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As it was expected, a combination of the 55-, 100- and 200-hour SMAs around the weekly PP, which is located at the 1.1948 level, did not allow the rate to surge any further. Because of the rebound, most of the previous trading session movement of the pair was guided by bears, which pushed it out of a symmetrical triangle. In other words, a long-term dominant ascending channel was broken. Such outcome indicates that today the currency rate is likely to continue to slip to the bottom, trying to reach the lower trend-line of a three week long descending channel. And the fact that it located below the monthly PP at 1.1881 and the weekly S1 at 1.1861 as well as the above moving averages, only supports this scenario.

Daily Pivots: (S1) 1.3410; (P) 1.3490; (R1) 1.3549; More....

GBP/USD is staying in consolidation from 1.3651 and intraday bias remains neutral. In case of deeper fall, downside should be contained by 38.2% retracement of 1.2773 to 1.3651 at 1.3316 and bring rise resumption. Above 1.3651 will turn bias back to the upside for 1.3835 support turned resistance next. Break there will target 55 month EMA (now at 1.4405).

In the bigger picture, current development argues that the long term trend in GBP/USD has reversed. That is, a key bottom was formed back in 1.1946 on bullish convergence condition in monthly MACD. Current rise from 1.1946 will target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 next. In any case, medium term outlook will now stay bullish as long as 1.2773 support holds.

Geopolitical uncertainties became dangerous late on Monday giving a boost to safe havens during Tuesday's Asian session. The North Korean Foreign Minister Ri Yong Ho used a stronger language against the US, saying that Trump's recent comments were a declaration of war on the Korean peninsula and the regime has the right to shoot down US bombers even if they fly outside the regime's airspace. A few hours later the White House spokeswoman Sarah Sanders denied that the US has declared war on North Korea, while the National Security Adviser H.R McMaster argued that the US is playing out four or five scenarios on how to deal with North Korean tensions admitting that warnings from the peninsula are “much further advanced” than anticipated.

Dollar/yen tumbled to 111.64 from 112.20 prior to the exchange of threatening words.

Dollar/swissie bottomed at 0.9641 on late Monday but managed to bounce up to 0.9697 afterwards due to the rising dollar.

Gold rose to $1,308.39 per ounce.

The dollar index climbed higher to 92.51 in Asia despite escalating geopolitical tensions after the New York Fed President William Dudley claimed on Monday that the Fed sees interest rates rising gradually given factors driving inflation lower are fading and US economic conditions are supportive. However, the Minneapolis Fed President Neel Kashkari who is a voting member this year commented early today that there is no need to hike rates as there is still no evidence of “inflation taking off”.

Next up today, Fed Chair Yellen is expected to give a speech before the FOMC members, Lael Brainard and Loretta Mester make public appearances later on. Moreover, new homes sales and Conference Board consumer confidence figures are anticipated to be released during the European trading hours.

The euro was hovering close to one-month low levels reached yesterday following ECB's Draghi remarks which stated that currency volatility is a source of uncertainty which needs monitoring while he also added that “ample” ECB accommodation was still required. The German election outcome kept pressuring the currency with far-right AfD party entering the parliament for the first time and Merkel's party seeking for new coalition partners after its current partner SPD decided to go to the opposition. Euro/dollar was last at 1.1853.

Sterling recovered from its ten-day low of 1.3430 touched yesterday, climbing to 1.3490 during the Asian session.

In other currencies, the kiwi stretched its downtrend, falling by 0.30% on the day to a two-week low of $0.7231 weighed mainly by uncertainties in the political environment as New Zealand's Prime Minister who was the winner of the elections for the second time on Saturday must negotiate with other parties to build a coalition government. Moreover, worse than expected trade data for the month of August and disappointing ANZ business readings released early today pressured the kiwi even further. Thursday sees the decision by the Reserve Bank of New Zealand.

Its Australian cousin was slightly up at $0.7941.

The loonie continued weakening for the third week on the back of a stronger dollar despite increasing oil prices. Dollar/loonie was last trading at 1.2370 ahead of the BOC's Governor Stephen Poloz speech on Wednesday.

Looking at energy markets, WTI crude oil and Brent touched fresh highs amid stronger joint compliance from OPEC and non-OPEC producers in order to reduce supply as well as the threat by Turkey's President, Tayyip Erdogan, to cut oil flows from Kurdistan to the rest of the world. The warning came as a response to Kurdistan's independence referendum held on Monday which passed off peacefully across the region. WTI crude rose to a five-month high of $52.40 per barrel while Brent reached a two-year high of $59.47. The API weekly crude report released later in the day is also expected to bring some volatility to oil prices.

