The Week Ahead 21st – 25th August: Eurozone Economy Under the Spotlight

<p>Welcome to Key to Markets preview of the Week Ahead.</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of <strong>August 17, 2023. 11:00 GMT.</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25057 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Currency-Pair-Performance.png" alt="" width="626" height="284" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Currency-Pair-Performance.png 626w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Currency-Pair-Performance-300×136.png 300w" sizes="(max-width: 626px) 100vw, 626px" /></p>
<p>Source: finviz.com</p>
<div></div>
<h2>10 Big Stories Last Week</h2>
<p>In case you missed it…</p>
<p><strong>UK wages rose at a record pace.</strong> UK wages rose at 8.3%, marking the fast pace of wage growth since records began.</p>
<p><strong>Target beat earnings but slashed FY forecast.</strong> The retailer posted EPS of $1.80 ahead of the $1.39 forecast, but revenue fell short of expectations, and FY guidance was cut.</p>
<p><strong>Fitch may downgrade US banks.</strong> The rating agency warned that it could downgrade dozens of lenders, including JP Morgan following an assessment of the sector.</p>
<p><strong>Coinbase is approved to offer crypto futures in the US.</strong> The firm won approval to sell crypto derivatives directly to retail customers in the US.</p>
<p><strong>The Chinese yuan fell to a 9-month low.</strong> Weak Chinese data and renewed concerns over the property sector in China sent USD/CNH to its highest level this year.</p>
<p><strong>Gold fell to a 5-month low.</strong> Hawkish minutes from the July FOMC meeting, where policymakers saw significant upside risk to inflation, pulled gold to its lowest level since March.</p>
<p><strong>Tesla cut prices in China by 6%.</strong> The EV maker slashed the price of Model S and X by $7400 and $8500 as it looks to boost sales.</p>
<p><strong>Nvidia was boosted by brokers ahead of earnings.</strong> Brokers have become increasingly bullish on Nvidia ahead of its results, with the stock enjoying several price target hikes.</p>
<p><strong>Fitch put China’s A+ rating in question.</strong> The rating agency said that it may rethink China’s rating amid growing economic woes in the world’s second-largest economy.</p>
<p><strong>Walmart lifts FY sales &amp; profits guidance.</strong> The bellwether retailer posted better than forecast Q2 profit. It now sees FY EPS at $6.36-$6.46 up from $6.10-$6.20. This was ahead of $6.28 expected.</p>
<div></div>
<h2>Chart of the Week</h2>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25060 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-of-the-week.png" alt="" width="579" height="454" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-of-the-week.png 579w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Chart-of-the-week-300×235.png 300w" sizes="(max-width: 579px) 100vw, 579px" /></p>
<p>Source: DailyShot</p>
<p>Moves across bond markets have been sharp this week. The US 10-year treasury yield rose to 4.31%, its highest level since 2008.</p>
<p>Hotter-than-expected inflation in July, a solid NFP report, and hawkish minutes from the July FOMC have resulted in the market taking the prospect of another rate hike from the Federal Reserve more seriously.</p>
<p>According to the CME FedWatch tool, the market is pricing in a 36% probability of another rate hike this year, up from 24% just a week ago.</p>
<p>Deutsche Bank strategist Jim Reid noted the selloff in sovereign debt, saying “Investors are adjusting to the fact that rates could remain at a higher level for some time.”</p>
<div></div>
<h2>5 Things to Watch This Week</h2>
<p><strong>1. Jackson Hole Symposium</strong><br />
The 2023 Economic Policy Symposium “Structural Shifts in the Global Economy” will be held August 24 – 26. The event brings together central bankers, economists, and policy experts from across the globe. Speeches by Fed Chair Powell, ECB’s Christine Lagarde as well as other central bankers will be watched closely for hints of a shift in policy. If the Fed is looking to reorient investors, this is often the platform where it happens.</p>
<p><strong>2. Eurozone PMI data</strong><br />
On Wednesday, 23rd August, the latest eurozone PMI data could provide fresh clues over the health of the eurozone economy after July’s PMI showed that business activity contracted again and as the service sector continued to outperform manufacturing. In addition to the headline prints, the market will also watch the input costs sub-category closely for clues about inflation.</p>
<p><strong>3. Yen intervention?</strong><br />
USD/JPY trades at around a 9-month high on BoJ – Fed divergence amid rising bets that the Fed could continue hiking interest rates while the BoJ sticks to its ultra-loose monetary policy. The pair trades above 145.00, a level that has prompted authorities to intervene in the past. Japan inflation data is due on Friday, and cooling inflation could drag the yen lower.</p>
<p><strong>4. Nvidia earnings</strong><br />
The chip stock is set to report earnings on Wednesday, 23rd August, after the market closes. The earnings report comes as the stock trades over 200% higher this year and as analysts raised their price target for the chipmaker, heightening already lofty expectations ahead of earnings. Wall Street is expecting a 66% surge in quarterly revenue to $11.13 billion, this is ahead of the $11 billion forecast by the firm.</p>
<p><strong>5. US retailers earnings</strong><br />
Earnings from Home Depot, Target, and Walmart, as well as stronger-than-expected US retail sales, put the spotlight firmly on the US consumer last week. The focus will continue this week with Lowe’s, Coty, Dollar Tree, Macy’s, and Kohls set to report earnings. The figures could shed more light on the health of the consumer as inflation cools and interest rates rise.</p>
