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After reaching the 1.1960 level the currency exchange rate returned back to the 55-hour SMA located at 1.1900, as expected. The correction was based on hawkish comments made by the Fed’s Kaplan as well as anticipation of the Governor Powell appear before Congress and Trump’s meeting with Senate Republicans regarding the new tax reform. If traders concentrate on positive moments of those meetings, the pair is likely to plunge even further, towards combined support formed by the weekly PP and the 100-hour SMA near 1.1865. Even though bears might take the lead in second half of the day, the overall movement of the rate is still expected to be guided by bulls. Their first goal is expected to be the new resistance at 1.1960, while the ultimate is located at 1.2000.

The European single currency remained relatively strong agains the Greenback, despite much stronger-than-anticipated the US new home sales figures. Following the report, EUR/USD depreciated 9 pips or 0.07% to 1.1930 to remain above the 1.1900 level despite some bearish signals.

Sales of new single-family homes in the US marked solid increase to reach a ten-year high due to robust demand throughout the country, providing a boost to the property market. The Commerce Department showed that new home sales rose 6.2% to a seasonally adjusted yearly rate of 685K in October, the highest level in ten years. Moreover, upbeat results indicated that housing kept gaining momentum after the lack of available properties and suitable land restraned the growth.

The British pound has pulled back from a two-month trading high against the U.S dollar, as the U.S tax reforms were endorsed by another U.S Senator. Price-action is now trading around the 1.3330 zone, with the pair surviving yet another technical re-test of the 1.3307 support level in Asia. This Tuesday, the BOE will release the Financial Stability report and the Bank of England’s stress test results, followed later by a key-note speech by BOE Governor Mark Carney.

The GBPUSD pair will likely be met with further selling pressure while price trades below the 1.3360 level. Sellers will look to target the 1.3307 and 1.3268 levels.

Should the GBPUSD pair start to trade above the 1.3360 technical level again, further buying towards the 1.3382 and 1.3400 levels appears likely.

The euro has moved lower against the U.S dollar, finding support at the key 1.1890 technical level, as the U.S dollar index attempts to recover Friday’s steep losses. The EURUSD pair fell from the 1.1957 level, despite positive headlines from the eurozone, confirming that Angela Merkel has said she is willing to make compromises, so a strong coalition deal to be reached. During the U.S trading session, investors await the release of U.S Consumer Confidence data, we also have a raft of Federal Reserve members delivering speeches.

A sustained loss of the 1.1890 technical support level should lead to a EURUSD sell-off towards the 1.1860 level. Extended euro support is found at 1.1834.

Should EURUSD price-action hold above the 1.1890 technical level, further buying towards the 1.1955 and 1.1990 levels cannot be ruled out.

The US dollar was consolidating its gains from the previous day when hopes for tax reform were rekindled by an optimistic tweet by President Trump.

Euro/dollar was pushed back below 1.19 as the single currency showed it was not yet ready for a test of the key psychological 1.20 level. The previous day's high was 1.1961 – a more than 2-month high – but the euro was last trading at 1.1888. Dollar/yen also reflected some strength by the greenback as it climbed back above 111 to 111.26.

The yen was a little weak despite a mood of apprehension in equity markets, as Chinese equities were at first under pressure but managed to reverse those losses and go slightly positive after posting three consecutive days of losses on Monday and the previous week. There are worries that the regulatory clampdown by authorities of certain types of financial activities in China could lead to tighter conditions in local markets.

President Donald Trump met with Republican Senators on Monday and the mood was one of optimism that tax reform would get a positive vote in the Senate. A vote could take place as soon as Thursday, but there were still Republicans that needed to get on board for a positive vote to happen. Trump tweeted that the tax plan was 'coming along very well', which had a positive effect on the dollar. Also dollar-positive were better-than-expected new home sales for October.

