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The Aussie dollar maintains negative near-term bias following repeated upside rejections and holding in red for the fourth consecutive day.

Falling bear-trendline which limited recovery phase, continues to cap descend from correction high at 0.7644 and keeps the pair under pressure.

Today's probe below 10 SMA which marks pivotal support at 0.7591 would generate stronger bearish signal on firm break and open way towards key support at 0.7530 (21 Nov low, the lowest since mid-June).

Bear-trendline marks initial resistance at 0.7605, with descending 20SMA marking upper pivot at 0.7623, close above which would shift near-term bias higher.

Res: 0.7605, 0.7623, 0.7644, 0.7665
Sup: 0.7574, 0.7555, 0.7530, 0.7500

The common European currency has been appreciating against the Loonie since mid-July. The rate has since increased its trading steepness, thus trading in three ascending channels at the same time. On Tuesday, the Euro tested the most senior channel which has guided the pair since late April. Given that the rate faces the combined resistance of the weekly and monthly R1 circa 1.2535 and the aforementioned senior channel, traders might feel pressured to short their positions and thus push the rate lower. This is likewise supported by the fact that the pair has failed to reach the upper boundaries of more junior channels—a move that suggests that the strong bullish sentiment which has guided the pair for the last three weeks is gradually allaying. In case bears take the upper hand and the 55-hour SMA is breached, the Euro might try to approach the 1.51 area, reinforced by the weekly PP and two moving averages located nearby.

The pair remains congested between 111.02 (50% of 107.31/114.73) and 200 SMA (111.67).

Directionless near-term mode extends into fourth straight day with 200SMA repeatedly capping and marking very strong resistance.

Overall bias remains bearish and favors selling upticks for final break below congestion floor for test of daily cloud base (110.70) and Fibo support at 110.15 (61.8% of 107.31/114.73) in extension.

Meanwhile, upticks above 200SMA cannot be ruled out as daily slow stochastic is still pointing higher after reversal from o/s territory, but bearish structure sees limited action, likely capped by daily Tenkan-sen (112.00) and Fibo 38.2% of 114.73/110.83 pullback (112.32).

Res: 111.67, 112.00, 112.32, 112.70
Sup: 111.35, 111.02, 110.83, 110.70

The pound rallied on foreign exchange markets on reports that the UK and the EU had agreed on a Brexit bill while the US dollar and risk sentiment more generally were helped by the passage of the Republican tax cut package through a Senate committee. These developments helped markets shake off worries about a new missile test from North Korea.

The North Korean military tested a new type of missile which flew higher than any other previous projectiles launched by the country. North Korea said its ballistic missile could hit any part of the United States; a claim which could not be completely verified as the missile was not carrying a regular payload. Markets were relatively unfazed by the news, since many times in the recent past, any North Korean-related selloff quickly reversed itself.

Therefore dollar/yen remained relatively quiet as risk sentiment was also positive following a big rally on Wall Street overnight. Asian stock markets were also mostly positive. Dollar/yen was last trading at 111.45.

The euro staged a modest recovery from the previous day’s lows as it climbed back to 1.1870. The dollar was upbeat yesterday as Republicans managed to pass their tax cut package from a key Senate committee, a move that sets up the stage for a vote on the package soon – possibly as soon as Thursday.

In other news, the President’s nominee for the post of Fed Chair, Jerome Powell said that the case for a December rate hike was “coming together”, in yet another sign that the Fed will most likely raise rates in its next meeting.

Despite the dollar-positive news, the pound strengthened to a 2-month high against the greenback, breaking through the 1.34 level, as reports came in that the EU and the UK were close to a deal on the so-called ‘divorce bill’. The figure was in the range of 40-50 billion pounds but the reports of the agreement were not verified by officials. An agreement on the Brexit bill could unlock the next stage of the negotiations, which would relate to the trade relationship that the UK would have with the EU after it leaves the block. Euro/pound fell to around 0.8845 on the news. Nevertheless, the thorny issue of the type of border Ireland and Northern Ireland would have post-Brexit remains as a potential sticking point before negotiations on trade start.