<p><strong>Economic Calendar Highlights</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25065 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Economic-Calendar-Highlights.png" alt="" width="734" height="478" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Economic-Calendar-Highlights.png 734w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Economic-Calendar-Highlights-300×195.png 300w" sizes="(max-width: 734px) 100vw, 734px" /></p>
<p>Source: FXStreet.com</p>
<div></div>
<h2>Technical Analysis:</h2>
<p>TA of the major asset classes (Forex – Commodities – Indices…).</p>
<p><strong>EUR/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25068 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/EURUSD.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/EURUSD.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/EURUSD-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/EURUSD-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/EURUSD-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/EURUSD-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>EUR/USD is in a downtrend, making lower highs and lows below the 50 SMA.<br />
Price is now in a downtrend on daily charts but the 50 SMA is flat showing a broadly sideways trend over the last 50 days. 1.0820 is major support with 1.0650 the June low beneath. 1.107 is resistance, followed by 1.118.</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25071 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/GBPUSD.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/GBPUSD.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/GBPUSD-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/GBPUSD-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/GBPUSD-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/GBPUSD-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>GBP/USD is in a downtrend, forming lower lows and lower highs beneath the 50 SMA.<br />
There has been no follow-through to the downside since price broke below the 50 SMA. There are 2 hammer patterns near 1.26 suggesting some bullish support. A close back over 1.28 would confirm the bullish impulse, otherwise next support is 1.25.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><strong><img decoding="async" loading="lazy" class="alignnone wp-image-25074 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/USDJPY-1.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/USDJPY-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/USDJPY-1-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/USDJPY-1-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/USDJPY-1-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/USDJPY-1-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></strong></p>
<p>USD/JPY is in an uptrend making higher highs and lows above the 50 SMA.<br />
Price made a fresh year-to-date high over 1.46 in a continuation of the long-term uptrend. The broken resistance at 144.3-7 is now support, which if broken could signal a false breakout.</p>
<p><strong>Gold (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25077 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XAUUSD.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XAUUSD.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XAUUSD-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XAUUSD-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XAUUSD-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XAUUSD-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>XAU/USD is in a downtrend, making lower lows and lower highs while below the 50 SMA. RSI is oversold under 35 showing downward momentum. The price just hit its lowest since March. Support is at 1876 then 1846. Resistance is 1912 then 1942</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25080 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XBRENT.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XBRENT.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XBRENT-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XBRENT-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XBRENT-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XBRENT-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>XBRENT is in an uptrend with higher highs and lows above the 50 SMA.<br />
RSI formed bearish divergence from overbought conditions above 70 and is now at 50. Price has pulled back to support at 83, where it is attempting a rebound. Next support is 81, then resistance is 87 then 89.50.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25083 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XUS.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XUS.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XUS-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XUS-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XUS-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/XUS-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>XUS500 is in a downtrend with lower highs and lows below the 50 SMA. RSI is approaching oversold territory near 35. Support is 4375 then 4300. Resistance is 4450 then 4515.</p>
<p>Thank you very much for reading – and have a great week trading!</p>
<p><a href="https://www.keytomarkets.com/open-real-account/?_ga=2.252393673.1135536227.1654596834-4032589.1652083530">Sign up</a> for your Key To Markets account today or login <a href="https://secure.keytomarkets.com/login?_ga=2.101662277.519047569.1691741654-1126588768.1664792417">here</a>.</p>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/the-week-ahead-21st-25th-august-eurozone-economy-under-the-spotlight-25054/">The Week Ahead 21st – 25th August: Eurozone Economy Under the Spotlight</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>