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Post-RBA short squeeze was short-lived as the Aussie peaked at 0.7235, before falling sharply and posting new low at 0.7157 on renewed probe through key 0.7160 support zone (May/Dec 2016 / Jan 2017 lows). Australian central bank kept interest rates unchanged at all time low at 1.5% in its September's meeting and signaled a steady policy ahead. Bullish signal that the economy has grown above trend rate in the first half of 2018, was not enough to further support the Aussie dollar. Limited recovery attempts were capped by falling 5SMA, with subsequent weakness reflecting the overall negative tone. Clear break below 0.7160 base is needed to generate strong bearish signal for extension of broader downtrend from 2018 high at 0.8135, towards psychological 0.7000 support and 0.6906 (03 Sep 2015 low), with further weakness to unmask key longer-term support at 0.6825 (15 Jan 2016 low). Meanwhile, bears may show further hesitation at key 0.7160 support zone on oversold daily studies.

Res: 0.7202, 0.7240, 0.7273, 0.7292
Sup: 0.7157, 0.7100, 0.7000, 0.6906

The markets are cautiously on buy for American stocks, and the dollar adds on fears that trade conflicts are seriously stifling the business sentiment in Europe and Asia. The MSCI Index of the Asia-Pacific region ex Japan loses 0.3%, Nikkei 225 decreases by 0.1%. Pressure on the European exchanges increased after the weak production PMI, indicating a negative impact on the economy of the USA trade disputes region.

The dollar index had kept above the 95.00 level by the end of the day. The single currency is traded near 1.16, as at the start of trading on Monday, and the British pound lost 0.8% within a day for the same time to $1.2860. Pressure on Sterling intensified after the news about the decline in production PMI of the country to the minimum since the referendum on Brexit.

Asia's business activity is also decreasing on fears of increasing trade wars, which causes the outflow of funds from the stock markets and currencies of the region. The Indian rupee updates its historical lows to the dollar, and the Argentine peso lost more than 3% on Monday. The Turkish lira exchange rate did not change a lot on Monday, as the central bank of the country made it clear that it was preparing some measures to combat huge jump in inflation. In all cases, the central banks of developing countries are forced to tighten their policy by various measures, which will almost inevitably raise credit rates for companies and consumers and will slow the growth.

PMI indices for Europe are also in decline, but are at a higher level, reflecting a robust growth rate, while in Britain and China the production growth is close to stagnation, and has been losing noticeably since the beginning of the year. The latest estimates for August on the United States will be published today, and we have yet to see whether they confirm or contradict the overall trend. According to previous estimates by Markit, the production activity in the United States decreases, but remains at a high level as in Europe. ISM estimates do not mark a certain trend for recent months.

Maintaining a high rate of the economy growth despite the threat of trade wars and tightening of the monetary policy favourably distinguishes the U.S. markets from the rest of the world, creating an objective craving in the dollar and stocks. This draught can be intensified with the onset of autumn as the new fiscal year approaches.

Gold continues to gyrate lower and lost 1200 handle again as Dollar strengthens broadly. But for now, price actions from 1214.30 are viewed as a corrective retreat. This is supported by the structure of the choppy decline from 1214.30. Also, gold is held well above 1182.90 minor support. The rebound from 1160.36 is still in favor to extend higher at a later stage. Break of 1214.30 will target 55 day EMA (now at 1224.35) and above. However, break of 1182.90 will indicate completion of the rebound from 1160.36 and bring retest of this low.

Overall, 1160.36 is viewed as a medium term bottom the down trend from 1365.24 took a breath. While stronger rebound could be seen, upside should be limited by 38.2% retracement of 1365.24 to 1160.36 at 1238.62 to bring near term reversal. Down trend from 1365.24 is expected to resume later after the consolidation from 1160.36 completes.

The pair advanced strongly on Tuesday, driven by fresh strength of the US dollar and less hawkish than expected BoJ operations which increased pressure on yen.

Friday's hammer candle signaled strong downside rejection and basing just ahead of daily cloud base, with today's acceleration higher turning near-term focus higher.

Fresh bulls pressure top of thick daily cloud (111.57) again, after last week's probes above failed to sustain break. Bull-cross of daily Tenkan-sen/Kijun-sen and fresh bullish momentum support the action for another attempt above daily cloud and test of key barriers at 111.82/87 (29 Aug high/Fibo 61.8% of 113.17/109.77 descend) in extension.

Converged 10/30/55SMA's at 111 zone mark strong support which is expected to keep the downside protected.

