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Otmane El Rhazi from Dukascopy Bank SA.

Japan’s economy contracted sharply in the second quarter after a sales-tax increase in April sent household spending tumbling and the real GDP, shrank 6.8%. Prime Minister Abe and other policy makers have said they expect the downturn to be short-lived. However, if things go different from their forecast, is there a chance of more economic-stimulus measures in the foreseeable future? We believe that the Bank of Japan will respond to further data undershoot from here, especially once we get

Otmane El Rhazi from Dukascopy Bank SA.

GBP/JPY 1H Chart: Broadening Rising Wedge Comment: The pattern started to form relatively recently, namely on 15th of August or one week ago. Yesterday the pair reached the upper trend-line and since then it is sliding lower. The biggest obstacle for the pattern, to remain in effect, is around 171.50 level, as there is a cluster of support levels (200-period SMA; weekly PP; daily S3) that could possibly halt the decline. Nevertheless, the short term technical indicators are bearish, thus the

Otmane El Rhazi from Dukascopy Bank SA.

Technical Analysis EUR/USD supported by monthly S1 “We are seeing profit-taking ahead of the Jackson Hole speeches by Janet Yellen and Mario Draghi.” - BK Asset Management (based on MarketWatch) Pair’s Outlook After three days of losses EUR/USD has finally found support at 1.3250, represented by the monthly S1 and weekly S3. However, unless the Jackson Hole changes the overall picture fundamentally, the rally is likely to be shallow, given there are now tough resistances at 1.33 and 1.3350.

Otmane El Rhazi from Dukascopy Bank SA.

Fundamental Analysis EUR “However, with the PMI Output Index slipping slightly to 52.8, the region remains on course to register growth of only around 0.3%-0.4% in the third quarter, a level that is unlikely to stimulate any real turnaround in the labour market.” - Rob Dobson, senior economist at Markit Private business growth in the Euro zone slowed more than expected in August, as manufacturing and service sectors activity declined, fuelling even more concerns over the region’s growth

Otmane El Rhazi from Dukascopy Bank SA.

Relative Currency Strength The BoE quarterly report, released on the very first day of the period, served as a defining force behind the GBP Index’ debasement. As the wage-growth estimates got lowered and inflation estimates were cut, a near future interest rate increase became less likely, sending the pound in a plunge against its peers. The index lost 0.45 points over the news, suffering the sharpest change of the period. The second quarter’s faster-than-expected expansion of the economy,

Otmane El Rhazi from Dukascopy Bank SA.

GBP/NZD 1H Chart: Ascending Triangle Comment: GBP/NZD is entering the apex of ascending triangle pattern, that started to form on 15th of August. The pair plummeted of 13th of August ; however, since then the Pound has been appreciating moderately. GBP/NZD volatility has dropped to the lower levels and also the 1H and daily technical studies are neutral, even though the pair has reached the apex of ascending triangle and the break-out should be just around the corner. Therefore, it is rather

Otmane El Rhazi from Dukascopy Bank SA.

Technical Analysis EUR/USD heads towards 1.31 “This relatively marginal hawkish shift [in Fed minutes] has reinvigorated the rally in the greenback, taking the EURUSD down to test key Fibonacci support in the 1.3250 area, while USDJPY bulls look to target previous resistance in the 104.00 zone.” - Forex.com (based on MarketWatch) Pair’s Outlook Despite toughness of the demand area around 1.33 and ‘buy’ signals on the monthly chart, the bears continued to push the price lower. The currency pair

Otmane El Rhazi from Dukascopy Bank SA.

Fundamental Analysis EUR “What is happening in geopolitics is tilting the balance toward having to implement further stimulus” - Andrew Bosomworth, a senior portfolio manager at Pimco German producer prices declined more than expected in July as energy prices continued to push the index down, indicating further downside risks to the cost of living outlook. The PPI index dropped by 0.1% on month and 0.8% on an annual basis in July, against expectations for a flat reading and a 0.7% decrease on

Otmane El Rhazi from Dukascopy Bank SA.

Technical Analysis EUR/USD dips to 1.33 “The euro looks particularly weak. Investment into the euro zone could stall. I feel it’s time to think that the euro will fall below $1.30.” - Kyosuke Suzuki, Societe Generale (based on CNBC) Pair’s Outlook EUR/USD, as suggested by the near-term technical indicators, has finally broken 1.3350 to the downside, which allowed it to re-test the 2013 Q4 low at 1.33. Although this support is reinforced by the monthly S1 and the monthly studies lean to the

Otmane El Rhazi from Dukascopy Bank SA.

EUR/AUD 1H Chart: Broadening Falling Wedge Comment: The EUR/AUD currency cross has been on a down-trend since 8th of August; however, this Broadening Falling Wedge pattern started to form on 12th of August. Yesterday the pair approached the August low and from there started its move higher towards the 100-period SMA and later the pattern’s resistance at 1.4365. The short term (1h) technical studies point upwards; strengthening the near term bullish outlook; however, the 4h and daily technicals