Looking ahead to the remainder of the day, German flash inflation for November will be the only newsworthy item out of Europe, before an action-packed US session begins. Early in the US session, the 2nd estimate of third-quarter growth for the world’s largest economy will come out, which is expected to show an upward revision to 3.2% annualized from 3% initially reported. Pending home sales and crude oil inventories are some of the other statistics expected. Although markets are focusing more and more on what Fed Chair nominee Jerome Powell has to say, they will also be keenly interested in Yellen’s congressional testimony about the economy today. Later in the day, John Williams of the San Francisco Fed will also speak about the economy and the Fed’s Beige Book of regional economic conditions will come out.

Fresh bullish acceleration in early European trading surged through target at 1.3415 (Fibo 61.8% of 1.3655/1.3026 descend) and generated strong signal of bullish continuation after the price was congested in past few sessions.

Fresh rally comes after multiple downside attempts were contained by daily cloud top and action underpinned by daily techs in full bullish mode.

Break and close above 1.3415 will be strong bullish signal for extension towards 1.3506 (Fibo 76.4%), with key barrier at 1.3655 (2017 high, posted on 20 Sep) expected to come in focus. Stops are raised to 1.3300 (broken trendline).

Res: 1.3506, 1.3570, 1.3600, 1.3655
Sup: 1.3415, 1.3385, 1.3337, 1.3335

The Euro bounced on Wednesday after two-day pullback found ground at 1.1826, contained by strong support, provided by daily cloud base and reinforced by rising 10SMA. Fresh rally eyes pivotal barrier at 1.1877 (daily cloud base) break of which to generate stronger reversal signal and mark higher low at 1.1826 for renewed attempts towards targets at 1.1965 and 1.2000. Short-term structure remains bullish and favors fresh upside on sustained break above daily cloud. Batch of confidence data from the Eurozone and German inflation numbers are in focus today and expected to generate fresh direction signals. Better than expected releases are needed to confirm positive sentiment, while weak numbers today would put the single currency under fresh pressure and risk deeper pullback.

Res: 1.1877, 1.1920, 1.1965, 1.2000
Sup: 1.1826, 1.1805, 1.1778, 1.1757

XAUUSD (1296.03): Gold prices have managed to maintain the upside moment despite some flat price action. Currently trading near the 1295 - 1296 level, gold prices are expected to see further gains pushing price towards the 1300 - 1304 level where resistance has been established. This could see a short term decline in price action as gold prices maintain a new sideways range within 1304 and 1285 level. The unfolding price action and the expected rally towards the 1304 level also signals a potential cup and handle pattern that could form. However, further evidence of this is required as we wait for a retracement off the 1304 resistance ahead of the pullback.

USDJPY (111.46): The USDJPY looks to have stalled in its declines above the 110.70 support level. However, the downside bias remains as we expect to see a firm test of support at this level. On the 4-hour chart, USDJPY has managed to post a bounce off the support region near 111.00 - 110.88 level. As long as this support level holds, USDJPY could remain range bound in the short term. Resistance level formed at 112.00 will be most likely tested but further gains are unlikely. The currency pair will have to form a higher low in order to confirm further upside. Above 112.00 the next main target for USDJPY will be the 113.00 handle..

EURUSD (1.1853): The euro extended declines for a second consecutive day following the brief rally towards the 1.1950 handle. Price action is likely to remain trading within the band of 1.1950 resistance and 1.1700 support in the near term. In the short term, EURUSD is expected to see some modest upside towards 1.1920 where a retest of the breakout from the rising median line will signal further declines. If the current support fails, then EURUSD could be seen correcting towards 1.1710 level after retesting resistance level. Alternately, in the event that the currency pair manages to breakout above 1.1920 then we expect to see further gains coming which could see the euro retesting the 1.2000 handle.

The U.S. dollar closed higher yesterday on the back of the President Trump's tax reforms hearing advancing in the senate. Investors are hopeful that the tax reform plans could soon be implemented after the bill moved to the senate. Elsewhere, Fed nominee Jerome Powell's confirmation hearing got underway. The potential candidate indicated his preference for normalization of interest rates and maintaining that the Fed's balance sheet unwinding program.

On the economic front, data yesterday saw Japan's retail sales declining 0.2% on the year which was below estimates of a 0.1% and posted declines following a 2.3% increase previously.

Looking ahead, the U.S. second revised estimates for the third quarter GDP will be released. Economists polled expect the GDP to be revised higher to 3.3% for the quarter, slightly higher than the preliminary estimates of 3.0%.

The Fed chair, Janet Yellen is expected to testify to the Joint Economic Committee in Washington today.