Sterling lost ground against the greenback as the previous day's rally to 1.3377 was met with strong selling that drove the pair back to 1.3324. The pound was doing a little better against the euro as the single currency has failed to punch through the 90 pence level and was last at 0.8922. In today's news, the Bank of England said all major UK lenders passed the so-called 'stress tests' and did not appear to need fresh capital. Stress tests involve checking whether a bank's capital level is adequate for adverse economic scenarios. This was good news for the pound, as at least one bank – RBS – was suspected to have failed the tests. In addition, the BoE found that UK banks were adequately capitalized to make it through a 'disorderly' Brexit if that particular scenario materializes.

Following the release of the Bank of England's financial stability review and Governor Mark Carney's press conference, there is little exciting in the European calendar. Market participants might take an interest in Eurozone credit growth followed by the German GfK consumer climate index. Most of the action for today will take place in the United States. In terms of data, the S&P/Case-Shiller house price index will come out, followed by the Conference Board's consumer confidence index. A number of Fed officials are also speaking today. Jerome Powell will appear in Congress for his confirmation hearing for the post of Federal Reserve President. He is not likely to be seriously challenged as he is not a controversial figure and could attract bipartisan support for his nomination. Other Fed speakers today will be William Dudley and Patrick Harker, while Treasury Secretary Steven Mnuchin is also speaking a little before the close of New York trading. In Canada, Bank of Canada Governor will also make a speech

XAUUSD (1294.44): Gold prices continue to remain volatile although price action has managed to clear the resistance level of 1285. We expect this ranging phase to continue with another retest of 1285 where support could be formed. On the upside, the target towards the 1300 level remains in focus. Gold prices could be seen edging closer to this level in the near term. However, there is a risk of price posting a correction. Unless the support at 1285 fails to hold price, we can expect gold prices slipping below this level.

USDJPY (111.18): The USDJPY continued to extend it’s declines. Price action weakened after a brief attempt to rally. As a result, USDJPY was seen falling back to retest the support level at 111.00 - 110.88. We expect to see USDJPY consolidating near this level with the potential to briefly dip lower. The bias remains flat at the moment, but further weakness could come in on a break down below this support level. On the upside, USDJPY will need to post gains above the recent local pivot high near 111.30. A close above this level will send USDJPY posting a correction towards 112.04 resistance.

EURUSD (1.1906): The EURUSD rallied to test the level above 1.1950 yesterday. However, price action was bearish as the common currency gave up the gains, closing on a bearish notice. In the near term, we expect price action to consolidate near this level. Although the euro fell sharply by late yesterday, we expect to see another short-term attempt to retest the 1.1950 level. On the downside, the risks are increasing as price could be seen testing the support level at 1.1843 - 1.1822. Establishing support at this previous resistance level will pave way for further gains.

The markets were seen trading rather mixed with the U.S. dollar identified as weakening. The euro briefly rallied to 1.1950 levels while gold prices rose close to the 1299 handle. On the economic front, the new home sales data was the only major economic release yesterday. Data showed that sales of single family units rose 6.2% in October, marking the highest increase in a decade.

Looking ahead, the Fed nominee, Jerome Powell's confirmation hearing is scheduled to begin today. On the economic front, the markets will be looking to the speech by BoE's Carney. In the U.S. the goods trade balance and wholesale inventories report is due. Later in the evening, the BoC governor Poloz is scheduled to speak.

USD/CHF - 0.9815

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9820

Kijun-Sen level                    : 0.9808

Ichimoku cloud top                 : 0.9806

Ichimoku cloud bottom              : 0.9802

Original strategy :

Sell at 0.9845, Target: 0.9735, Stop: 0.9880

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9855, Target: 0.9745, Stop: 0.9890

Position : -

Target :  -

Stop : -

As dollar has rebounded after falling to 0.9778 yesterday, suggesting consolidation above this level would be seen, however, reckon upside would be limited to 0.9846 (previous support) and bring another decline later, below said support at 0.9778 would extend recent decline from 1.1038 top towards 0.9730-37 support area but near term oversold condition should limit downside and reckon support at 0.9705 would hold from here, bring rebound later.

In view of this, we are looking to sell dollar again on recovery as previous support at 0.9846 should turn into resistance and limit upside. Only break of 0.9875-80 would defer and signal a temporary low is formed instead, bring test of 0.9899 but price should falter well below resistance at 0.9947.