand than in increases in oil and gas prices. These factors can keep inflation elevated even after stabilization or declines in energy prices. If the overall CPI acceleration is primarily attributable to an external energy shock, the ECB may view the spike as a temporary effect rather than as evidence of persistent price pressure in the economy.

This is precisely why the market did not find sufficient "concrete" grounds in the report to reassess expectations toward a more aggressive pace of ECB tightening.

Moreover, a September interest rate hike is already largely priced into the quotes. Therefore, for the euro, it is more important not just the fact of a hike at the upcoming meeting, but also the prospects for further monetary policy tightening. The structure of the report allows the ECB to limit itself to just one additional hike, as long as the energy shock drives overall inflation but does not lead to an acceleration in core price processes.

By the way, the report resonates with the German data published on Monday. Overall inflation in Germany accelerated from 2.8% to 2.9%, but it was still below the 3% forecast. The harmonized index also landed in the red zone, rising to 2.9% against a forecast of 3.1%. Meanwhile, core inflation remained stable at 2.4%, and inflation in the services sector decreased from 2.9% to 2.8%. Food inflation slowed to 0.1% from 0.4%. The main driver of inflation growth in Germany was once again the energy sector: energy prices increased from 8.3% to 10.5%.

In other words, the German report effectively served as a prologue to the broader European data. In Germany, we observed an acceleration in overall inflation, stable core inflation, and a slowdown in the services sector. Today, a similar picture is evident across the entire Eurozone.

Overall, the report did not serve as the fundamental driver for the euro that it could have been had the acceleration in inflation been of a more "qualitative" nature. The rise in overall CPI remains closely linked to energy, while core inflation and services inflation continue to decline. As a result, the market did not price in a more aggressive rate-hike trajectory, allowing EUR/USD sellers to regain the initiative.

And here we return to where we started — the support level at 1.1580, which corresponds to the middle Bollinger Bands line on the D1 timeframe (and simultaneously on the W1). EUR/USD buyers have lost the initiative, yet sellers essentially failed to take advantage of the situation, unable to breach this price barrier. It is prudent to consider short positions only after bears confidently break below 1.1580 and establish themselves under this level. In this case, the next targets for the downward movement will be 1.1530 (the Kijun-sen line on D1) and 1.1500 (the upper boundary of the Kumo cloud on the same timeframe). However, if the support level of 1.1580 holds, the pair will likely return to the range of 1.1620–1.1660 (the middle and upper Bollinger Bands lines on the H4).

The wave structure of the four-hour EUR/USD chart is becoming more complex. There is still no question of canceling the upward segment of the trend (lower chart), which began in January of last year. On the contrary, we have seen a complete corrective A-B-C structure, which has most likely been completed. We never saw a convincing wave 5 of C. This wave took a truncated form, which also occurs from time to time. Let me remind you that classical wave structures are generally found only in textbooks. In real-world conditions, traders and analysts should be more flexible in their analysis. Therefore, for a month now, I have been saying in my analyses that traders should prepare for a rise in the European currency. If the current wave structure is correct, the instrument is at the very beginning of a new upward segment of the trend.

On the lower time frame, I can identify a classical five-wave downward structure with a truncated wave 5. I had expected the European currency to decline to the 1.13 level, but the fundamental backdrop turned against the dollar, and sellers simply lacked the strength to form a convincing wave 5. Therefore, it can be considered that the formation of a new upward wave structure began on July 28.

ISM Index and JOLTS Report Fail to Support the Dollar

The EUR/USD exchange rate declined by 15 basis points on Tuesday, but it may recover all of its losses and move into positive territory by the end of the day. The first important data of the week was released today, giving traders new information to consider. In the morning, the European Union released its inflation report, which could have supported buyers, but unfortunately, the market had already anticipated the August figure. The Consumer Price Index rose to 3.3%, as market participants had expected. In my view, inflation at 3.3% gives the ECB room to tighten monetary policy at its next meeting. I believe that what matters is not even the relatively high inflation figure itself, but the trend. Inflation in Europe has been rising for most of 2026, while the ECB's monetary policy tightening in June resulted only in a two-month pause in the acceleration of inflation. In addition, oil prices fell to pre-war levels in July, meaning that inflation may have slowed not because of the ECB's rate hike, but because of lower energy prices. Now that crude oil prices are rising again, inflation is accelerating once more. Therefore, the ECB needs to take "hawkish" measures.

In the second half of the day, the ISM and JOLTS reports were released in the United States. Neither report provided support for the sellers. The ISM Services PMI fell to 54.6 points and, although this is still a very high reading, market participants had expected more. The same can be said about the JOLTS report. The market expected 7.3 million job openings in July but received only 7.271 million. The difference is small, but it is unfavorable for the dollar. As a result, the euro declined moderately in the first half of the day, while the dollar weakened in the second half.

General Conclusions

Based on my EUR/USD analysis, I conclude that the pair remains within the upward segment of the trend (lower chart), while in the shorter term, it has moved into a new upward wave structure. In my view, this is an excellent time to establish long positions. If the downward segment of the trend that began on January 28 does not develop into a more extended five-wave structure (which would require a strong fundamental backdrop in favor of the dollar), the EUR/USD pair is at the very beginning of a new, prolonged upward segment of the trend, with targets extending as high as the 1.25 level.

On the higher time frame, an upward segment of the trend is visible, after which the formation of a corrective wave structure began. The A-B-C structure is presumably complete. If this is the case, a new impulsive upward segment of the trend has begun.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often undergo changes.
2. If there is no confidence in what is happening in the market, it is better not to enter the market.
3. There can never be 100% certainty about the direction of a price move. Do not forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The EUR/USD pair declined for six days, but the bears' advance may now be coming to an end. Overall, it can be said with confidence that the bears truly attacked only last Friday, when FOMC President Kevin Warsh first spoke, followed by a revision to the annual Nonfarm Payrolls data. Neither of these events was unequivocally bearish; nevertheless, they can be interpreted as such if one chooses to. As I wrote earlier, the Nonfarm Payrolls report could have been much worse than it ultimately was, while Warsh's speech could once again be interpreted as having "hawkish" undertones. However, a straightforward assessment of the available data suggests that there was no reason for the dollar to rise even on Friday. The Nonfarm Payrolls report showed a negative reading, while Kevin Warsh merely spoke about high inflation and did not promise to raise the interest rate or take any specific measures. The euro's price declined to the base of imbalance 21, and the decline has so far ended there. From here, everything will depend mainly on the U.S. labor market and unemployment data.

Overall, in my view, the fundamental backdrop continues to fully support the bulls. First, any chart clearly shows that the euro began its rise from relatively low levels, compared with the average price over the past year. This means that it still has upward potential. Second, the market continues to doubt that the FOMC will tighten monetary policy in September, regardless of what statements Warsh makes. Third, U.S. economic data have recently been nothing but disappointing. Fourth, geopolitical developments no longer support the bears or the dollar. Fifth, the ECB may implement another monetary policy tightening this autumn. Sixth, the U.S. Treasury has decided to increase its purchases of long-term bonds, reducing demand for the dollar. Seventh, a new trade war between the United States and Canada, and between the United States and China, could begin in the near future. Eighth, the U.S. labor market is contracting, which could put an end to Warsh's "hawkish initiatives." Thus, I currently see not a single reason for a "bearish" advance.

