USD/CNH test the major support at 7.1200 before recovery is likely – UOB Group

FXStreet Insights Team FXStreet

There is a chance for US Dollar (USD) to test the major support at 7.1200 before a more sizeable recovery is likely. In the longer run, downward bias is building, but USD must first close below 7.1100 before a sustained decline can be expected, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward bias is buildin

24-HOUR VIEW: "After dropping sharply to a low of 7.1218 in the NY session last Friday, USD recovered to close slightly lower at 7.1266 (-0.13%). Despite the decline, there has been no significant increase in downward momentum. That said, there is a chance for USD to test the major support at 7.1200 before a more sizeable recovery is likely. USD is unlikely to break clearly below 7.1200. On the upside, if USD breaks above 7.1375 (minor resistance is at 7.1340), it would mean that USD has likely entered a range-trading phase."

1-3 WEEKS VIEW: "In our latest narrative from last Wednesday (03 Sep, spot at 7.1400), we stated that 'the current price movements are likely part of a range trading phase between 7.1200 and 7.1650.' USD traded within the range, but last Friday, it fell sharply to a low of 7.1218. There has been an increase in downward momentum, but not significantly. Overall, while the downward bias is building, USD must first close below 7.1100 before a sustained decline can be expected. The odds of USD closing below 7.1100 are not high for now, but they will remain intact as long as 7.1500 is not breached."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD strengthens above 1.3350 ahead of US CPI data

The GBP/USD pair trades in positive territory around 1.3360 during the Asian trading hours on Tuesday. However, the potential upside for the major pair might be limited amid fears of an escalating US-Iran conflict. The US June Consumer Price Index inflation report will take center stage later on Tuesday.

EUR/USD holds gains near 1.1400 ahead of US CPI

EUR/USD extends gains and retakes 1.1400 in the European session on Tuesday. The US Dollar sees a profit-taking pullback, supporting the pair's rebound. However, the potential upside for the pair might be limited amid renewed US military strikes against Iran and ahead of the US CPI data and Fed Chair Warsh's testimony.

Gold sticks to gains above $4,000 ahead of US CPI, Fed's Warsh

Gold trims a part of its modest intraday recovery gains and remains within striking distance of a nearly two-week low touched earlier this Tuesday. The commodity, however, sticks to a positive bias above the $4,000 psychological mark through the first half of the European session amid mixed cues.

Major Altcoins: XRP, ADA and SOL remain vulnerable as bearish grip tightens

Major altcoins in the crypto market, such as Ripple, Cardano, and Solana, are trading in the red on Tuesday, extending their 2% to 3% decline from the previous day. The technical outlook for XRP, ADA, and SOL shows a near-term bearish bias, with prices trending below their respective 50-day EMAs.

US CPI data set to show inflation cooled in June due to tumbling fuel prices

The US Bureau of Labor Statistics will publish the June Consumer Price Index data on Tuesday. The report is expected to show a decline in consumer inflation, driven by the easing of crude Oil prices following the ceasefire announcement between the United States and Iran.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.