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Euro climbs vs dollar

Risk in trading continued to push asset higher in low liquidity. Heck even commodities and bitcoin has taken a slightly bullish tone. Equities have rallied for three days in a row as fear of a Turkish currency collapse has faded and plan for high level tariff talks between the US and China should being as early as Wednesday. Markets are now waiting for Fed Chairs Jerome Powell’s remarks on the symposiums primary topic “Changing Market Structure and Implications for Monetary Policy.” US treasures have moved higher as reports grow President Trump has taken issues with Powell’s monetary policy approach and rate of interest rate hikes. Flatting of the US curve and expectation for political disruption has provided an opportunity to liquidate overbought USD. EURUSD has staged a recovery bounce towards 115.30 potentially indicated an end to unbridled greenback strength. USD would need a significantly hawkish shift (which we don’t anticipate) for additional repricing of the curved to get further ahead. At this point sentiment in Europe has shifted from last weeks doom and gloom to a more positive outlook (welcome to summer trading). Trader shrugged off news that Moody’s would delay conducting Italy’s Review, which is clearly warranted. This move could have a bigger effect when it actually is release. However for right now it highlights markets ignorance is bliss. Also in Europe market celebrated Greece’s complete ion of its three-year euro zone emergence loan program worth $70.8bn. While the immediate result is good the long-term outlook in our mind remains very uncertain. With crushing public debt at 180% of GDP and no effort for European creditors to put the Greece economy on solid footing, opting rather to get paid, the outlook feel worrisome. Yet for right now we remain constructive that Euro will move higher while USD will continue to decline.

Aussie optimism

The Reserve Bank of Australia confirmed in its August Meeting Minutes that it is not expecting to raise its Official Cash Rate, given at 1.50% since 8 February 2016. The RBA sees improvement in unemployment, income growth and inflation. Inflation and unemployment forecasts are estimated at 2.25% (2018: 1.75%) and 5% by 2020. Current monetary policy should continue to support growth. However, recent drought conditions affecting crop harvests is a serious factor to monitor, as farm output and export forecasts are reduced. Additionally, uncertainties surrounding US trade policies remain a serious impediment. The Aussie was little changed. Currently at 0.7358 USD, the AUD/USD pair is expected to strengthen, heading along 0.7370 in the short-term.

Following a rather still morning, the Euro hit the 55-hour SMA at 1.14 mid-Friday and consequently accelerated 132 pips until Tuesday morning when EUR/USD tested the weekly R2 near 1.1550. This strong appreciation pushed the rate out of two channels, the most senior of which was formed mid-July.

It is likely that the Euro tries to make a retracement from the breached one-month channel. The same bearish signals are given by technical indicators which should ease a bit from the overbought territory. Today's downside target is the breached channel line, the 55-period (4H) SMA and the 50.00% Fibonacci retracement at 1.1450.

In case of a surge, bullish gains are unlikely to exceed the monthly S1 at 1.1580. This move north should then be followed by a price decline down to the aforementioned area.

Strong bullish sentiment was guiding the GBP/USD exchange rate on Monday. The Pound breached the monthly S2 and the weekly PP mid-session which was followed by a 0.75% surge against the Greenback. This allowed the pair to break out from the dominant four-month channel this morning.

Even if the rate manages to push slightly higher during the following hours, these bullish gains are unlikely to surpass the psychological 1.29 level. The 61.80% Fibonacci retracement is also located there.

Thus, it is more likely that bears try to regain some of their lost positions in this session and thus push the Pound down to the 55– and 200-hour SMAs at 1.2750.

The US Dollar depreciated against the Japanese Yen bounced off a junior ascending channel at 109.178 in the midnight of Monday's trading. The whole movement decrease totaled negative 90 pips or 0.81%.

However, the US Dollar has recovered itself which may be a bullish signal. The indicators predict the main currency to go upward reaching the 55– hour simple moving average which could be the day's highest resistance level for the trading session. Currently, the pair is located near a support level formed by the monthly S1.

