In This Issue

• FX Recap — Data missed, dollar held, Iran still the floor

• EUR/USD — Closed above the 100-day for first time since May, wedged between key MAs

• USD/JPY — Grinding higher

• Gold — Above the 100-day for first time since April, overbought and consolidating

• Crude — Consolidating with upside bias, testing upper range

• BTC — Stuck, vol at January lows, waiting for a catalyst

• Week Ahead — Jackson Hole, Warsh speaks, Iran the wildcard

FX Recap

Three data prints in three days. None of them gave markets a clear answer.

CPI Wednesday — 3.4% headline, right on consensus. Dollar sold off on the release then spent the rest of the day clawing it back. September hike odds barely moved. The market came in positioned for something hotter and when it didn't come, the initial reaction was to sell dollars — then reality set in and the move reversed.

PPI Thursday missed. Retail Sales Friday missed by the most in over a year. Dollar dipped both times and recovered both times. Ended the week higher. That tells you something — the dollar's floor isn't the data anymore, it's Iran and yields.

The Strait situation isn't improving. Fourteen vessels crossed on Tuesday. Before the war that number was near 120 a day. Crude stayed well bid all week on the supply premium and that kept inflation fears alive, which kept yields supported, which kept the dollar from selling off the way the data said it should.

USD/JPY held above 159. Intervention risk is keeping the ceiling low — but every dip gets bought. Range-bound until something changes.

Gold held near $4,400 — safe haven bid and inflation proxy at the same time. Clean story.

My read: this was a week where bad data didn't hurt the dollar because the geopolitical backdrop wouldn't let it. That dynamic stays in place until Iran resolves. Jackson Hole is the next scheduled catalyst — Warsh speaks and markets will be listening for any shift in tone.

EUR/USD

Late last week EUR finally closed above the 100-day moving average for the first time since mid-May. Price is now wedged between the 100 and 200-day moving averages.

Momentum has been overbought since early August. While it has crossed over to the downside it's only gradually coming lower despite EUR pressing higher — a sign the rally is losing steam. With the 200-day moving average and upper Bollinger Band both close above, EUR will likely struggle to push much further from here.

Resistance
1.1614 — last week's high
1.1630 — 200-day moving average
1.1643 — upper Bollinger Band

Support
1.1569 — 100-day moving average
1.1499 — 20-day moving average
1.1468 — 50-day moving average

USD/JPY

The slow grind higher post-intervention has stalled at 159.50/60. Not saying it's intervention again — but it sure looks like someone drew a line in the sand there.

If price does get through, the 100-day moving average and mid Bollinger Band are converging around 160.00 — so that's likely the next place it runs into resistance. Momentum is neutral and still pointing higher.

Resistance
159.50/60 — capped for the past week
160.00 — 100-day moving average
160.17 — mid Bollinger Band (20-day moving average)

Support
158.28 — 200-day moving average
155.38 — lower Bollinger Band
155.23 — intervention low

Gold

Broke and closed above the 100-day moving average for the first time since mid-April last Monday. Since then it has consolidated — trading back and forth around the 100-day and starting the week firmly wedged between the 100 and 200-day moving averages.

Momentum is extremely overbought and has crossed over to the downside — suggesting headwinds on any rally from here.

Resistance
4,514.45 — confluence of upper Bollinger Band and 200-day moving average
4,574.42 — 38.2% Fibonacci (January high to June 30 low)
4,769.38 — 50% Fibonacci

Support
4,385.27 — 100-day moving average
4,311.09 — last week's low
4,212.17 — 20-day moving average

Crude (CL1 - Cont. Contract)

Consolidated last week around the 50-day moving average, which also converged with the 200-day — double support holding the floor. Yesterday price tested the upper end of the recent range at 85.00.

Momentum didn't quite reach oversold before crossing over and starting to move higher. With momentum still below neutral and pointing higher, and price testing the upper end of its range, the bias points to a further move toward the 100-day moving average and then the upper Bollinger Band.

Resistance
87.68 — gap from two weeks ago
88.74 — 100-day moving average
90.84 — upper Bollinger Band

Support
82.58 — 20-day moving average
79.27 — 50-day moving average
77.34 — 200-day moving average

BTC

Stuck between the same levels mapped over the past several weeks. Volatility is at extremely low levels — the last time it was this compressed was January. Could be typical summer markets with vol low across asset classes. Sitting and waiting for things to move might be the right play here.

Resistance
65,000/67,000 zone — 38.2% Fibonacci retracement confluence
66,405 — 100-day moving average
69,079 — 200-day moving average

Support
57,742 — July low

Week Ahead

Quiet week on the calendar — but the market knows what's coming.

FOMC Minutes Wednesday. Three members dissented for a hike at the last meeting. The minutes will show how that debate played out and give markets something to chew on ahead of the bigger event next week.

Jackson Hole is August 27-29. Warsh speaks for the first time as Fed Chair. He's already said he hasn't decided what to say. September FOMC is six weeks away. That's the combination that keeps everyone on edge this week even with nothing major on the calendar.

Iran stays the wildcard on crude. One headline either way and the inflation story moves with it.

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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