The latest U.S. labor market data showed weak readings, inflation is slowing, and GDP growth is losing momentum. These three factors make me doubt an FOMC rate hike not only in September but also by the end of the year. In my view, the bears' only opportunity at present lies in a new escalation in the Middle East. However, Donald Trump is not inclined toward military escalation. He now wants to put economic pressure on Iran instead.

The current technical picture points to the continuation of the "bullish" momentum. The price has completely filled the latest "bullish" imbalance 21 and may even touch the previous "bullish" imbalance 20. The combined reaction to these two patterns could bring the bulls back into the market, and the upward move could resume. If one or both patterns are invalidated, the bears will be able to launch their own offensive, but even in that case, they will need fundamental support. Where would they get it?

The economic backdrop on Tuesday allowed the bulls to launch a new attack. Inflation in the European Union rose to 3.3%, as traders had expected. Perhaps because market expectations matched the actual figure, we did not see the euro rise, but the euro certainly did not deserve to fall. So far, traders have been making less-than-clear-cut decisions this week.

There remain a huge number of reasons for the bulls to attack in 2026, and even the outbreak of war in the Middle East has not reduced their number. Structurally and globally, Trump's policies, which led to a significant decline in the dollar last year, have not changed. At present, I see no significant factors supporting the U.S. currency, despite the FOMC's formally "hawkish" stance. Geopolitical developments, which supported demand for the U.S. currency during most of the first half of 2026, no longer do so. The conflict in the Middle East remains unresolved, but there have been no new hostilities from either Iran or the United States.

Economic Calendar for the United States and the European Union:

• United States — ADP Employment Change (12:00–15:00 UTC).

On September 2, the economic calendar contains only one item, which I do not consider important. The impact of the economic backdrop on market sentiment on Wednesday will be extremely weak or nonexistent.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a "bullish" trend that has paused for an entire year. The fundamental backdrop changed sharply in favor of the bears six months ago, but the trend itself cannot be considered canceled or completed. In the long term, I would say that the pair is in a range. However, a range does not cancel the broader trend. Thus, the bulls may well continue their advance after two liquidity sweeps of clearly defined lows. At present, bullish traders have an excellent support zone in the form of imbalance 21. A new buy signal may form within this imbalance or imbalance 20. I consider 1.1797 and 1.1850 to be the upward targets for the euro.

The GBP/USD pair found itself between two imbalances — 26 and 27 — on Monday, and the technical picture remained unchanged on Tuesday. At the same time, imbalance 27 cannot be considered invalidated, while imbalance 26 may trigger a price reaction in the near future. The pound's decline on Friday was not unambiguous, but it can nevertheless be explained. What happened has already happened, so we now need to think about where the price may move from its current levels. Today, traders had few reasons for active trading, so the fate of the dollar and the pound will most likely be decided later this week. New data on business activity, the labor market, and unemployment in the United States will help traders determine whether everything is really as good in the American economy as it appeared on Friday. Let me remind you that weakness in the U.S. labor market significantly complicates matters for the Federal Reserve, which, according to Kevin Warsh, is considering the option of tightening monetary policy. If this week's economic data support the U.S. currency, invalidating imbalances 26 and 27 will become considerably easier. In that case, the bears will go on the offensive. Today, I am concerned by the pound's decline, although it is only modest. There were no reasons to sell the pair today so far, and a further decline in the pound could lead to the invalidation of two "bullish" patterns at once, which would be undesirable.

Over the past month, the dollar has suffered numerous blows, including the U.S. Treasury's decision to increase the volume of long-term bond buybacks, weak monthly Nonfarm Payrolls reports, a weak annual Nonfarm Payrolls report, a slowdown in the Consumer Price Index, a slowdown in GDP growth, and a decline in market expectations for tighter monetary policy by the Federal Reserve. Thus, from its current levels, the dollar's decline could resume. However, for this to happen, the bulls need to take a firm stance, while for now they are showing a willingness to retreat again at the most inopportune moment.

Do the bears have prospects at the moment? In my view, no, or very few. As we have already established, the fundamental backdrop does not support the U.S. dollar. However, it should not be forgotten that not everything in the market depends solely on the fundamental backdrop. In the long term, the market has been in a range for about a year. We have seen three upward waves, and everything points to the bulls forming a fifth wave as well. However, over the past year, we have also been observing an alternation of three-wave structures and similar formations. A liquidity sweep of the swing from May 1 could provide a basis for a new "bearish" part.

As I have already said, geopolitics is no longer having a favorable effect on the dollar, as negotiations between the United States and Iran have become completely deadlocked. This is a major loss for the dollar. Officially, Tehran is negotiating only with Oman. It is still unclear what these negotiations will lead to in terms of ending the conflict and reopening the Strait of Hormuz. Iran may be able to agree on terms for controlling the Strait of Hormuz with Oman, but how would that resolve the conflict with the United States and lift the U.S. blockade of the strait? Meanwhile, Donald Trump has decided to impose a second blockade on Iran — a financial one. At the same time, he plans to impose sanctions on all countries that support Iran. As of now, Trump's threats have not been implemented, and it is extremely difficult to understand how Washington intends to force China to stop cooperating with Iran. But one fact remains: the conflict is at an impasse.

Technical analysis points to the bulls going on the offensive. At present, traders have three "bullish" imbalances (25, 26, and 27), within which buying opportunities can be considered. The liquidity sweep of the May 1 high triggered a corrective pullback, and this pullback may be completed within imbalances 26 and 27. However, invalidation of these imbalances would give the bears an opportunity to attack as far as imbalance 25, or even lower.

The fundamental backdrop was absent for most of Tuesday. Only in the evening did the ISM and JOLTS reports come out in the United States. We may still see some market movement during the final quarter of the day.

The overall fundamental backdrop remains such that, in the long term, I cannot expect anything other than a decline in the U.S. currency. The war between Iran and the United States has not changed anything either. Geopolitics forced the market to remember the dollar's safe-haven status for several months, but the conflict has already passed its active phase. Expectations of tighter FOMC monetary policy have declined significantly in recent weeks, putting pressure on the U.S. currency. Thus, in my view, any rise in the dollar is temporary and random in nature. I see no reason for a new bearish offensive.

Economic Calendar for the United States and the United Kingdom:

• United States — ADP Employment Change (12:00–15:00 UTC).

On September 2, the economic calendar contains one secondary item. The impact of the economic backdrop on market sentiment on Wednesday will be extremely weak or nonexistent.

GBP/USD Forecast and Trading Advice:

The long-term picture for the pound remains "bullish." After liquidity sweeps of the two most recent swings and the formation of a series of buy signals, the bulls may continue their advance. Unfortunately, the bears have controlled the initiative over the past week, and it will take only a little more for the "bullish" patterns to be invalidated. In that case, the bears will go on the offensive. I do not yet see grounds for a bearish attack, but a "bearish" imbalance was formed on August 26. The liquidity sweep of the swing from May 1 pushed the pound slightly lower, but so far it has not broken the "bullish" structure. We should now expect the formation of a "bullish" signal within imbalances 27 and 26, or alternatively, their invalidation and a shift to a bearish offensive.