Given that the three SMAs are above the price, the upward momentum is likely to continue during the following trading session. Meanwhile, technical indicators flash neutral signals on the 4H time frame chart. This means that the price movement upward could be insignificant, thus more likely resulting in a move sideways.

The yellow metal has appreciated 2.50% against the US Dollar since August 16. The same bullish sentiment was apparent on Monday when the 100-hour SMA provided enough support to push the rate past the 1,190.00 level.

On Tuesday morning, Gold was testing the 200-hour and the 55-period (4H) SMAs. If both moving averages are breached together with a three-month descending channel near 1,195.00, the rate should target the 61.80% Fibonacci retracement at 1,215.00 within the following sessions.

In terms of today, this trading session could be rather calm, as no significant fundamental releases are weighting on the pair. In case the 1,195.00 area remains intact, bears should push the rate back to the 55- and 100-hour SMAs near 1,185.00.

The Gold has formed a descending zigzag pattern suggesting further bearish move. The POC zone where the sellers might be appears to be between 1199.25-1205. Rejection from the zone targets 1181 and 1169.70. Only below W L3, the price should resume towards 1154.

1215 needs to hold if bears want to be in a full control.

The pair is consolidating after strong two-day fall which resulted in close below daily cloud.

Today's extension lower probed below key supports at 110.00/109.85 zone (double-Fibo/100/200SMA's), but dip was so far short-lived, showing strong hesitation here.

Reversing momentum and slow stochastic at the border of oversold territory are initial signs of reversal, which could be additionally boosted by formation of Hammer on daily chart.

Bullish scenario requires daily close above 110.20 for confirmation, to open way for extension towards daily cloud base at 110.45 and possible extension towards falling 10SMA (110.70) on break.

On the other side, bearish weekly studies favor further downside, with upticks seen as positioning for fresh weakness.

Only close above daily cloud (110.45/111.37) would neutralize bearish threats.

Res: 110.20, 110.45, 110.70, 111.02
Sup: 110.00, 109.77, 109.30, 108.90

Cable holds in green for the fourth straight day, as softer dollar maintains pound's positive near-term tone for extension of recovery from 1.2661 (15 Aug low).

Today's rally broke above former bear-channel support line and pressures pivotal barrier at 1.2857 (Fibo 38.2% of 1.3173/1.2661 bear-leg), break of which would generate fresh bullish signal.

Momentum made bull-cross with its 7SMA and heads north, supporting scenario along with RSI which reversed from oversold territory.

Close above 1.2857 would signal extension towards 1.2920 (falling 20SMA) and 1.2977 (Fibo 61.8%).

Meanwhile, the pair may hold in extended consolidation, with pivotal support at 1.2774 (10SMA) expected to keep the downside protected.

Res: 1.2857, 1.2920, 1.2977, 1.2995
Sup: 1.2800, 1.2774, 1.2729, 1.2697

The US dollar has fallen to its lowest trading level against the Japanese yen currency since early July after US President Donald Trump criticized the Federal Reserve. The USDJPY pair retains a strong intraday bearish bias while trading below the 110.10 level. Sellers will try to target further losses towards the 108.15 level, as it represents the neckline of a head and shoulders pattern with a large downside projection.

The USDJPY pair is intraday bearish while trading below the 110.10 level, key support is now found at the 109.20 and 108.15 levels.

If the USDJPY pair trades above the 110.10 level, buyers will likely test towards the 110.30 and 110.55 resistance levels.

The euro currency has moved sharply higher against the greenback after US President Donald Trump reiterated his concern about the Federal Reserve raising interest rates. The EURUSD pair has so far advanced towards the 1.1540 region, falling just short of the key 1.1553 resistance level. The intraday bias for the EURUSD is bullish while trading above the 1.1507 level, the MACD indicator across the four-hour time frame has also turned bullish.

The EURUSD pair is bullish while trading above the 1.1507 level, key resistance is now found at the 1.1553 and 1.1600 levels.

If the EURUSD pair moves below the 1.1507 level, sellers may push the price back towards the 1.1445 support level.