Euro Fundamental Backdrop

This Friday, the Euro had a bearish slide following the euro area inflation indicating a slow decline. However, the main inflation stayed high with tobacco, food, and alcohol. Construction data results indicated arising concerns around the eurozone economy. The economic increase fears of the Chinese can also reflect negatively on Europe.

Judging from the USD viewpoint, the currency is backed by the increase in US short-term Treasury yields. Additionally, traders who avoid unnecessary risk are sceptical about China, following their growth issues. With USD being a safe heaven and stable currency, many traders feel confident trading with it; this has kept the currency buoyant. However, the upcoming economic forum next week by Jackson Hole can alter the market path if Fed chairman Jerome Powell changes his statement indicating a more dovish monetary policy report. 

On Friday, the EUR/USD had a good run during the US session. However,  the pair fell below the 1.0900 price market hitting a 1.0872 price mark. 

US Data

The US data report shows a decrease in the unemployment rate. The report showed a decrease of 11,000, with the rate moving from 250,000 to 239,000. The data report on the Philly production Business exceeded expectations. The retail sales published on Thursday showed a positive outcome,  however, the Dollar still had a bearish slope. Additional data also showed great improvement in all sectors, however, 6 months' predictions look wobbly as most future indexes dropped downward. However, companies predict a lower increase in the price of commodities as inflation declines. 

Risk Events Ahead

Judging from the USD viewpoint, there are a few risk events in the coming week before the Jackson Hole forum. Some data will be released next week, but that will be focused on the Euro. 

Technical Analysis For EUR/USD

The daily price chart of the EUR/USD showed a bearish trend after a series of long upper wicks candles. The present fundamental analysis suggests a short-term increase in momentum for the USD.  However, from now till when the forum is will be held, traders will tread carefully, as this type of forum always results in great price swings.  

GBP/USD Analysis

GBP/USD is the forex pair that illustrates the worth of the British Pound against the US Dollar. It shows traders how much USD is required to purchase one GBP. The GBP is one of the currencies with the strongest economy in the world.

Let's see how this pair performed this week...

The British Pound ended the week in good form against the USD, the pair also closed high above the other Major 7 currencies. The UK government bond yields are being driven higher following the anticipation of higher UK rates. However, the Bank of England is stuck in a dilemma; the Bank of England wants to reduce rates to help the dwindling economy plunge further, however, inflation is still high and above the target mark.  

UK Retail Sales

The data released shows that retail sales struggled, and inflation remains sticky. The series of bad weather faced in July contributed to this effect, the heavy kept most consumers indoors. Analysts predicted a 0.5% drop in retail sales, but data showed a 1.2% drop. This result propelled the early bearish trend of the Pound. 

The data also showed a decline in food store sales, which dropped by 2.6% in July. This decline is due to the continual increase in the cost of living which is directly affecting consumers.  Clothing sales also declined as supermarkets reported that wet weather decreased clothing sales.

However, e-commerce has increased as the bad weather has propelled consumers to order things online. From February 2022 till date, e-commerce has noted an all-time high of 27.4% of retail sales. 

With markets already in the talk of rate hikes from the Bank of England in September, analysts predict more hard times for consumers. 

Risk Events Ahead

Next week, the upcoming forum is themed ‘Structural Shifts in the Global Economy’. It will comprise The central bank monetary policymakers, with top-tier academics, and high-profile individuals. They will come together to deliberate on the economic stance and Jerome Powell will have the opportunity to restate his economic stance and policies.