Monthly dynamics of the US dollar

The US dollar has received support from three fronts. Firstly, due to the escalation of the conflict in the Middle East. US troops struck an island in the Strait of Hormuz, and Iran responded with attacks on the UAE and Jordan. For the first time in a month, the parties exchanged direct strikes. Secondly, the related spike in oil prices is fueling inflationary expectations. Thirdly, due to rising political risks in Germany. The AfD's slogan "Let's make history together" is resonating at rallies in Saxony-Anhalt, where on September 6, the country risks getting its first far-right government since the war.

However, the euro has its own trump card. Inflation in the Eurozone accelerated from 2.9% to 3.3% year-on-year in August. This is a new cyclical high, primarily due to energy prices. Core inflation, in contrast, eased from 2.5% to 2.4%, while service inflation slowed from 3.3% to 3.0%. According to Bloomberg experts, the ECB will continue to raise rates quarterly, with the next move potentially coming at the September meeting.

European inflation dynamics

Meanwhile, the Fed is in no rush. Morgan Stanley believes that the data before the September FOMC meeting will confirm the movement of core inflation towards the target of 2%. This means there will be no increase in the federal funds rate. Goldman Sachs explains the difficult summer for the US dollar as a result of political unpredictability: targeted interventions in the yen and Treasury bond markets showed the Fed's willingness to sacrifice the strength of the greenback in support of other assets, and the lack of transparency in the regulator's reaction function has only added pressure.

Thus, the US dollar and euro are being pulled in different directions by several conflicting factors, and none of them is currently achieving a clear victory. In fact, the pair remains balanced between geopolitical issues and macro statistics until both sides receive clearer signals from their regulators.

Who will give up their positions first? The US dollar under the weight of its own uncertainty or the euro under the burden of oil prices and German politics? There is no definitive answer yet.

Technically, on the daily chart, the EUR/USD pair shows a retracement from the 20-80 bar, followed by the completion of the bulls' attack and a return of initiative to the bears. The euro's inability to hold on to resistance levels at the pivot points of 1.161 and 1.1595 is a sign of weakness for the regional currency and a basis for selling it. Target levels are set at 1.154 and 1.147.

US stock indices closed lower: the S&P 500 fell by 0.33%, the Nasdaq 100 lost 0.12%, and the Dow Jones Industrial Average dropped by 0.70%. The primary driver of the sell-off was a radical reassessment of expectations regarding US monetary policy following Kevin Warsh's Jackson Hole speech. Traders sharply raised the probability of a Fed interest rate hike at the September meeting to 65%, up from 34% before the speech, responding to the regulator's statement about its intent to firmly maintain the inflation target at 2%.

This abrupt shift in monetary expectations spurred a sell-off in government securities worldwide. The yield on 10-year US Treasury bonds rose to 4.77%, while Japanese 10-year bonds reached 3% for the first time since 1996. Investors are demanding increased compensation for risk amid persistent inflation, high government spending, and extensive corporate borrowing for AI infrastructure development. Follow the link for more details.

Global central bank tightening in September fuels volatility in currency and commodity markets

September is set to be a defining month for global markets, as regulators from major economies prepare for simultaneous interest rate hikes. The swaps market fully anticipates a rate increase by the European Central Bank at its meeting on September 10, with a 92% probability for a similar move by the Bank of Japan and a 98% chance from the Reserve Bank of New Zealand. This synchronized wave of tightening monetary conditions by global regulators is reshaping currency trends and applying pressure on precious metals, keeping gold around $4,425 per ounce.

Moreover, the commodity sector continues to be influenced by geopolitical factors. Brent crude prices surged locally to $91.55 per barrel amid renewed hostilities in the Middle East, before partially retracing that increase. The combination of central bank actions and escalation in the Middle East creates a broad window of opportunities for trading commodity instruments and currency pairs at InstaForex. Follow the link for more details.

Bitcoin and Ethereum end August with unusually strong growth, defying historical patterns

The cryptocurrency market experienced one of its strongest Augusts ever, breaking the traditional pattern of seasonal declines. Over the month, Bitcoin soared by 25.3%, fully recovering from the prolonged spring-summer correction, while Ethereum exhibited even more impressive dynamics, gaining over 32%. This current performance places the past month alongside rare historical exceptions like the record rally of 2017, confirming a return of significant capital into digital assets.

The catalyst behind this robust bullish momentum was a combination of fundamental factors: the US Treasury's decision to double its purchase of long-term bonds, record institutional inflows into spot ETFs, and increased regulatory optimism in Washington. At this stage, buyers are preparing to challenge the nearest resistance levels. Follow the link for more details.

Since 2013, Bitcoin's average return in August has been a modest 1.12%, while the median has actually been negative, at about -7.49%, because a typical August more often closes in the red and the positive average is pulled higher only by a few exceptional rallies. Of the last 13 Augusts, only 4 were positive, and the absolute record remains August 2017, when Bitcoin gained 65.32%. Against that backdrop, August 2026's 25.3% rise puts it among the few genuinely strong months in the asset's history rather than a routine summer rebound.

It is also important to note that this was the second consecutive month of gains after July's 7.4%, which means bitcoin has fully recovered the March-to-June correction, and average losses for the year no longer look so critical.

Ether delivered an even more impressive performance, rising more than 32% over the month and climbing from levels below $1,950 to a $2,400–$2,480 range.

The catalysts behind the two-month rally are clearly visible in the sequence of events discussed here over recent weeks. The US Treasury's decision on August 19 to double long-term bond buybacks triggered a sharp jump in prices and more than $3 billion in short liquidations; Trump's meeting with crypto industry representatives at the White House added regulatory optimism; and a series of strong weekly inflows into spot ETFs, including a record $1.92 billion in a single week, provided institutional confirmation of the move.

The result for the largest corporate holders is also notable. Michael Saylor's strategy ended August with an unrealized gain of more than $2.8 billion on its reserve of 840,447 Bitcoin, returning to profit for the first time in several months thanks to this rally — rare for August — which had only days earlier been interrupted by a sharp pullback after Warsh's hawkish Jackson Hole speech but still failed to overturn the overall monthly result.

Trading recommendations:

As for the technical picture for Bitcoin, buyers are now targeting a return to $79,200, which opens a direct path to $81,300, and from there the distance to $83,600 is short; a break of that level will signal an attempt to restore a bull market. In the event of a decline in bitcoin, I expect buyers at $77,500. A move back below that area can quickly drag BTC toward $75,300. The farthest target will be the $72,800 area.

As for the technical picture for Ethereum, a clear hold above $2,504 opens a direct path to $2,557. The farthest target will be the high around $2,624, a break of which will signal strengthening bullish sentiment and a return of buyer interest. In the event of a decline in ether, I expect buyers at $2,459. A move back below that area can quickly drag ETH toward $2,415. The farthest target will be the $2,373 area.

