US GDP Apple and Amazon earnings

USD/JPY falls after the Fed hikes

USD/JPY fell in the previous session and is extending that loss today, trading at a four-week low following the Federal Reserve interest rate decision.

The Fed as expected raised interest rates by 75 basis points, but also sounded cautious amid fears of an economic slowdown. The Fed is expected to slow the pace of hikes going forward. Attention now turns to US GDP data which is expected to show that the economy rebounded in the April – June quarter, rising after a contraction in the first quarter of the year. A weak reading could send the USD lower and boost the safe-haven yen.

Where next for USD/JPY?

USD/JPY reached a 20-year high of 139.40 in mid-July and rebounded lower, falling through the 20 sma, and the multi-month rising trend line, which combined with the taking out of support at 135.70 and the RSI falling below 50 into bearish territory, suggests that there could be more downside on the cards.

Sellers will target 134.10, the 50 sma, and the June 23 low, with a break below opening the door to 131.55, the May high.
On the flip side, should buyers push the price back above 135.70. resistance at 136.10, the rising trendline, and 136.90, the 20 sma, will come into play.

Amazon Q2 earnings preview

This could be a tough quarter for Amazon as the company struggles against high costs tied to inflation, supply chain constraints, and slowing e-commerce growth.

The COVID boom has caught up with the company leaving it with too many workers and too much warehouse space. While many parts of the business are susceptible to an economic downturn, the AWS cloud business is expected to continue performing well as companies digitalize.  The results come after Amazon raises prices for European prime subscribers to address surging inflation.

EPS is expected to drop 72% to $0.66. In Q1, Amazon uncharacteristically missed forecasts, and the stocks plunged. Amazon trades down 25% so far this year.

Apple Q3 earnings preview

Apple will report its June quarter results after the close.

Expectations are pretty low. Apple is expected to report its first quarterly decline in EPS in around two years. Revenue is expected to rise 1.5% to $82.7 billion, and EPS is forecast to drop 11% to $1.16.

China’s COVID lockdowns have been a significant headwind for Apple, hitting the supply chain and costing the tech giant between $4 – $8 billion. Supply chain issues and softer demand mean device sales are likely to be softer. However, the business’s high-margin digital services side is expected to perform well.

Support can be found at 147 (20 sma) and 143 (50 sma).

Resistance for the index can be seen at 160 (round number) and 166 (May high).