In This Issue

• FX Recap — Payrolls miss, dollar softens, gold surges

• EUR/USD — Narrow range, capped at the 100-day, headwinds on rallies

• USD/JPY — Stabilized post-intervention, bounces may be limited

• Gold — Breaks above the 50-day for first time since March, room to run

• Crude — Sharp drop then recovery, back above the 50-day

• BTC — Stuck at resistance, no conviction either way

• Week Ahead — CPI Wednesday, dollar at a crossroads

FX Recap

Payrolls delivered the answer — just not the one anyone expected.

July NFP came in at -23K against an 80K consensus. June revised from 57K down to 20K. Combined revisions showed employment 103K lower than previously reported. Two consecutive months of negative or near-zero job growth with revisions running the wrong way every time. That's not a one-off.

Dollar sold off on the number before finding its footing — ending the week not far from where it started. September hike went from coin flip to off the table.

Gold was the biggest mover of the week. Surged on Wednesday closing near $4,308. Rate hike narrative collapsing and Iran keeping the safe-haven bid alive at the same time. Clean setup.

USD/JPY consolidated between 157.60 and 159.36 — a long way from 163.99 two weeks ago. Intervention floor at 155.23 held. Soft US data is now doing some of the BOJ's work for them.

My read: the rate differential was the dollar's primary support all summer. That support just got a lot shakier. CPI Wednesday is now the number. Soft print and the dollar has further to fall. Hot print and the hike conversation comes back fast — but it'll need to be a big number to undo what Friday did.

EUR/USD

Traded in a narrow range over the past week — sitting within 20 pips of where it closed the week before. Price is currently capped right at the 100-day moving average at 1.1568. Momentum is overbought with key moving averages stacked above — rallies are likely to run into headwinds from here.

Resistance
1.1568 — 100-day moving average
1.1594 — upper Bollinger Band
1.1630 — 200-day moving average

Support
1.1470 — 50-day moving average
1.1462 — 20-day moving average

USD/JPY

Stabilized after the prior week's intervention. Price traded around the 200-day moving average at 158.10 for most of the week before pushing to a post-intervention high of 159.36 Monday. Momentum is oversold and starting to turn — but with the threat of more coordinated intervention lurking, bounces may be limited from here.

Resistance
160.00 — 100-day moving average
161.10 — 20 and 50-day moving averages

Support
158.10 — 200-day moving average
156.02 — lower Bollinger Band

Gold

Spiked higher last Wednesday — pushing to its highest level since mid-June and closing above the 50-day moving average for the first time since mid-March. The last three closes have all been above the upper Bollinger Band, highlighting the strength of the move.

Momentum has only just moved above neutral and is pointing higher — room for the move to continue before running into the next meaningful resistance. The 100-day moving average at 4,389 is the level to watch. Gold hasn't closed above it since mid-April.

Resistance
4,389 — 100-day moving average
4,495 — 200-day moving average

Support
4,310 — upper Bollinger Band
4,150 — 50-day moving average

Crude (CL1 - Cont. Contract)

Trading close to where it was a week ago — but the week wasn't quiet. A sharp move lower Tuesday pushed price below the 200-day moving average to a low of 74.24 before recovering the losses. Now trading back above the 50-day moving average and pressing up against the 20-day.

Momentum is pointing lower and not yet oversold — headwinds likely on any extension higher from here.

Resistance
81.98 — 20-day moving average
89.33 — 100-day moving average
90.48 — upper Bollinger Band

Support
80.32 — 50-day moving average
76.66 — 200-day moving average
73.47 — lower Bollinger Band

BTC

Back to where it was a week ago — 64,250. No interest in breaking out of the recent price structure in either direction. Resistance above continues to create strong headwinds.

Momentum is in neutral territory and pointing higher — but from neutral, not oversold. Not enough to suggest a meaningful push through resistance from here.

Resistance
65,000/67,000 zone — 38.2% Fibonacci retracement confluence
67,760 — 100-day moving average
70,038 — 200-day moving average

Support
57,742 — July low

Week Ahead

CPI Wednesday. That's the week.

After Friday's payrolls collapse, the September hike is below 50% probability and the dollar has lost its primary support. CPI now decides whether that stays the case or whether the conversation reopens. A soft number and the dollar has further to fall. A hot number and the hike is back on the table — but it'll need to be a big surprise to undo what Friday did.

PPI follows Thursday. Retail Sales and Michigan Consumer Sentiment Friday. A full week of data that will either confirm or challenge the payrolls signal.

USD/JPY is the other one to watch. Stabilized post-intervention but the threat of more coordinated action is still out there. Any dollar weakness from soft CPI and the yen gets a further bid.

Stay close to the data.

Market Notes

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Next Tuesday: Weekly market update. — Mark

Meridian Compass is brought to you by Mark Schaefer, a portfolio manager specializing in systematic global macro and FX strategies, with experience across institutional trading platforms, major banks, and hedge funds.

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