Market Sector Scanner: Central Bank Meetings, Rising Oil Prices and Yen Intervention

Stock markets came under pressure as rising oil prices and concerns about the returns from heavy AI investment reduced investor confidence. WTI crude climbed sharply as fighting in the Middle East continued and ceasefire talks showed little progress, increasing worries about inflation and the possibility that central banks may need to keep rates high. The ECB left interest rates unchanged but said further tightening remained possible, while limited economic data was mostly in line with forecasts. The yen also weakened toward 164 per U.S. dollar as the wide interest-rate gap, Japan's fiscal concerns, and stronger demand for the dollar outweighed repeated warnings of possible intervention.

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Market Outlook

Forex Market

USD/JPY

Last Week Recap
USD/JPY continued to move higher despite fears of possible Bank of Japan intervention. Rising crude oil prices increased expectations of a U.S. interest-rate hike in September, while plans for higher Japanese government spending added to concerns about growing public debt.

Technical Picture
The sharp move above resistance at 163 pushed USD/JPY above the upper Bollinger Band and created a wide gap above the 10-day moving average. This suggests the market may be overbought in the short term.

Outlook This Week
With USD/JPY looking overbought, selling near resistance at 164 may offer the best opportunity early this week. Traders should also remain cautious ahead of the important Federal Reserve and Bank of Japan meetings.

GBP/JPY

Last Week Recap
GBP/JPY had a quiet week as the market consolidated its recent gains. Weaker-than-expected U.K. inflation data was slightly negative for the pound, while higher WTI crude oil prices also pressured GBP against the U.S. dollar.

Technical Picture
After recently becoming overbought and testing the upper Bollinger Band, GBP/JPY has returned to the 10-day moving average. The moving average is still rising, suggesting the broader uptrend remains in place.

Outlook This Week
Recent price action above and below the 10-day moving average suggests further sideways trading is possible. The market may remain range-bound while traders wait for comments following the major central bank meetings later this week.

EUR/USD

Last Week Recap
EUR/USD came under selling pressure throughout last week after the ECB left interest rates unchanged and markets increased expectations of a U.S. rate hike at the September FOMC meeting.

Technical Picture
The 10-day moving average is pointing slightly lower, suggesting a mild bearish trend. However, in relatively quiet market conditions, the lower Bollinger Band is providing short-term support.

Outlook This Week
The downtrend is likely to continue in the short to medium term as U.S. interest rates are expected to rise while eurozone rates remain unchanged. Selling near the 10-day moving average may therefore offer the better trading opportunity.

Equities

U.S. Stock Market

Last Week Recap
The Nasdaq had another negative week, falling nearly 3% as concerns continued about the returns generated by heavy investment in artificial intelligence. Rising crude oil prices also increased expectations of higher U.S. interest rates, adding further pressure to technology stocks.

Technical Picture
The weekly close below the lower Bollinger Band and near the lows seen in June and earlier this month shows that the market remains under strong selling pressure.

Outlook This Week
The downtrend is becoming stronger, but selling near support in relatively quiet market conditions may be difficult. Waiting for a rebound toward the 10-day moving average before looking for selling opportunities may be the better strategy.

Commodities

Gold

Last Week Recap
Rising expectations of a U.S. interest-rate increase in September pushed gold below $4,000 again last week. However, support remained strong as central banks continued to buy at lower price levels.

Technical Picture
The lower Bollinger Band and recent lows are still providing support. The flat 10-day moving average also suggests that gold is currently trading within a range.

Outlook This Week
Gold remains under pressure as markets focus on the possibility of higher U.S. interest rates. However, continued central bank buying is helping to balance the market, so short-term range-trading opportunities may offer the best strategy this week.

Markets will focus on central bank meetings, with the Fed, BoE and BoJ expected to keep rates unchanged. Their comments could still move markets, while traders see an 82% chance of a Fed rate rise in September. Rising oil prices, U.S. durable goods orders and possible yen-buying intervention will also be closely watched.