Market Focus

US equities slumped after the vice-chair of the Federal Reserve suggested rates could rise by 2023 and mixed economic data for July showed US companies adding far fewer jobs than expected. The S&P 500 fell as General Motors Co. and CVS Health Corp. declined after earnings. Dow Jones dropped 0.92% to 34792.67, while the Nasdaq gained 0.13% as technology stocks outperformed.

Uber Technologies Inc. spent heavily to lure drivers back in the second quarter, resulting in a wider-than-predicted loss and raising fresh doubts about the reliability of its labor model long-term. Shares declined about 4% in extended trading.

The loss before interest, tax, and other expenses was $509 million in the period that ended in June, Uber said in a statement Wednesday. That’s wider than the prior quarter but narrower than a year earlier. Analysts expected a loss of $325 million, according to an average of analysts’ estimates compiled by Bloomberg.

Uber said the loss will be less than $100 million in the third quarter and that gross booking will be $22 billion to $24 billion. The forecast is about in line with analysts’ estimates. Uber cautioned that a wider outbreak of the delta variant could change the results.

“We invested in recovery by investing in drivers, and we made strong progress,” Uber Chief Executive Officer Dara Khosrowshahi said in a statement.

Main Pairs Movement

The dollar gained ground after US Federal Reserve Vice-Chair Clarida’s talk, saying that if core inflation hits 3% this year, he would consider it “much more” than a moderate overshoot. He added that he expects conditions for raising interest rates to be met by the end of 2022 if inflation and employment outcomes meet his forecasts.

On the macro side, the ISM Services PMI jumped to 64.1 in July, better than expectations. The ADP survey, however, showed that the private sector added just 330K in July.

Most of the greenback’s major rivals fell as the dollar index climbed above the 92.00 level. The euro pair hovers at weekly lows around 1.1840. Cable settles around 1.3900 ahead of BoE’s statements. Commodity-linked currencies edged lower, with Aussie slid back below 0.7400, and Loonie trading around 1.2540. NZD however remains bullish due to the excellent employment data of New Zealand.

USD/JPY recovered from a daily low of 108.72, a level that was last since in May, to the current 109.50 price zone, amid a rebound in the dollar’s demand. Japan is struggling with rising coronavirus cases, and the head of the local Medical Association called for a nationwide state of emergency.

Gold bounced $1830 a troy ounce intraday but lost most of its gains and finished the day at a familiar $1812. Crude oil prices were sharply down, with WTI plummeted to $68.00 a barrel, and Brent at $70.30.

Technical Analysis

GBPUSD (4-hour Chart)

Sterling drops below 1.39 after it rallied over 1.395 in an earlier session, amid hawkish comments from Fed’s members seem to be providing a propel to the greenback, despite the disappointing labor market data missing estimate by a wide margin. On Thursday, the BoE will announce its monetary policy decisions. For technical aspect, RSI indicator corrects it momentum then set 45 figure, suggesting slightly bear movement ahead. For moving average side, 15 long SMA indicator holding a flat side movement and 60 long SMA indicator remaining up way traction.

All in all, sterling break through the critical support level again but is not way off the last lowest point. If the price continues to fall, the market will eye on 1.385 level in short term and 1.38 level follow. On the up way, if the price could go over the last highs spot, it will head to over 1.4 level.

Resistance: 1.3896, 1.3985, 1.4

Support: 1.3665, 1.3745, 1.38, 1.385

EURUSD (4- Hour Chart)

Euro fiber reversed sharply amid a rally of the U.S. dollar and fell from the highest level in three days to a one-week low in a few minutes. The pair peaked at the 1.1899 thresholds after the beginning of the New York session and was boosted by U.S. data, as of writing, it trades at 1.1833. the lowest level in a week. From the technical perspective, the RSI indicator closes 43 figures as of writing, suggesting slightly bearish movement for the short term. For moving the average side, 15 long SMA indicators turn their slope to negative territory and 60 long SMA remaining flat.

For price action, If the price could breach 1.188 firmly again, it could be heading to a higher level. On the downside, we deem the most strong support level will be the 1.1766 level. Moreover, it seems like building a double head price action and neckline will be on 1.1848. For now, we think the price will consolidate in the tiny range between first immediately resistance and support.

Resistance: 1.1848, 1.188, 1.19

Support: 1.18, 1.1766

USDCHF (4- Hour Chart)

The USDCHF pair entended its daily losing streak to seven on Tuesday and touched its lowest level since mid-June at 0.9022. Nevertheless, the pair seems to have gone into a consolidation phase on Wednesday and was last seen gaining 0.15% on the day at 0.905. At the same time, after losing more than 7% in the two days, the 10 year Treasuries yields are up 0.5%, helping the pair stay in the positive territory. For the technical side, the RSI indicator rebounds from over sought zone to a 51 figure, suggesting a bearish movement ahead. From the moving average perspective, both 15 and 60 long SMAs indicators are moving to south way, yet 15 long indicator seems to turn flat.

For now, the Swiss franc seems to stand above the 0.9047 level in the day market. However, it has to firmly defend immediately the support level that offers the advantage forbid buyer. In short term, we believe the market will test the support level again. If the price tamps down to 0.9047, then the market will be churning and choppy under 0.904.

Resistance: 0.9075, 0.9134

Support: 0.9047, 0.9