Sample Category Title

EUR/USD

Current level - 1.1558

The bias is still positive, for a tight test of 1.1640 hurdle. An eventual break of the latter will challenge 1.1750 majorr resistance. Initial support lies at 1.1540 and crucial on the downside is 1.1490.

USD/JPY

Current level - 110.36

Despite the violation of 110.40 area, the overall outlook remains bearish, for a dip to 109.30 zone. Initial resistance lies at 110.70, followed by 111.40.

GBP/USD

Current level - 1.2874

The uptrend remains intact with the recent break through 1.2840 and the bias is positive, for a rise towards 1.2970. Key support lies at 1.2480 and crucial on the downside is 1.2750.

The Aussie dollar holds in red on Wednesday, easing from recovery top at 0.7383, as risk aversion on the newest political turmoil in the US and overbought condition weigh on near-term bulls. Corrective dips may extend as slow stochastic is reversing in overbought territory and signaling correction, with broken 10SMA (0.7303) expected to contain extended dips and keep near-term bulls in play for push towards next target at 0.7400 (55SMA).

Res: 0.7368, 0.7381, 0.7400, 0.7453
Sup: 0.7333, 0.7303, 0.7252, 0.7202

Mexican peso to rise

Mexico’s new President, Andres Manuel Lopez Obrador (AMLO), has restarted talks with the USA on the North American Free Trade Agreement. US and Mexican officials have particularly covered how much North American content should be included in cars. According to both Jesus Seade (negotiator of AMLO) and Ildefonso Guajardo (current Economy Minister), negotiation are making good progress. Completion is expected by the end of the month or mid-September latest. A second phase of discussions will focus on agriculture.

By completion of this “bilateral” talk phase between the US and Mexico, we expect the Mexican peso to appreciate further against the greenback and approach the 18.45 range. For now, USD/MXN is trading at 18.96.

More USD Selling

What a difference a summer week makes! Just a week ago markets were calling for the end of days. Yesterday the sS&P 500 made an intraday all time high. USD continued to slide against G10 and EM currencies as DXY fell below its 50-dma. The broad risk on sentiment and USD selling makes sense considering Trump's interventionist retoric toward Powell, optimism surrounding the US-China trade talks and extremely overbought USD positioning. Barring any surge in volatility we anticipate further USD weakness. Treasuries slipped as Trump's criticism of the pace of interest hike weighted on the short and mid section of the curve. Oil advance helping firm the broader commodity complex as news broke 11 million barrel of strategic reserve would be released, suggesting higher summer demand. Positivity around trade and fading concern over mexico political environment further highlight MXN as the currency to ride the current wave of risk taking on. Todays focus will be on the FOMC minutes.

Overall we anticipate members will be satisfied withe the economic improvement matching their June forecast. Yet further tightening would be unwarrented (ie USD negative). Trump will not be happy as looser monetary condition are not a projected outcome. Markets should expect Trump's anti-Powell rhetoric to increase.

EURJPY rallied aggressively on Tuesday, momentarily surpassing the 128.00 psychological level and roughly 1.0% on the day to pause the previous downtrend movement. However, some technical indicators continue to send bearish signals, suggesting that the strengthening of the market may be over soon.

The RSI and the stochastics have both weakened, with the former dropping below 70 and the latter moving lower after the green %K line and the red %D line posted a bearish crossover – this is a negative signal in the very short-term. The MACD oscillator, though, is heading higher above its red-trigger and zero lines in the 4-hour chart.

Over the last hour, the price dipped below the 38.2% Fibonacci retracement level of the downleg from 131.97 to 124.90, around 127.60. The next immediate support could come from the 23.6% Fibonacci of 126.55, which holds just below the 20-period simple moving average (SMA).

On the upside, a run above 128.00 would reinforce the upside correction mode and may challenge the 50.0% Fibonacci near the 128.50 resistance barrier. More advances could drive the pair towards the 61.8% Fibonacci mark of 129.27.

Overall, EURJPY has been positive since hitting an almost three-month low of 124.90 on August 15. The near-term positive tendency is expected to remain as long as price action takes place above the 20- and 40-SMAs.

The weakening of the dollar, caused by Trump’s comments, continues. The dollar index sank by 0.3% for the past 24 hours to 95.1, having played down the growth of the beginning of August and returned to the upper border of the trading range of the previous three months. The EURUSD pair has increased to 1.1570 on Wednesday morning against the lows at 1.13 one week earlier. Sterling, as well as Australian and New Zealand dollars, demonstrates a similar return to the trading ranges of previous months and a departure from one-year lows. GBPUSD recovered to the area above 1.29 after failing to 1.2650 last week.

