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XAUUSD (1198.62): Gold prices were seen trading subdued. Price action managed to hold out near the support level offering a modest bounce in price action. Gold prices could be seen maintaining the sideways range within 1212.20 - 1196.00 region in the short term. A breakout from this level is required to establish the near-term direction. There is a risk of the precious metal failing at the support. This could push gold prices lower to 1186.15 region.

GBPUSD (1.3103): The British Pound was seen posting a modest bounce only to be held back by the 20-period EMA. Price action could be seen extending the declines back to the support at 1.3028. A reversal around this level could potentially keep the upside bias intact. However, this could change if the cable slips below this support. The previously held resistance level is likely to be the target on a reversal off the support level

EURUSD (1.1738): The EURUSD currency pair rallied to post intraday highs before easing back. The currency pair closed with a doji pattern near the support level of 1.1745. We expect the currency pair to consolidate near the area of 1.1745 - 1.1718 region. If the support area fails, we expect the declines to test the lower support at 1.1651. The overall bias remains to the upside, but this could change on a break down below 1.1651.

The markets were seen trading quietly on Monday. Following the new tariffs on China coming into effect since 24th the markets were seen to be a little spooked. This was followed through by the U.S. and China trade talks stalling for the moment.

The ECB President Mario Draghi was speaking at an economic event on Monday. He commented about the underlying inflation pressures picking up. This briefly sent the Euro higher on the day, although the common currency pulled back since.

The German Ifo business confidence index for September was seen at 103.7. Although the index beat expectations of 103.2, it eased from August reading of 103.9.

The economic data today will start off with a speech by the Bank of Japan governor Kuroda. Later in the day, the German WPI data is due. The wholesale price index is forecast to rise 0.2% on the month after a flat print the month before.

Bank of England's MPC member, Vlieghe will be speaking later in the day. The NY trading session is expected to remain calm. The conference board's consumer confidence index is due later in the day.

Consumer confidence is forecast to ease to 132.2 from 133.4 previously. After this event, Richmond Fed manufacturing will be reporting. Expectations call for the index to reduce to 22 from 24 previously.

The USD/JPY keeps moving higher within the uptrend channel after posting a new higher high in yesterday’s trading. How far can the UJ move?

USD/JPY uptrend could be aiming for the Fibonacci targets around 113.30-80.

The USD/JPY bounce at the support trend line (green) of the uptrend channel and is now challenging the previous top. A break above that could see price move higher towards the Fibonacci targets. This could be part of a potential wave 3 (orange) pattern.

Cable remains constructive on Tuesday and looks for repeated attack at converged 5/100SMA's (1.3147), which capped Monday's recovery attempts.

Immediate risk after Friday's sharp fall has been repeatedly contained by top of thick daily cloud, is on hold for now, however, persisting negative sentiment after a series of Brexit-negative news, keeps the downside vulnerable.

Mixed daily techs do not provide clear direction signal, with bearish scenario to be sparked on close below pivotal 1.3054 support (daily cloud top / Fibo 38.2% of 1.2661/1.3297 rally), while stronger bullish signal could be expected on close above 100SMA.

FOMC decision on Wednesday is likely going to provide clearer direction signal.

Res: 1.3147, 1.3166, 1.3214, 1.3276
Sup: 1.3094, 1.3054, 1.3038, 1.3000

The Federation of German Industries (BDI) lowered 2018 GDP growth forecast to 2.0%, down from prior estimate of 2.25%. Also, export growth is expected to be 3.5% in real terms, down from prior forecast of 5%.

BDI president Dieter Kempf urged the country to "prepare for the downturn" in a statement. He noted that "the high phase of the global economic recovery is over, investment activity has flattened." And, for German companies "risks arise with almost every protectionist measure - even if they are directed by the US against China."

Kempf also completed that "the industry is waiting impatiently for economic policy of the Federal Government, especially in the tax, digitization and energy policy."

At the same time, he also emphasized that "in our society, xenophobia has no place." And, "investments by foreign companies and the integration of skilled workers from other countries contribute significantly to prosperity and jobs in Germany."

Full statement in German here.

Chinese Vice Commerce Minister Wang Shouwen said at a news conference today that whether trade talk could restart depends on the "will" of the US. But he emphasized that trade meeting will not take place against the backdrop of "threats and pressure" from the US.

He said, "now that the United States has adopted such a huge trade restriction measure ... how can the negotiations proceed? It's not an equal negotiation."

Wang also added that "if this continues, it will destroy in an instant the gains of the last four decades of China-U.S. relations."

Pivot (invalidation): 6.1170

Our preference Long positions above 6.1170 with targets at 6.1870 & 6.2390 in extension.

Alternative scenario Below 6.1170 look for further downside with 6.0450 & 6.0135 as targets.

Comment The RSI calls for a rebound.

Pivot (invalidation): 0.7265

Our preference Short positions below 0.7265 with targets at 0.7220 & 0.7200 in extension.

Alternative scenario Above 0.7265 look for further upside with 0.7280 & 0.7300 as targets.

Comment As Long as 0.7265 is resistance, look for choppy price action with a bearish bias.