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Yesterday, the US dollar continued to decline against the basket of major currencies due to the political instability in the US. Legal proceedings against Donald Trump's former lawyer, Michael Cohen, and Donald Trump's former campaign chairman, Paul Manafort, are in the focus of attention. In addition, the US intends to impose a number of sanctions against Russia because of the "malicious" actions of the country. The US dollar index (#DX) updated a two-week low and closed in the negative zone (-0.16%). Today, during the Asian trading session, the US currency has recovered some of the losses.

Meanwhile, yesterday the FOMC minutes were published, according to which the Fed leaders positively assessed the state of the American economy and intended to raise the interest rate in the future. However, the meeting participants also expressed concerns about the US trade conflicts with key global partners. At the moment, more than 90% of financial market participants believe that the Fed will raise the interest rate at a meeting in September.

The "black gold" prices continued to increase after the publication of the report on crude oil inventories in the US. At the moment, futures for the WTI crude oil are testing a mark of $67.80 per barrel.

Market Indicators

Yesterday, there was a variety of trends in the US stock market: #SPY (-0.06%), #DIA (-0.34%), #QQQ (+0.39%).

At the moment, the 10-year US government bonds yield is at the level of 2.81%-2.82%.

The news feed on 2018.08.23:

Data on economic activity in Germany and the Eurozone at 10:30 (GMT+3:00) and 11:00 (GMT+3:00);

Publication of the ECB account of monetary policy meeting at 14:30 (GMT+3:00);

New home sales in the US at 17:00 (GMT+3:00).

The Euro stands at the back foot in early Thursday’s trading, pressured by stronger dollar after hawkish Fed and initial signs of stall of recent strong five-day rally.

Near-term bulls showed strong rejection at falling 55SMA, which marks key barrier, with rising risk of deeper pullback.

Slow stochastic reversed and created bear-cross, on the way to emerge from overbought territory, while 14-d momentum is returning to negative zone, supporting negative near-term scenario.

Solid support at 1.1530 (20SMA) stays intact for now, with deeper pullback needed to hold above 10SMA (1.1454) to keep bullish near-term bias in play for fresh attempts higher.

Sustained break above 55SMA (1.1621) would unmask lower platform at 1.1750.

Conversely, close below 10SMA would signal reversal and lower top at 1.1623 (Wednesday’s recovery peak).

Res: 1.1599, 1.1623, 1.1640, 1.1687
Sup: 1.1542, 1.1530, 1.1500, 1.1454

XAUUSD (1191.78): Gold prices closed with a doji candlestick pattern on Wednesday. The current bearish price action could potentially mark a retracement of the gains. The support at 1180.25 once again comes into focus. The reversal comes following a brief retest of the lower trend line of the falling price channel. A decline toward 1180.25 could mark a retest of the support level. This could potentially make way for gold prices to renew its correction to the upside. In the event of a close below 1180.25, gold prices could extend back to previous lows.

USDJPY (110.81): The USDJPY currency pair posted gains for the second day and is seen currently extending these gains. This came following the reversal of the previously established lows around 109.85. The rally sent the U.S. dollar to retest the resistance level area around 111.13 - 110.85 level. As long as this resistance level holds, the USDJPY currency pair could maintain a sideways range. To the downside, a retest of the support at 109.45 is required.

EURUSD (1.1554): The EURUSD currency pair was seen retreating from Wednesday's highs earlier this morning. The declines come following price action rallying above the 1.1540 level of resistance. Price action briefly tested the upper resistance at 1.1626 before easing back. As long as 1.1540 now holds out as support, we expect the currency pair to maintain its range within these levels. In the event that the currency pair breaks below 1.1540 support, then we anticipate further losses to push the currency pair lower. The next main support is seen at 1.1366.

The U.S. dollar was trading flat on Wednesday. Economic data was most limited. The Fed released its monthly meeting minutes. The minutes showed that officials were concerned about the impact of trade tariffson the U.S. economy. However, officials maintained that the U.S. economy was strong.

Ahead of the Fed minutes, the U.S. existing home sales report showed a decline for the fourth consecutive month. Official data showed that existing home sales fell 0.7% in July on a month over month basis. This brought the existing home sales to decline by 1.5% on the year.

Looking ahead, the economic calendar today is somewhat busy. The European trading session will see the release of the flash manufacturing and services PMI data for August. The median forecasts estimate a modest pick-up in activity from the previous quarter.

Later in the day, the ECB will be releasing its monetary policy meeting minutes.

The NY trading session will see the flash manufacturing and services PMI data from IHS Markit. This is followed by the U.S. consumer confidence report and the new home sales data.

The Aussie dollar fell 0.8% in Asia on Thursday, driven by political turmoil in Australia, as resignation of three senior ministers undermined position of Australian Prime Minister.

Aussie dipped to one-week low at 0.7283, also pressured by firmer greenback after the minutes of latest FOMC policy meeting signaled that the Fed is on the way for another rate hike.

Fresh bearish acceleration probed below pivotal 10SMA support (0.7296), weakening near-term structure, which could be further hit on close below 10SMA and deterioration of political situation.

Technical studies on daily chart support scenario as MA’s returned to bearish setup and momentum turned south, while slow stochastic reversed from overbought territory.

Bears eye next significant support at 0.7270 (Fibo 61.8% of 0.7202/0.7381 upleg), loss of which would expose key support at 0.7202 (15 Aug low).

At the upside, broken daily Kijun-sen (0.7333) marks solid barrier, with stronger upticks to be capped by falling 20SMA (0.7347).

Res: 0.7313, 0.7333, 0.7347, 0.7370
Sup: 0.7283, 0.7252, 0.7202, 0.7158

Pivot (invalidation): 0.7320

Our preference Short positions below 0.7320 with targets at 0.7275 & 0.7250 in extension.

Alternative scenario Above 0.7320 look for further upside with 0.7335 & 0.7365 as targets.

Comment The RSI advocates for further decline.

Pivot (invalidation): 1.3000

Our preference Long positions above 1.3000 with targets at 1.3070 & 1.3095 in extension.

Alternative scenario Below 1.3000 look for further downside with 1.2980 & 1.2960 as targets.

Comment The RSI is bullish and calls for further upside.

Pivot (invalidation): 0.9855

Our preference Short positions below 0.9855 with targets at 0.9805 & 0.9785 in extension.

Alternative scenario Above 0.9855 look for further upside with 0.9890 & 0.9915 as targets.

Comment As Long as 0.9855 is resistance, likely decline to 0.9805.