Daily Pivots: (S1) 0.9622; (P) 0.9683; (R1) 0.9725; More....

Intraday bias in USD/CHF remains neutral for the moment. On the upside decisive break of 0.9772 resistance will suggest that whole down trend form 1.0342 has completed. In that case, near term outlook will be turned bullish for 0.9860/1.0099 resistance zone. Nonetheless, with 0.9772 resistance intact, outlook remains bearish. Below 0.9587 minor support will turn bias back to the downside for retesting 0.9420 low.

In the bigger picture, current development suggests that 0.9443 key support (2016 low) could be taken out firmly as down trend form 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

The USDJPY pair has fallen below the 112 level, to test its 200-day moving average, at 111.44, after North Korea’s foreign minister said on Monday, President Donald Trump had declared war on North Korea.

Tensions have also risen, after Pyongyang threatened to test another nuclear capable hydrogen-bomb over the Pacific Ocean, sending investors into safe-haven assets such as the Japanese Yen and gold.

At present, the USDJPY trades below its 200-week moving average, at 111.64, however, sellers yesterday failed to close the daily time-frame price candle below the 111.64 level.

Key intraday USDJPY technical support is found at the 200-day moving average at 111.44 and the pairs 100-week moving average, at 111.04. Below 111.04 further support is found at 110.86 and 110.68.

To the upside, key technical resistance above the 111.65 level is found at the pairs daily pivot point, at 111.84 and the key 112 handle.

Above 112, further resistance is found at 112.30 and 112.57, with the 112.71 and 113.20 levels offering strong weekly resistance.

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Daily Pivots: (S1) 111.27; (P) 111.90; (R1) 112.33; More...

Intraday bias in USD/JPY remains neutral for the moment. Further rise is in favor with 111.07 support intact. Sustained break of medium term channel resistance (now at 112.90) will argue that whole correction from 118.65 has completed. In that case, further rise should be seen to 114.49 resistance for confirmation. However, break of 111.07 minor support will raise the risk of rejection from channel resistance and turn bias back to the downside for 55 day EMA (now at 110.64) and below.

In the bigger picture, rise from 98.97 (2016 low) is seen as the second leg of the corrective pattern from 125.85 (2015 high). It's unclear whether this this second leg has completed at 118.65 or not. But medium term outlook will be mildly bearish as long as 114.49 resistance holds. And, there is prospect of breaking 98.97 ahead. Meanwhile, break of 114.49 will bring retest of 125.85 high. But even in that case, we don't expect a break there on first attempt.

Daily Pivots: (S1) 1.1377; (P) 1.1483; (R1) 1.1556; More... .

EUR/CHF's sharp fall suggests short term topping at 1.1622, on bearish divergence condition in daily MACD. Intraday bias is mildly on the downside for 1.1355 support and below. On the upside, break of 1.1511 minor resistance will suggest that the pull back is completed and bring retest of 1.1622.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1198 resistance turned support holds.

Daily Pivots: (S1) 1.4880; (P) 1.4943; (R1) 1.4992; More....

EUR/AUD is staying in consolidation pattern in range of 1.4791/5173. Intraday bias remains neutral first. On the upside, break of 1.5173/5226 resistance zone will finally resume larger rise from 1.3624. On the downside, break of 1.4791 support will turn bias to the downside and extend the fall from 1.5173 to retest 1.4421 support.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

EUR/USD

Current level - 1.1851

The intraday bias is bearish and the pair is currently testing the key support at 1.1830. A violation of the latter will provoke a slide towards 1.1660 area. Crucial on the upside is 1.2000 peak.

USD/JPY

Current level - 111.62

My outlook remains bearish, for a break through 111.10, en route to 109.30. Initial minor resistance lies at 111.90 and crucial on the upside is 112.50.

GBP/USD

Current level - 1.3489

My outlook is still positive above 1.3440, for a rise through 1.3570 peak, towards 1.3830. A violation of 1.3440 will challenge 1.3340.

Daily Pivots: (S1) 149.38; (P) 150.82; (R1) 151.92; More

GBP/JPY's pull back from 152.82 is still in progress and deeper fall could be seen. But downside of retreat should be contained above 146.57 support to bring another rally. Above 152.82 will extend the larger rise from 122.36 to 61.8% projection of 122.36 to 148.42 from 139.29 at 155.39 next.

In the bigger picture, medium term rebound from 122.36 is in progress. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. For now, the bullish scenario is preferred as long as 139.29 support holds.