What we see on the chart:

- Red lines indicate support and resistance levels where either a price slowdown or active growth is expected;

- Green lines indicate the 50-day moving average;

- Blue lines indicate the 100-day moving average;

- Light green lines indicate the 200-day moving average.

A crossover, or a price test of moving averages, typically either halts the move or sparks fresh market momentum.

The 159.95 price test occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's upward potential.

In the second half of the day, the market is awaiting the ISM Manufacturing PMI, the JOLTS job openings report, and a speech by FOMC member Michael Barr. The ISM index reflects the condition of the manufacturing sector, while job openings data serve as an important indicator of the labor market. Strong figures could provide additional support for the dollar by increasing expectations for the Fed's interest rate and pushing up US bond yields, especially against the backdrop of the hawkish stance following Jackson Hole. For the yen, a stronger dollar creates a risk of further weakness, as it widens the policy divergence between the decisive Fed and the much more cautious Bank of Japan. This divergence has recently been weighing on the Japanese currency. Strong data could push USD/JPY higher, especially since the recent weak Japanese Manufacturing PMI has already reduced demand for the yen.

As for the intraday strategy, I will rely more heavily on the implementation of Scenarios #1 and #2.

Buy Signal

Scenario #1: Today, I plan to buy USD/JPY when the entry point is reached around 160.11 (the green line on the chart), with a target of a rise to 160.44 (the thicker green line on the chart). Around 160.44, I will exit the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pair can be expected today, but the outlook is far from certain. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.

Scenario #2: Today, I also plan to buy USD/JPY if the price tests 160.11 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger a reversal to the upside. A rise toward the opposite levels of 159.92 and 159.55 can be expected.

Sell Signal

Scenario #1: Today, I plan to sell USD/JPY after the 159.92 level is broken (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 159.55, where I will exit the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Downward pressure on the pair will return if the central bank intervenes. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started declining from it.

Scenario #2: Today, I also plan to sell USD/JPY if the price tests 160.11 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a reversal to the downside. A decline toward the opposite levels of 159.92 and 159.55 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take the overbought and oversold zones into account.

Important. Beginner Forex traders should be very cautious when making decisions about entering the market. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp exchange-rate fluctuations. If you decide to trade during a news release, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

The 1.3537 price test occurred when the MACD indicator had just started moving downward from the zero line, confirming the validity of the entry point for a short position on the pound. However, the pair never went on to experience a significant decline.

British industry continued to expand in August, but at a noticeably slower pace, with the Manufacturing PMI falling to 51.7 from 51.9. Notably, the slowdown is relatively positive in nature, as it was caused by a reduced focus on maintaining inventories. In other words, companies simply stopped building up stocks in advance due to the risks associated with the war. Nevertheless, the pound barely reacted to the report. Although the data were moderately positive overall, they contained no surprise strong enough to outweigh the impact of the external backdrop.

In the second half of the day, the US agenda will determine the pound's direction, as there are no significant domestic catalysts for the British currency. The focus will be on the ISM Manufacturing PMI, the JOLTS job openings report, and a speech by FOMC member Michael Barr. The ISM index reflects the condition of the manufacturing sector, the job openings report indicates labor-market tightness, and Barr's comments help assess the central bank's stance. Through these channels, the events affect the strength of the US dollar. Strong data would provide additional support for the dollar and could put downward pressure on GBP/USD, while weak data would support the British currency by weakening the US dollar.

As for the intraday strategy, I will rely more heavily on the implementation of Scenarios #1 and #2.

Buy Signal

Scenario #1: Today, I plan to buy the pound when the entry point is reached around 1.3547 (the green line on the chart), with a target of a rise to 1.3577 (the thicker green line on the chart). Around 1.3577, I will exit the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pound can be expected today only if the US data are weak. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.

Scenario #2: Today, I also plan to buy the pound if the price tests 1.3532 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger a reversal to the upside. A rise toward the opposite levels of 1.3547 and 1.3577 can be expected.

Sell Signal

Scenario #1: Today, I plan to sell the pound after the 1.3532 level is broken (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3509, where I will exit the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Strong downward pressure on the pound will return if the data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started declining from it.

Scenario #2: Today, I also plan to sell the pound if the price tests 1.3547 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a reversal to the downside. A decline toward the opposite levels of 1.3532 and 1.3509 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take the overbought and oversold zones into account.

Important. Beginner Forex traders should be very cautious when making decisions about entering the market. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp exchange-rate fluctuations. If you decide to trade during a news release, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

The 1.1603 price test occurred when the MACD indicator had just started moving downward from the zero line, confirming the validity of the entry point for a short position on the euro. As a result, the pair declined by 10 points.

The August surge in eurozone inflation to 3.3% year-on-year from 2.9% in July failed to impress the euro, as the figures were fully in line with economists' expectations. The single currency barely reacted to the report because the market had already priced in the acceleration, and there was no sharp movement in the absence of a surprise. The reason for the acceleration is obvious and energy-related, as energy prices rose by 14.3%, while the other components remained much more subdued. For the ECB, such data provide arguments for both hawks and doves, but the risk of a September rate hike remains.

The euro will spend the second half of the day awaiting US economic data that could increase pressure on the single currency. The ISM Manufacturing PMI and the JOLTS job openings report will be released, followed by a speech from FOMC member Michael Barr. The ISM index reflects business activity in the manufacturing sector, while job openings data help assess the condition of the labor market, and both indicators directly affect expectations for the Fed's interest rate. The outlook for the single currency is cautious. Strong data would provide additional support for the dollar and could push EUR/USD lower, while weak data would favor the euro.

As for the intraday strategy, I will rely more heavily on the implementation of Scenarios #1 and #2.

Buy Signal

Scenario #1: Today, the euro can be bought when the price reaches around 1.1602 (the green line on the chart), with a target of a rise to 1.1622. At 1.1622, I plan to exit the market and also sell the euro in the opposite direction, targeting a move of 30–35 points from the entry point. A rise in the euro can be expected today only if the US data are weak. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.

Scenario #2: Today, I also plan to buy the euro if the price tests 1.1589 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger a reversal to the upside. A rise toward the opposite levels of 1.1602 and 1.1622 can be expected.

Sell Signal

Scenario #1: I plan to sell the euro after the price reaches 1.1589 (the red line on the chart). The target will be 1.1570, where I plan to exit the market and immediately buy in the opposite direction, targeting a 20–25-point move in the opposite direction from the level. Downward pressure on the pair will return if the US data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started declining from it.

Scenario #2: Today, I also plan to sell the euro if the price tests 1.1602 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a reversal to the downside. A decline toward the opposite levels of 1.1589 and 1.1570 can be expected.

What Is Shown on the Chart:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take the overbought and oversold zones into account.