Trump's comments about his discontent with the Fed's hawkish policy came to a phase when the dollar was actively gaining momentum after the exit from the established range, and the movement was gaining momentum with the renewal of annual highs. The self-fulfilling wave of stop orders and flight from risks acted as a significant factor of support of the American currency. The rollback of the dollar has kept the influence of the first factor, allowing to normalize the markets for a while, but we can hardly speak about a full return of optimism.

The China and the US positions on trade are very far away, and there is still a long and bumpy road ahead the summit of the leaders. Earlier the markets were convinced that trade disputes would be resolved by the end of the summer, but for now there is a faint hope that Trump and Xi will come to an agreement even in November.

Chinese bourses are also under pressure in the morning on the PBC comments that it does not plan large-scale stimulus to accelerate the economic growth. The officials perceived the calming of the markets last week as a sign that the situation is under control as a whole. However, we should not forget that traditionally August is a very quiet month.

In addition, there are few important macroeconomic news published this week. The major players return to the market by September can lay the ground for a big trend for the coming months.

The U.S. stock markets returned back to the peak levels of the beginning of the year. In the nearest future, we will find out whether there is enough optimism on the exchanges for new historical highs in the U.S. markets.

The dollar should also answer the question: was its growth to the levels of one-year highs the beginning of a new upward impulse, or only a false start, which was successfully stopped by a few words of the American president.

The US dollar continued to decline against the basket of major currencies. The US dollar index closed in the negative zone (-0.69%). Investors took a wait-and-see attitude before the publication of the FOMC minutes. In addition, today a three-day conference will start in Jackson Hole, where representatives of the world's central banks will make speeches. Also, the attention of financial market participants is focused on the negotiations between the US and China.

According to the European Chief Negotiator for the United Kingdom Exiting the European Union, Michel Barnier, the EU and the UK intend to establish a number of agreements on the exit of the country from the union.

Today, during the Asian trading session, optimistic data on retail sales have been published in New Zealand. The core retail sales index counted to 1.4% and was better than the forecasted value of 0.8%. In the second quarter, the volume of retail sales grew by 1.1% instead of 0.4%.

The "black gold" prices are moderately growing. At the moment, futures for the WTI crude oil are testing a mark of $66.20 per barrel. At 17:30 (GMT+3:00), a report on weekly crude oil inventories will be published in the US.

Market Indicators

Yesterday, purchases prevailed in the US stock market: #SPY (+0.23%), #DIA (+0.25%), #QQQ (+0.37%).

At the moment, the 10-year US government bonds yield is at the level of 2.83%-2.84%.

The news feed on 2018.08.22:

Report on retail sales in Canada at 15:30 (GMT+3:00);

Existing home sales in the US at 17:00 (GMT+3:00);

Publication of the FOMC minutes at 21:00 (GMT+3:00).

Cable eases from new recovery high at 1.2925, posted after four-day rally which accelerated on Tuesday on strong UK data.

Recovery was capped by falling 20SMA, with barrier reinforced by Fibo 38.2% of 1.3362/1.2661 descend.

Profit-taking on overbought conditions could push the price further down before fresh attempts higher.

Solid supports at 1.2800 zone (daily Tenkan-sen / Fibo 38.2% of 1.2661/1.2925 upleg) are expected to contain extended dips and keep near-term bullish bias in play.

Strong bullish signal could be expected on close above 20SMA, which would open way towards psychological 1.30 barrier.

On the other side, overall picture remains bearish and increased downside risk could be anticipated on loss of 1.2800 support zone.

With no data from UK scheduled today, focus turns towards US housing reports and key event – FOMC minutes.

Res: 1.2908, 1.2929, 1.2986, 1.3000
Sup: 1.2827, 1.2800, 1.2780, 1.2762

Gold's rebound from 1160.36 extends higher to 1197.81 today. But it's clearly losing upside momentum as seen in the bearish divergence condition in hourly MACD. While further rise could still be seen, upside will likely be limited by 1200 handle to complete the rebound. Meanwhile, break of 1187.40 will turn bias back to the downside an bring retest of 1160.06 low.

Also, for now, as long as 1204.58 minor resistance holds, rebound from 1160.36 is seen as a brief consolidation. And fall from 1365.24 is expected to resume sooner rather than later. Though, break of 1204.58 will indicate that rise from 1160.36 is correcting the whole decline from 1365.24. And stronger rise would be seen to 38.2% retracement of 1365.24 to 1160.36 at 1238.62 before completing the rebound.

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Daily Pivots: (S1) 141.07; (P) 141.88; (R1) 143.10; More...

Break of 142.46 minor resistance suggests short term bottoming at 139.89. Intraday bias is back on the upside for further rebound to 4 hour 55 EMA (now at 144.92). On the downside, below 141.32 minor support will extend larger down trend and turn focus back to 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 current downside accelerate 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).