Sample Category Title

Pivot (invalidation): 1.3060

Our preference Short positions below 1.3060 with targets at 1.3010 & 1.2995 in extension.

Alternative scenario Above 1.3060 look for further upside with 1.3095 & 1.3125 as targets.

Comment As Long as 1.3060 is resistance, expect a return to 1.3010.

Pivot (invalidation): 0.9910

Our preference Short positions below 0.9910 with targets at 0.9865 & 0.9840 in extension.

Alternative scenario Above 0.9910 look for further upside with 0.9930 & 0.9950 as targets.

Comment The RSI is bearish and calls for further decline.

Pivot (invalidation): 110.30

Our preference Short positions below 110.30 with targets at 109.50 & 109.30 in extension.

Alternative scenario Above 110.30 look for further upside with 110.50 & 110.70 as targets.

Comment As Long as 110.30 is resistance, likely decline to 109.50.

Pivot (invalidation): 1.2790

Our preference Long positions above 1.2790 with targets at 1.2855 & 1.2885 in extension.

Alternative scenario Below 1.2790 look for further downside with 1.2755 & 1.2725 as targets.

Comment The RSI is supported by a bullish trend line.

Pivot (invalidation): 1.1480

Our preference Long positions above 1.1480 with targets at 1.1575 & 1.1600 in extension.

Alternative scenario Below 1.1480 look for further downside with 1.1450 & 1.1430 as targets.

Comment The RSI calls for a rebound.

President Donald Trump is making the headlines again. This time by criticizing Jerome Powell and complaining about the Federal Reserve’s rate hikes to Republican donors at a Hamptons fundraiser on Friday in a closed meeting. His comments also went public on Monday after he told Reuters that he was not thrilled about the Federal Reserve’s decision this year to raise interest rates. This is not the first time Trump has hit the Federal Reserve, earlier in July he tweeted “The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done.”

As a result, the dollar index fell further from a 13.5 month high to trade below 95.5 for the first time since August 9. Trump’s criticism of the Fed was not the only reason for the dollar’s decline. Treasury yields also fell across the yield curve on Monday with the 10-year yields trading 18 basis points below August highs of 3.01%. Comments from Atlanta Fed President Raphael Bostic that he expects only one more interest rate hike in 2018 also encouraged traders to take some profits on long dollar positions.

Given that there are no tier-one economic data on the calendar on Tuesday and Wednesday, sentiment will continue to be driven by politics. China-U.S. trade talks will kick off tomorrow, but Trump is also not showing much enthusiasm and said he did not anticipate much from the talks. However, any small signs of progress may still provide equities a boost. Investors want to know whether these lower level meetings will lead to higher level negotiations in the coming months. If that’s the case, expect the dollar to fall against the Yuan and other emerging market currencies. The dollar may also fall further against the Euro and its major peers because after all, the greenback became investors’ first choice in this trade battle.

Gold prices also shot higher on Tuesday recovering almost $35 from the lows tested on Thursday. The recovery began after the latest Commitment of Traders report showed that gold speculative short positions reached a record high last week. Gold backed ETFs also dropped heavily over the past three months with investors continuing to pull out. Whether the recovery will continue or not depends on how the situation between the U.S. and China evolves. I expectthe recent high correlation between Gold prices and the Yuan to remain in play. On a technical level, price should move above $1,205 to indicate a change in trend.

XAUUSD (1194.03): Gold prices posted gains for two consecutive days after the previous decline to lows of 1160.32. The current rebound is expected to push the price of the precious metal toward the previous support level at 1211.50 to established resistance. Currently, the pace of gains is signaling a near-term correction to the downside. However, following the higher low, gold prices are likely to inch higher toward 1211.50. A break down below the previous lows could, however, signal further weakness in the currency pair.

USDJPY (110.09): The USDJPY currency pair extended declines yesterday as price action was seen easing to a fresh two months low earlier today. The decline of the support level area between 111.13 110.85 signals the move lower. The USDJPY is likely to maintain its range below the resistance level with the retest of 109.45 likely. Establishing support here could signal a short-term rebound. Further declines can be expected only on a close below the support level at 109.45.

EURUSD (1.1523): The EURUSD currency pair was seen posting gains for the third consecutive day after the price fell to fresh yearly lows below 1.1400. Price action is currently testing the previously breached support level at 1.1540. A reversal near this resistance level is likely with the 4-hour Stochastics currently showing a hidden bearish divergence. A near-term pullback could give the needed correction. In the near term, price action could remain within 1.1540 and 1.1366 levels of resistance and support.

The U.S. dollar was seen easing back on Monday with a slight risk on sentiment following the upcoming China - U.S. trade talks. However, there was some negative news as well with media outlets reporting Trump criticizing the Fed for raising interest rates and also calling out Europe and China for manipulating the currencies.

The comments came as the German Bundesbank released its monthly report. The German central bank said that the economy would be maintaining a strong trade surplus until next year.

The economic calendar for the day will see the release of the UK's public sector net borrowing. Economists point to a decline of 2.1 billion. The NY trading session is quiet and later during the overnight trading session, the quarterly retail sales figures from New Zealand will be released.

Economists forecast that quarterly retail sales increased 0.4%, advancing from a 0.1% increase from the previous quarter. Core retail sales are expected to rise 0.8% up from 0.6% previously.