Important. Beginner Forex traders should be very cautious when making decisions about entering the market. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp exchange-rate fluctuations. If you decide to trade during a news release, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

Meanwhile, spot Bitcoin ETFs attracted $216.7 million yesterday alone, while Ether funds added another $87.68 million, continuing the series of inflows that has characterized the market for almost the entire past month. XRP attracted $5.64 million, SOL $925,000, and HBAR a symbolic $399,000. HYPE, LINK, AVAX, DOGE, DOT, LTC, and BNB recorded zero inflows, which contrasts somewhat with the broader altcoin participation seen a week earlier, when six or seven assets were simultaneously recording positive inflows.

The figures themselves look modest compared with the record weekly results at the end of August, but this moderation is consistent with the market's changed sentiment. The Fear and Greed Index has retreated to the neutral zone at around 58 points, well below the peak levels of 74–80 recorded during the height of the August rally following the Treasury's decision to double bond buybacks.

The index's shift from the greed zone into neutral territory is not in itself a negative signal. Rather, it reflects the market's more measured assessment of risks following a month of extreme optimism. For comparison, the lowest level of the index in this cycle was recorded on February 5 at 10 points, when Bitcoin was trading at around $63,548, while the peak reading of 82 points coincided with the asset's all-time high in October. The current reading of 58 points, with the price holding well above the February lows, indicates a market in a state of cautious equilibrium, where institutional demand through ETFs continues but without the euphoria that drove the market a week ago.

Bitcoin

Buy Scenario

Scenario #1: Today, I will buy Bitcoin when the entry point is reached around $78,200, with a target of a rise to $79,000. Around $79,000, I will exit the long position and immediately look to sell on a rebound. Before buying on a breakout, it is necessary to make sure that the 50-day moving average is below the current price and that the Awesome Oscillator is above zero.

Scenario #2: Bitcoin can be bought from the lower boundary at $77,800 if there is no market reaction to a breakout below this level, with a return toward $78,200 and $79,000.

Sell Scenario

Scenario #1: Today, I will sell Bitcoin when the entry point is reached around $77,800, with a target of a decline to $77,000. Around $77,000, I will exit the short position and immediately look to buy on a rebound. Before selling on a breakout, it is necessary to make sure that the 50-day moving average is above the current price and that the Awesome Oscillator is below zero.

Scenario #2: Bitcoin can be sold from the upper boundary at $78,200 if there is no market reaction to a breakout above this level, with a return toward $77,800 and $77,000.

Ethereum

Buy Scenario

Scenario #1: Today, I will buy Ether when the entry point is reached around $2,469, with a target of a rise to $2,499. Around $2,499, I will exit the long position and immediately look to sell on a rebound. Before buying on a breakout, it is necessary to make sure that the 50-day moving average is below the current price and that the Awesome Oscillator is above zero.

Scenario #2: Ether can be bought from the lower boundary at $2,450 if there is no market reaction to a breakout below this level, with a return toward $2,469 and $2,499.

Sell Scenario

Scenario #1: Today, I will sell Ether when the entry point is reached around $2,450, with a target of a decline to $2,422. Around $2,422, I will exit the short position and immediately look to buy on a rebound. Before selling on a breakout, it is necessary to make sure that the 50-day moving average is above the current price and that the Awesome Oscillator is below zero.

Scenario #2: Ether can be sold from the upper boundary at $2,469 if there is no market reaction to a breakout above this level, with a return toward $2,450 and $2,422.

The company reported a record quarterly revenue of $96.2 billion, exceeding analysts' forecasts of $92.2 billion, marking a 106% year-over-year increase. The data center chips segment generated a record $89 billion, reflecting a 117% annual gain. Earnings per share came in at $2.22, surpassing expectations of $2.10.

The company's management provided strong guidance for the future, forecasting third-quarter revenue between $105.8 billion and $110.2 billion. Chief Financial Officer Colette Kress stated that revenue is expected to grow by 70% in the 2028 fiscal year, while market experts projected only 44% growth. CEO Jensen Huang noted that the infrastructure for artificial intelligence has entered a phase of direct profitability, with total spending by tech corporations on data centers set to rise from $800 billion this year to $1.3 trillion next year.

Additional support for the stock price came from new contracts and product launches. Nvidia entered into an agreement with Amazon to supply 2 million graphics processors by 2028. Analyst Ming-Chi Kuo announced the relaunch of the specialized Rubin CPX chip, designed for initial processing of user queries before generating responses. Production of the chip is set to begin in the first quarter of 2027, in the form of standalone server racks. Against this backdrop, investment banks have sharply raised their price targets for Nvidia shares: Raymond James expects $515, Evercore ISI forecasts $465, Bernstein sets a target of $400, and Morgan Stanley targets $300 per share.

Key pressures

Despite record profits and optimistic forecasts, the company's stock faces significant risks:

1. September market decline: Historical data since 1971 indicates that the Nasdaq technology index declines in 48% of cases in September, with an average return of -1%. Fund managers returning from vacation typically close profitable positions and sell highly liquid stocks ahead of the financial year-end. Nvidia shares have risen more sharply than the market, leading investors to actively lock in profits, creating selling pressure on the stock.
2. Memory shortage and declining profitability: The shortage of high-speed memory has driven up component costs and forced the company to increase prices on finished servers by 15%. Due to rising production expenses, the profit margin is expected to fall to 71-72% in the fourth quarter, down from the previous 73%, meaning the company will retain less net revenue from each server sold. The report from key memory supplier Micron Technology at the end of September will indicate how severe this shortage remains.
3. Allegations of circular financing and regulatory scrutiny: Investor Michael Burry and other skeptics have highlighted Nvidia's $3.5 billion investment in MediaTek and guarantees on $105 billion in deals for OpenAI. Critics claim that the chipmaker invests money in third-party companies that then use those funds to purchase its products. The Wall Street Journal reported that Nvidia has suspended its revenue-sharing program with cloud partners due to antitrust investigations.
4. Threat of new trade tariffs and loss of China's market: The Trump administration is preparing new tariffs on semiconductor imports, increasing the cost of building artificial intelligence infrastructure. Owing to current export restrictions, Nvidia's revenue from server chip shipments to China has dropped to zero, and the company is excluding the Chinese market from its forecasts.
5. Rising Treasury yields and expensive oil: Federal Reserve Chair Kevin Warsh indicated that interest rates will remain high. The yield on 10-year US Treasury bonds has risen to 4.75%. Concurrently, escalating conflict in the Strait of Hormuz has pushed oil prices above $90 per barrel. High yields on government bonds make risk-free investments more attractive and dampen investor interest in buying expensive tech stocks.

Forecast

Nvidia's stock dynamics through the end of 2026 are expected to evolve in two phases influenced by seasonal factors and corporate reports.

In September 2026, stock prices will be pressured by profit-taking from large funds and overall market weakness. High interest rates and the risks of new tariffs will limit the influx of fresh capital. During this period, a decline in share prices from the current $220.78 to a support range of $200–$210 is likely. Investors should not expect a swift rise to analysts' targets of $300 until the market navigates through the seasonal wave of selling.

