Looking at the DXY chart, another dollar rally might be in the works. There could be a bounce on both EU and GU early next week, but the overall direction should be further down for both pairs. Most big news are on thursday and friday, so it will be important to follow the PA until then, but I am expecting a bearish week for both euro and pound, and if not, definitely a bearish month of september.

Both EU and GU did a good spike on friday, after horrible economic numbers from the US. Bidenomics is finally working in full swing, so this won’t change anytime soon. But what might give euro bulls a hard time are the tensions between Israel and Iran, so I expect EU to drop early in the week and then we will see where it stops and gains some power for another bull move, if that even happens. I will be watching the 850-860 area on EU and if it breaks, then possibly the 820 area…if even that breaks, then bulls are probably done for the week and shorting the spikes will be a better option during the week, as there are no major economic news until the end of it. First important economic news we are getting will be in 10 days, on august 13-14th, where US inflation numbers are posted, which will be again a big mover. In which direction is yet to see. A lot can happen until then.

EU was strongly bullish the past few weeks, but couldn’t break above 900 with confidence. On the other hand, it couldn’t stay below 800 either. Now we have very strong support and resistance zones, which should break next week, since we not only have the FED meeting on wednesday, but also important inflation numbers from the US on wednesday and thursday. Nothing important should be happening until then, so I wouldn’t be surprised, if we stayed in the current range. Friday’s move, caused by employment numbers gave bears some relief, but looking deep into those numbers, they were more dovish, as full employment is down by over 600k job and the only thing that grew was part-time employment. The “green” employment number was basically just people having to work 2-3 part-time jobs intead of the full-time job they lost. Markets should catch up to that pretty quickly and we could easily see EU back above 850 early next week, unless EU parliament elections create some mess before the week starts. And on wednesday, we should have a big move, either breaking 900 on the upside or 800 on the downside. But this is all just speculation, lets see how the week unfolds.

Everyone is getting ready to short UJ, as you see news about an intervention everywhere. But just because everyone is expecting it, I would be very cautious and wait for a possible spike up first, that will take out all the weak shorts. Just a warning, take it or leave it.

We had mostly very positive US data lately, but the US Dollar didn’t make much of it and couldn’t even manage to break below 750 in the past few weeks. ECB was also bearish and every bear move was bought instantly or the next day. It kind of makes me think that EU wants to go higher and the bottoming might be over soon. Not that I would be a huge fan of indicators, but they kind of suggest the same and are thus aligned with price action. Early next week will give us a clue…if EU goes back above 820-850 and manages to stay there….then we can expect another attempt of breaking 900 and then potentially 1000.

After 2 easy trading weeks, when we were stuck in a range between 1.09 and 1.10, it looks like price will break either way soon. Bad thing is, it can break both ways and both ways would make sense technically. And even fundamentally…because FED is now talking clearly about rate cuts, but ECB started doing the same. And with both economies in trouble, its not about who will be a winner, but who will be a less of a loser. Probably best to wait for a break out and then if its going to be a fake breakout or a real one.

Last week went a little over the top during the ECB and BOE meetings, even though market was very logical up to that moment. Lagarde was dovish and yet, euro kept climbing without any corrections, so I was expecting friday’s US session to fix all that, which it did. Now we have interresting daily candles on both EU and GU, regular bearish divergence on GU and hidden bearish divergence on EU. At the same time we have USDCHF with a bounce after a strong bottoming and also strong bottoming on the DXY. It all looks in favor of the US Dollar into next week, so lets see if the market confirms it.

Euro did correct like I suggested in my last post and hit my first big correction target of 740-790. Now the question is, if it keeps dropping or if this was it for bears. Either way, I see this is as a good zone to start buying, even if it may drop some more. But PA suggests that the bottom is here or near. We had amazingly positive data from the US on friday and yet, euro bears didn’t manage to make much from it. After an initial whipsaw, price went back up and closed only around 15 pips lower than what it was before the news. This could give bulls an advantage into next week. We have major inflation news on tuesday and wednesday, but if there are no surprises there, EU should remain bullish until the FED meeting on wednesday. What happens after FED, is yet to see. And we also have ECB and BOE on thursday, so a busy week, with a lot of volatility. And probably the last volatile week of the year, as vacation time is near and the market will be slow between Christmas and New Years.

I don’t think it will stay there early next week, though. Friday’s move was a little overextended and one-sided, even after positive US news. But thats normal on fridays, once a direction is established during London, it mostly goes in the same direction for the rest of the day. Now on monday we should get some correction, so bulls can gain some power again. The question is, if its going to be a small correction only or if its going to be bigger and will last longer. Long term, euro is now bullish, no question about that, but on a weekly basis, it will go both up and down. I see 2 options…first is a correction towards 740-790 and new longs from there or a deeper correction to re-test the previous FED levels at 550-590. Either way bears should get some relief, if bulls don’t manage to stay above 900 early next week. We have FED minutes on tuesday, not wednesday, as most of the time. so that will give us a clue. It never makes a big move, but it mostly decides a direction for the rest of the week, so whatever direction there will be after FED on wednesday, should stay until the end of the week.

Last week, both EU and GU finally broke above some medium term resistance zones and turned bullish. Friday was a bit one sided, so a correction is expected early next week. The question is how long the correction will last and how deep will it go. If the week starts with a drop, I would wait until tuesday-wednesday, to see where new support zones develop, to buy EU or GU. EU could easily correct 50-100 pips first and GU even more than 100 pips. There are no major news until wednesday, anyway. As always, anything can happen, but a correction would make sense for bulls, too.