Res: 111.57, 111.87, 112.15, 112.37
Sup: 111.19, 111.00, 110.90, 110.68

Dollar surges across the broad in European session. At this moment, there is no apparent trigger for the move yet. A possiblility is that traders are back from long weekend in the US. No matter what, there are a few points to note:

• GBP/USD's break of 1.2844 minor support suggests completion of corrective rebound from 1.2661 at 1.3042. The pair is now heading back to revisit 1.2661 low.
• USD/CAD moves further away from near term channel resistance. The development suggests that correction from 1.3385 has completed at 1.2886 already. More importantly, 38.2% retracement of 1.2061 to 1.3385 at 1.2879 was defended and the up trend from 2017 low at 1.2061 is kept alive. Break of 1.3173 will likely bring retest of 1.3385 next.
• AUD/USD's post RBA recovery was very very brief. Break of 0.7165 temporary low indicates down trend resumption. Next target is 100% projection of 0.7452 to 0.7201 from 0.7361 at 0.7110.
• The focuses will now be on 1.1529 and EUR/USD and 111.82 in USD/JPY. Break of these two levels will further affirm Dollar's underlying strength.

UK construction PMI dropped notably to 52.9 in August, down from 55.8 and missed expectation of 54.9.

Tim Moore, Associate Director at IHS Markit and author of the IHS Markit/CIPS Construction PMI®:

"The construction sector slipped back into a slower growth phase in August, with this summer's catch-up effect starting to unwind after projects were delayed by adverse weather at the start of 2018.

"Civil engineering was the worst performing area of the construction sector, with output in this category falling for the first time since March amid reports citing a lack of new work on infrastructure projects. House building saw a particularly sharp slowdown since July, meaning that commercial construction was the fastest growing sub-sector in August.

"There are some encouraging takeaways from the latest survey, especially the resilient degree of new business growth in August and a strong upturn in staff recruitment. Survey respondents noted that they are confident about achieving organic growth at their businesses in the coming 12 months. The degree of optimism reported in August remained constrained by external factors, including domestic political uncertainty, stretched supply chains and shortages of suitably skilled labour."

Full release here.

The EUR/JPY has formed a POC zone straight at D H3/DH4 but below the camarilla W H3 Pivot. Trend lines are suggesting a confluence with technical tools (EMAs, Pivots, Canslesticks) for further bearish movement if the price stays below 129.58.

Rejections are possible from 129.20-37 towards 128.48 and 128.30.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Monthly Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Monthly Camarilla Pivot (Daily Support)

D L4 – Monthly H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect the price to react - aka the entry zone)

Cable holds in red for the fourth straight day and cracks 20SMA support at 1.2842 on Tuesday. Renewed Brexit concerns prompted traders out of pound, with bears being boosted by weak UK data on Monday.

Technical studies are in bearish mode as daily MA’s are turning into full bearish setup and slow stochastic continues to head south, however, momentum turned sideways after easing and holding for now above its 7SMA, which could partially offset negative signals.

Extension below 20SMA would open next pivotal support at 1.2807 (Fibo 61.8% of 1.2661/1.3043 rally) loss of which is needed to confirm reversal.

UK Construction PMI for Aug and Inflation report are key releases today.

Res: 1.2875, 1.2902, 1.2917, 1.2939
Sup: 1.2807, 1.2751, 1.2697, 1.2661

The Euro extends lower in early Tuesday's trading and pressures again key supports at 1.1573/68 (30SMA / Fibo 38.2% of 1.1300/1.1733 upleg). The dollar rose on fears that US/China trade conflict could escalate, as well as concerns about emerging markets, with focus on growing crisis in Argentina and Turkey, keeping the Euro under pressure. Near-term risk remains skewed lower, with dips through 1.1573/68 to open next support at 1.1541 (20SMA), where extended pullback should find ground and keep larger bulls in play. The notion is supported by strong momentum which eased slightly but remains in bullish mode and slow stochastic in oversold zone and expected to generate bullish signal on reversal. Only sustained break below 1.1517 (50% retracement of 1.1300/1.1733) would neutralize bulls and signal further downside.

Res: 1.1615, 1.1637, 1.1660, 1.1690
Sup: 1.1573, 1.1568, 1.1541, 1.1517

Pivot (invalidation): 110.90

Our preference Long positions above 110.90 with targets at 111.20 & 111.40 in extension.

Alternative scenario Below 110.90 look for further downside with 110.70 & 110.50 as targets.

Comment Technically the RSI is above its neutrality area at 50.