Recovery will begin in the fourth quarter of 2026. The demand for next-generation Vera Rubin and Rubin CPX chips is fully backed by the budgets of tech giants totaling $1.3 trillion. The agreement with Amazon and the stabilization of memory supplies will allow the company to maintain revenue growth rates above 70%. After completing the September correction, Nvidia shares are expected to return to growth, finishing 2026 in the $250–$270 range.

Eurozone inflation jumped to 3.3% year-on-year in August from 2.9% in July, but the euro barely reacted to the report because the data were in line with economists' forecasts. The Consumer Price Index reflects the pace of price growth and directly affects expectations for the ECB's interest rate, but since the acceleration had already been priced in by the market, there was no reason for sharp movements. The entire story, however, fit into a single line, as energy prices rose by 14.3% compared with 10.3% a month earlier and by 2.9% in just one month, accounting for almost all of the acceleration.

British industry also continued to grow in August, but at a noticeably slower pace, with the Manufacturing PMI falling to 51.7 from 51.9, a five-month low, although it was still above the preliminary estimate of 51.5. The pound also chose to ignore this development.

In the second half of the day, the market is awaiting the ISM Manufacturing PMI, the Job Openings and Labor Turnover Survey (JOLTS) from the US Bureau of Labor Statistics, as well as a speech by FOMC member Michael Barr. The ISM index is based on surveys of purchasing managers and reflects the state of the manufacturing sector, with the 50-point mark separating expansion from contraction, while the JOLTS report on job openings shows the degree of tightness in the labor market and serves as one of the Fed's reference points when assessing employment. Barr's comments will add weight to the agenda, as the market uses them to gauge the central bank's stance.

Strong data would provide even more support for the dollar, as robust statistics would reinforce the already hawkish expectations for Fed policy following Jackson Hole. For the euro and the pound, this creates a risk of further declines, as a stronger dollar would put additional pressure on EUR/USD and GBP/USD.

If the data are strong, I will rely on the Momentum strategy. If the market does not react to the data, I will continue using the Mean Reversion strategy.

Momentum Strategy (breakout) for the second half of the day:

For EUR/USD

• Buying on a breakout above 1.1600 could lead to a rise in the euro toward 1.1620 and 1.1639.
• Selling on a breakout below 1.1580 could lead to a decline in the euro toward 1.1557 and 1.1534.

For GBP/USD

• Buying on a breakout above 1.3555 could lead to a rise in the pound toward 1.3574 and 1.3596.
• Selling on a breakout below 1.3527 could lead to a decline in the pound toward 1.3502 and 1.3475.

For USD/JPY

• Buying on a breakout above 160.24 could lead to a rise in the dollar toward 160.43 and 160.67.
• Selling on a breakout below 160.02 could lead to a decline in the dollar toward 159.80 and 159.60.

Mean Reversion Strategy (return) for the second half of the day:

For EUR/USD

• I will look for selling opportunities after a failed break above 1.1613, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.1579, followed by a return to this level.

For GBP/USD

• I will look for selling opportunities after a failed break above 1.3552, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.3525, followed by a return to this level.

For AUD/USD

• I will look for selling opportunities after a failed break above 0.7156, followed by a return below this level.
• I will look for buying opportunities after a failed break below 0.7135, followed by a return to this level.

For USD/CAD

• I will look for selling opportunities after a failed break above 1.3879, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.3850, followed by a return to this level.

Gold (XAU/USD) is posting moderate intraday losses while remaining close to the one-and-a-half-week low recorded the previous day. Comments by Federal Reserve Chair Kevin Warsh last Friday strengthened market expectations of an imminent rate hike, weighing on gold.

Warsh delivered an unexpectedly hawkish speech at the Jackson Hole symposium, pointing to the possibility of higher interest rates if inflation does not slow significantly. Another factor is the rise in energy prices caused by escalating tensions between the US and Iran, which has revived concerns about persistent inflation and strengthened expectations of higher interest rates. According to CME Group's FedWatch Tool, traders currently estimate the probability of the Fed raising borrowing costs at its upcoming September 15–16 meeting at around 65%. This, together with geopolitical uncertainty, is supporting a recovery in the US dollar as a safe-haven asset after its decline on Monday and putting additional pressure on gold prices.

Recent developments in the Middle East, in which US forces struck Iran's Larak Island on Sunday, have added to tensions. This was the first such strike since late July, prompting Iran to attack US air bases in Jordan in response. In addition, Iran reported using drones against Al Minhad Air Base in the United Arab Emirates. US President Donald Trump warned of the possibility of further military action and threatened a "tough" strike against Iran, thereby maintaining the geopolitical risk premium, which continues to support oil prices and the US dollar.

Nevertheless, traders should refrain from opening aggressive directional positions and wait for the release of key US macroeconomic data scheduled for the beginning of the new month. The busy week begins with the release of the ISM Manufacturing PMI and JOLTS job openings data, both due today. The main focus should be on the US monthly Nonfarm Payrolls (NFP) report, due on Friday. Given the fundamental backdrop described above, the outlook favors dollar bulls, indicating that the path of least resistance for gold prices is lower.

From a technical perspective, after breaking below the 100-period simple moving average (SMA), the bears may target the 200-day EMA. However, the oscillators have not yet moved into negative territory, indicating that the bulls still have some strength. Resistance is now at the 20-day SMA, followed by the 100-day SMA, above which the bulls could regain momentum.

The EUR/USD pair struggled to consolidate following an overnight rebound from the 100-day simple moving average (SMA), located around 1.1575–1.1572, which corresponds to a one-and-a-half-week low. During the European session on Tuesday, the pair moved lower and is currently trading below 1.1600, down nearly 0.50% on the day amid moderate US dollar strength.

Traders are exercising caution while awaiting preliminary data on the eurozone Harmonised Index of Consumer Prices (HICP).

Economic forecasts point to an increase in eurozone inflation in August, which in turn makes a September rate hike by the European Central Bank (ECB) almost inevitable. These expectations were supported by German Consumer Price Index (CPI) data, which rose to 2.9% in August from 2.8% in the previous month. Moreover, ECB Executive Board member Isabel Schnabel expressed confidence in the need for another rate hike, although the market reaction to this report is likely to be more subdued.

Meanwhile, during the North American session, attention should be paid to US economic data, including the ISM Manufacturing PMI and JOLTS job openings data. In addition, recent remarks by Federal Reserve Chair Kevin Warsh have strengthened expectations of an imminent rate hike, which, together with geopolitical uncertainty, is increasing demand for the US dollar as a safe-haven asset and supporting its recovery after a moderate decline the previous day. This is seen as a significant factor putting downward pressure on EUR/USD.

Nevertheless, dollar bulls may refrain from aggressive action and prefer to wait for the release of the important monthly US employment data, known as the Nonfarm Payrolls (NFP) report, which will be published on Friday. Despite this, fundamental factors may continue to provide support for the dollar, and any intraday recovery in EUR/USD is likely to encounter selling pressure.

From a technical perspective, if the price fails to hold above the 100-day simple moving average (SMA), a break below it would be viewed as an important signal for the bears. Under this scenario, spot prices could decline to 1.1522, followed by the psychological level of 1.1500. On the other hand, the pair will encounter resistance at the 9-day EMA, followed by the 200-day SMA and then 1.1650, above which the bulls would have room to advance further. As long as the oscillators remain in positive territory, the bulls still have a good chance of regaining control. A daily close above the 1.1700 barrier would be required to fully ease the current downward pressure.

