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EURUSD (1.1624): The EURUSD currency pair was seen turning bullish on Friday following the rebound off the support at 1.1540 level. But the daily chart signals a bearish divergence against the previous highs formed at 1.1730. On the 4-hour chart, the EURUSD currency pair was seen closing with a doji pattern alongside a bearish divergence. Therefore, we expect to see some downside price action to prevail. In the near term, the EURUSD currency pair could remain range bound within 1.1626 and 1.1540 levels of resistance and support.

The U.S. dollar index was seen giving back the gains on Friday, following the speech by the Fed chair Jerome Powell at the annual Jackson Hole Symposium. The dollar index fully gave up the gains logged from Thursday. In his speech, Powell said that further tightening of interest rates was appropriate. The Fed chair also noted that there was no clear indication of inflation accelerating above the Fed's 2% inflation target rate.

Economic data was sparse on Friday. The final GDP report from Germany confirmed that the economy advanced 0.5% in the second quarter. Data from the U.S. showed that core durable goods orders rose just 0.2%. This missed estimates of a 0.5% increase. Headline durable goods orders declined 1.7% which was more than the 0.7% decline that was forecast.

Looking ahead, economic data is light for the day. The German Ifo business confidence report will be coming out. Economists forecast that the German business confidence index rose to 101.9 from 101.7 previously.

Attempts to extend Friday's strong recovery rally were repeatedly capped by falling 20SMA on Monday, but the pair keeps bid on renewed risk appetite.

Daily MA's are mixed but weakening momentum and south-heading slow stochastic keep the downside at risk, as descending thick daily cloud continues to weigh.

North-turning 10SMA marks pivotal support at 0.7298 and sustained break here would weaken near-term structure and risk retest of 23/24 Aug double-bottom at 0.7240.

Bullish scenario requires close above 20SMA to generate initial bullish signal for extension towards key barriers at 0.7381/83/88 (21 Aug high / falling 55SMA / daily cloud base).

Res: 0.7336; 0.7357; 0.7388; 0.7436
Sup: 0.7297; 0.7252; 0.7240; 0.7202

Early Monday's action holds in red after last week's three-day recovery rally stalled on approach to daily cloud top and Friday's action ended in Doji candle, signaling bulls might be running out of steam.

The dollar came under pressure after Fed Powell's speech in Jackson Hole last Friday disappointed many which expected more hawkish tone, instead of already known remarks about gradual rate hikes.

Also, weakening momentum and overbought slow stochastic add to negative signals.

Downside attempts were so far contained by converged 20/55SMA's at 111.00 zone, keeping immediate downside risk limited.

Close below these supports would weaken near-term structure and confirm reversal pattern on daily chart, risking retest of key support at 110.64 (daily cloud base, reinforced by Tenkan-sen).

Conversely, bullish scenario requires break and close above daily cloud (cloud top lays at 111.62) to generate bullish signal for continuation of recovery rally from 109.77 (21 Aug low).

Res: 111.34, 111.62, 111.87, 112.15
Sup: 110.93, 110.78, 110.64, 110.51

Cable holds in tight range and directionless mode in early Monday's trading, as falling 20SMA (currently at 1.2868) continues to cap, but pullback from recovery high at 1.2936 (22 Aug) has so far been contained by north-turning 10SMA (1.2798).

Converging MA's keep near-term action within narrowing range, helped by flat momentum and RSI.

Break of either boundary would provide fresh direction signal, with return below 10SMA to expose 15 Aug low at 1.2661, while lift above 20SMA would open pivotal barrier at 1.2930 (Fibo 38.2% of 1.3362/1.2661/22 Aug high).

Overall structure is bearish on daily chart, but bullish signals are developing on weekly chart. Momentum is heading north, slow stochastic reversed from oversold territory and Doji reversal pattern is forming but needs confirmation on sustained break above 1.2930 pivot.

Res: 1.2868, 1.2918, 1.2930, 1.2957
Sup: 1.2828, 1.2798, 1.2759, 1.2729

The Euro moved lower at the beginning of the European session after hitting four-week high at 1.1653 in Asia, as the greenback opened lower on Monday after Fed chief Powell’s speech on Friday was seen less hawkish than expected and disappointed dollar bulls.