The wave situation on the hourly chart remains bullish. The latest completed upward wave broke above the previous peak, while the new downward wave has not yet broken below the previous low. Geopolitical conditions remain consistently negative: negotiations between Iran and the US are not taking place, and the blockade of the Strait of Hormuz remains in place. However, the FOMC's stance, which remains highly contradictory, is currently more important for the US dollar.

The fundamental background on Monday was highly contradictory. Traders could focus only on Germany's consumer price index, which rose from 2.8% year-on-year to 2.9% year-on-year, but most preferred not to draw any conclusions from this indicator. Today, in just a couple of hours, the euro area inflation report will be released, showing how serious the situation with price growth in Europe is. The ECB will use this report as a basis for its monetary policy decision in a couple of weeks. I would also note that over the past few days, the market has once again started to believe in FOMC monetary policy tightening, but this belief has so far provided very little support for the US currency. Bears attacked aggressively over the past week, but most of the dollar's gains came during just a few hours following Kevin Warsh's speech on Friday. As they say, trust but verify. The market believes the Fed president's statements about the need to combat high inflation, but at the same time, it has serious doubts about monetary policy tightening given the current state of the US economy and labor market. A new Nonfarm Payrolls report will be released this week, so the Fed's policy outlook should become clearer by the end of the week.

On the 4-hour chart, the pair continues to decline and has consolidated below the upward trend channel. A rebound from the 50.0% Fibonacci level at 1.1588 led to a small recovery in the euro, while consolidation below 1.1588 would allow for expectations of a continued decline toward the next retracement level, 38.2%, at 1.1526. No emerging divergences are currently observed on any of the indicators.

Commitments of Traders (COT) report:

During the latest reporting week, professional traders opened 2,678 Long positions and closed 20,058 Short positions. Over the seven weeks in February and March, the bulls' overwhelming advantage evaporated because of the war in Iran, while over the past 22 weeks, the situation has leveled out amid a supposed truce and market hopes for an end to the war. The total number of Long positions held by speculators currently stands at 198,000, while the number of Short positions stands at 235,000. The bears remain in the lead, but their advantage is rapidly shrinking.

Overall, over the long term, large market participants continue to show considerable interest in the euro. Certainly, events of various kinds around the world, which have been abundant in recent years, affect investor sentiment. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war alternately appears to end and then resumes. However, geopolitics no longer determines the dollar's fate on its own.

News calendar for the US and the European Union:

• Germany – Change in retail sales volumes (06:00 UTC).
• European Union – Consumer Price Index (09:00 UTC).
• US – ISM Manufacturing PMI (14:00 UTC).
• US – JOLTS Job Openings (14:00 UTC).

On September 1, the economic-events calendar contains four entries. Of these, I would highlight the ISM index and inflation in Europe. The economic background may influence market sentiment on Tuesday.

EUR/USD forecast and trading tips:

Long positions in the pair can be considered today after a close above 1.1620 on the hourly chart, with a target of 1.1700. Short positions were possible after a rebound from 1.1700 on the hourly chart, with a target of 1.1620. Today, a rebound from 1.1620 would allow for new short positions to be opened, with a target of 1.1551.

The Fibonacci grids are drawn from 1.1620–1.1325 on the hourly chart and from 1.1849–1.1325 on the 4-hour chart.

The market situation remains bullish. The latest completed upward wave broke above the previous peak, while the new downward wave has not yet broken below the previous low. Thus, the bulls currently have the initiative in the market, and their advantage remains substantial. The bullish trend can be considered broken only after the low of the latest completed wave is broken. That is, below 1.3414. Alternatively, after two downward waves have formed.

There was no significant fundamental background on Monday. Trader activity was low, as no one wanted to force the issue ahead of a whole series of important events and reports. Let me remind you that several important indicators will be released in the US this week, which will either support Kevin Warsh's hawkish stance on Friday or refute it. The US dollar strengthened quite well at the end of last week, but this was mainly driven by traders' own optimism about the prospects for tighter FOMC monetary policy. Will these expectations be justified? The ISM business activity report, JOLTS and ADP labor-market reports, the Nonfarm Payrolls report, and the unemployment rate will provide answers to these questions. In my view, the prospects for tighter FOMC policy are not clear-cut. US inflation remains high, but the labor market, the economy, and the Treasury Department's problems with public debt and rising long-term Treasury yields must also be taken into account. The latter factor is also extremely important, as a Fed rate hike would lead to an even greater increase in bond yields. And the Treasury Department is currently unable to stop this process.

On the 4-hour chart, GBP/USD fell to the 23.6% retracement level at 1.3538. A rebound from this level would favor the pound and a resumption of growth within the upward trend channel toward the 0.0% retracement level at 1.3657. Consolidation below 1.3538 would allow for a further decline toward the 38.2% Fibonacci level at 1.3467. No new emerging divergences are currently observed.

Commitments of Traders (COT) report:

The sentiment of the Non-commercial trader category became less bearish over the latest reporting week. The number of Long positions held by speculators increased by 16,269, while the number of Short positions increased by 6,220. The gap between the numbers of Long and Short positions is currently approximately 93,000 versus 1.382 million. The gap and the bears' advantage are gradually narrowing; however, the bears' advantage remains substantial. Previously, the bears' dominance was unquestionable, but now it is, as the fundamental background has changed.

I still do not believe in a bearish trend for the pound, but in the near term, everything will depend on Trump's trade policy, the monetary policies of the Fed and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market has shifted toward expectations of peace, but negotiations between Iran and the US failed without really getting started. And there is no guarantee that they will resume in the near future. The Fed's monetary-policy stance remains contradictory.

News calendar for the US and the UK:

• US – ISM Manufacturing PMI (14:00 UTC).
• US – JOLTS Job Openings (14:00 UTC).

On September 1, the economic-events calendar contains two entries, among which the ISM index stands out as at least one significant release. The economic background may influence market sentiment in the second half of Tuesday.

GBP/USD forecast and trading tips:

Selling the pair was possible after consolidation below the 1.3633–1.3641 level on the hourly chart, with targets at 1.3556 and 1.3526. The targets were reached. New short positions can be considered after a rebound from 1.3556 or a close below 1.3526. Long positions can be considered today after a close above 1.3556, with a target of 1.3633–1.3641.

The Fibonacci grids are drawn from 1.3557–1.3272 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.

Trump's "two-week operation" in Iran, dubbed "Epic Rage," has entered its seventh month. Increasingly, Epic Rage looks more like Epic Lethargy, and with each passing month the US military and the White House are persuading the world that the threat is less formidable than advertised. Iran is not only putting up stiff resistance and answering every strike with one of its own. It is now dictating its own terms for ending the conflict and making no concessions. Tehran has seized the initiative, and Donald Trump simply does not know what to do with it.