Rally from 1.1300 (15 Aug low) showed initial signs of stall on approach to daily cloud base (1.1659) as cloud (spanned between 1.1659 and 1.1752) marks significant obstacle.

Daily studies support negative scenario as slow stochastic reverses from overbought zone and 14-d momentum turns south and entering negative territory.

On the other side, Friday’s long bullish daily candle, which also formed outside day pattern, underpins near-term action, with break through daily cloud needed to signal stronger advance.

Broken 30SMA (1.1576) marks important support (reinforced by bull-cross with rising 5SMA) which should ideally hold to keep bulls intact.

Deeper dips would challenge key supports at 1.1530 zone (20SMA/Thu/Fri lows) los of which would signal reversal.

German Ifo data are key event for Euro on thin Monday’s calendar.

Forecast for Aug release (101.9) is slightly better than July’s figure (101.7), however, the index stands at the lowest since Oct 2012 and needs stronger results to generate positive signal.

Res: 1.1659, 1.1700, 1.1752, 1.1790
Sup: 1.1594, 1.1576, 1.1526, 1.1491

German Ifo business climate improved to 103.8 in August, up from 101.7, beat expectation of 102.0. Current assessment index rose to 106.4, up from 105.3 and beat expectation of 105.5. Expectations index also rose to 101.2, up from 98.2 and beat consensus of 98.5. .

Ifo President Clemens Fuest noted in the release that "The companies were once again more satisfied with their current business situation. Business expectations were revised noticeably upwards. In addition to a robust domestic economic situation, the truce in the trade conflict with the US contributed to improved business confidence. The German economy is performing robustly. Current figures point to economic growth of 0.5 percent in the third quarter."

Full release here.

Powell's tempered comments in Jackson Hole last week supported the growth of U.S. stocks which closed at record highs. Futures on S&P500 оn trades in Asia continued its historical highs updates, adding another 0.3% from the beginning of the day to levels 2884.5. The growth of American bourses helps Asian markets this Monday morning. Heng Seng 50 adds 1.4% on Monday morning.

In his speech on Friday Powell noted that rates increase will remain gradual. It was also important for markets to hear that the rate hikes are not predetermined, and further path will be data-dependent.

These comments have caused a somewhat reduced degree of tension around the further rate of growth, it also pushed stock markets up and added pressure to the dollar.

The dollar index returned to area 95 on Friday night, and remains at these levels at the start of trades on Monday. Last week this mark served as an important level of support. It is likely that the dollar will continue to benefit from the demand for rollback to these levels.

The EURUSD pair grew to 1.1650 at one point at the start of the Monday, to 3 weeks highs, but lately it somewhat corrected to the area 1.1630, to the levels of Friday's closing. Sterling is trading near 1.2850, adding 0.4% to Friday's lows.

The development of bull market rub in the US stock markets helps to restore the demand for commodities. Gold added1.9% on Friday, returning to levels near $1205, which is quite quick recovery from lows at 1173 on August 15. Brent Crude Oil is trading around $76 per barrel, at 7 weeks after EIA report that U.S. oil refineries are working at the limit of their capacity that would force to increase import of fuel at further growth of demand. Oil is traded at the top of the downward channel, and further growth can signal an over of downward trend, which is in effect from the end of May.

The AUD/USD has formed an enlarged bullish SHS (inverted head and shoulders) pattern above the W H3 pivot. The enlarged pattern usually forms after a basic pattern has been broken, as we can see on the chart. This suggests a further upside above 0.7340 and 0.7355, while 0.7270-90 is the POC zone in the case of a retracement. The targets are 0.7355, 0.7403, and eventually 0.7440.

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)

Daily Pivots: (S1) 142.57; (P) 142.91; (R1) 143.29; More...

With 141.32 minor support intact, further rise could still be seen in GBP/JPY for 55 day EMA (now at 144.71). On the downside, however, below 141.32 minor support will indicate completion of the rebound. And larger down trend will likely resume for 139.29/47 key support zone instead.

In the bigger picture, at this point decline from 156.59 is still seen as a corrective move. But the downside acceleration makes this view shaky. Focus will be on 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47). Strong rebound from there will re-affirm the bullish case that rise from 122.36 is still to extend through 156.59 high. However, sustained break of 139.29/47 should confirm medium term reversal. GBP/JPY would then target a retest on 122.26 (2016 low).