At times I have the impression that America is being run by a child. Many of the US president's actions and statements provoke either laughter or complete bewilderment. If those actions had produced positive, albeit unexpected, results, perhaps the world would have applauded Trump. Instead, they have merely led to a growing number of statistical portals counting the US president's false statements, while his actions are being criticized even by American experts across a wide range of fields.

It is difficult for me to say in which area Trump's policies, which were supposed to revive America, have produced positive results. Yet Trump has not stopped there and over the weekend launched new strikes on Iran. After a month-long pause. What the purpose of these new strikes is, probably no one will be able to explain. Iran will not make concessions, it has no intention of dancing to Washington's tune, and it is also pursuing a cunning strategy of reducing Trump's authority after the midterm elections to the US Congress.

As a result, the new strikes on Iran were likely carried out so that Trump could then tell the world how Kharg Island was being blown to pieces. Presumably, at that moment the entire world was supposed to tremble. Recall that Kharg Island is Iran's largest oil hub, except that all Iranian ports are currently blocked by the US Navy. Therefore, strikes on Kharg make little sense, because Iran is not exporting oil by sea. Trump also posted on social media a video of the strikes on Kharg Island that was generated by artificial intelligence.

In addition, the White House leader said the US may soon carry out new limited strikes on Iranian facilities near the Strait of Hormuz. Trump still considers Hormuz open and explains the new strikes as necessary to contain Iranian attacks on commercial ships. I would add that only a few vessels a day are currently passing through Hormuz, somehow receiving transit permission from Tehran. Oil prices are rising again this week.

Pay attention to my other articles:

EUR/USD analysis, September 1. The market is once again taking Warsh at his word

Wave analysis of EUR/USD:

Based on the analysis conducted on EUR/USD, I conclude that the instrument remains within an upward trend segment (lower chart), while in the shorter term it has shifted into a new bullish wave sequence. In my view, now is an excellent time to form long positions. Unless the downward trend segment that began on January 28 takes on a more extended five-wave form — which would require a strong news background in favor of the dollar — EUR/USD is at the very beginning of a new, prolonged upward trend segment, with targets extending as far as the 1.25 figure.

Wave picture for GBP/USD:

The wave structure for GBP/USD has taken on an entirely clear shape. We now see on the charts a distinct corrective A-B-C structure, which has been completed. I therefore expect the formation of an upward wave sequence that is taking on an impulsive character and coincides with the impulsive structure in EUR/USD. If that is correct, then sterling is now in the third wave, and the targets for the entire trend segment lie above the 1.39 figure. Over the coming months I am considering only buying trades.

Core principles of my analysis:

1) Wave structures should be simple and clear. Complex structures are difficult to trade and often change.

2) If there is no confidence in what is happening in the market, it is better not to enter it.

3) There can never be 100% certainty about the direction of price movement. Do not forget protective stop-loss orders.

4) Wave analysis can be combined with other forms of analysis and trading strategies.

Traders fear that the Reserve Bank of New Zealand will deliver a so-called dovish hike at its upcoming meeting, which takes place tomorrow, September 2. In other words, the RBNZ will raise rates while simultaneously striking a cautious tone and stressing that further tightening will depend entirely on incoming data.

That scenario mirrors the hawkish pause delivered in May. At that time, the central bank kept the OCR at 2.25%, but the decision was effectively made on a knife edge: three members of the committee voted for a 25-basis-point increase, while three voted to leave policy unchanged. The governor's deciding vote favored a pause. At the same time, the central bank adopted hawkish rhetoric, saying that interest rates would likely have to rise over the course of the year and more than previously expected.

In July, the RBNZ acted on those hawkish intentions, lifting the policy rate to 2.5%. However, the language of the accompanying statement had already become noticeably more cautious. Policymakers noted that after the partial reopening of the Strait of Hormuz, global oil prices fell sharply, and with them short-term inflation risks eased.

Even so, the main argument for a further increase on September 2 remains inflation. Annual CPI accelerated from 3.1% to 4.1% in the second quarter, reaching a 2.5-year high and exceeding both the RBNZ's forecast of 3.9% and the upper bound of the central bank's 1–3% target range. Quarterly price growth was 1.5%. However, the structure of that acceleration matters. Prices for tradable goods rose 4.9% year-on-year, while non-tradable inflation slowed to 3.4%, its lowest level in five years. A substantial part of the acceleration in headline CPI was linked to fuel: gasoline rose 27.5% and diesel surged 71.1%. CPI excluding food, household energy, and motor fuel rose only 2.5%. In other words, a large share of the inflation spike reflects an external energy shock rather than uncontrolled domestic price pressure.

That is an important nuance for the coming meeting. On the one hand, a September rate increase looks almost predetermined given the RBNZ's hawkish signals and the trajectory of headline CPI in the second quarter. On the other hand, the path of rates beyond that point is far less clear. Weak domestic demand remains a serious constraint for the RBNZ. According to the latest figures, real retail sales fell 0.5% in the second quarter after rising 0.9% in the previous reporting period. Declines were recorded in 8 of 15 sectors, with especially sharp drops in fuel sales (-13%), automotive goods (-2.3%), accommodation services (-8%), and food services (-2.8%).

Another argument for caution is New Zealand's labor market. Unemployment rose to 5.6% in the second quarter, the highest level since 2015. Employment increased 0.5%, while the underutilization rate climbed to nearly 14% at 13.8%. Annual wage growth was just 2.0%, well below the current inflation rate. Overall, the structure of the data does not point to an overheating labor market.

In other words, the New Zealand economy is receiving an inflation impulse, but one that is largely imported through energy prices, while domestic price pressure remains materially weaker.

Finally, inflation expectations give the RBNZ additional room to preserve a cautious stance. In the central bank's August survey, one-year inflation expectations fell from 3.41% to 2.6%, and two-year expectations declined from 2.53% to 2.34%. Business inflation expectations for one year ahead also fell, from 3.68% to 2.99%. Clearly, easing inflation expectations gives the central bank more flexibility to act less aggressively. When businesses and consumers believe price growth will slow, the risk of a wage price spiral falls materially.

As a result, the fundamental picture looks contradictory. Inflation compels the central bank to act, while weakness in the labor market and consumer demand limits room for further tightening. The most likely outcome of the September meeting is therefore a 25-basis-point OCR increase to 2.75%, accompanied by more cautious signals on the path ahead. The RBNZ will likely confirm that further rate increases remain possible, but it will stress that its decisions depend on incoming data.

Such a scenario will weigh on the New Zealand dollar and, consequently, on NZD/USD. The fact of a rate increase is already largely priced in, so the kiwi will need additional hawkish commentary to strengthen. If the hike is accompanied by dovish signals, the New Zealand dollar will come under significant pressure. In that case sellers in NZD/USD will not only force a break of support at 0.5900, the middle Bollinger Band on the daily chart, but will also test the next price barriers at 0.5870, the Kijun-sen line on D1, and 0.5830, the lower Bollinger Band on the same time frame.

Useful links:

My other articles are available in this section

InstaForex course for beginners

Popular Analytics

Open trading account

Important:

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

#instaforex #analysis #sebastianseliga