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The euro continued to be dogged by concerns about the outcome of the German elections, extending its losses in European trading, while a similarly disappointing election outcome in New Zealand caused the kiwi to be the day's worst performing major currency. The US dollar was firmer as the yen came under pressure after the Japanese prime minister called a snap general election. Oil prices meanwhile rose to fresh highs after major producers said the market was rebalancing.

The prospect of prolonged uncertainty as Angela Merkel and her CDU/CSU alliance try to form a coalition with two smaller parties pulled the single currency deeper into the red in Monday's European session. The stronger-than-expected showing for the far-right anti-immigrant AfD party has reignited fears about the rise of populist parties in Europe, while a potential coalition with the FDP and the Greens could force Merkel to take a tougher stance on further EU integration.

Further weighing on the euro today was weaker-than-expected German business survey data from the Ifo Institute. The Ifo's business climate index missed forecasts of 116.0 to decline to 115.2 in September from the prior 115.9. The current conditions index also missed estimates to fall to 123.6 in September, while the Ifo's expectations index dropped from 107.8 to 107.4.

The euro's woes worsened after ECB President Mario Draghi said that the economic recovery has yet to "translate more convincingly into stronger inflation dynamics". Speaking before the European Parliament's Economic and Monetary Affairs Committee, Draghi added that volatility in the exchange rate was "a source of uncertainty which requires monitoring".

The single currency fell back below the key $1.19 level, hitting a session low of $1.1861. It was also lower against the yen and the pound at 133.27 yen and 0.8788 pounds.

The greenback was unable to retain its Asian session highs against the yen but remained up on the day, and was last trading at 112.20. The dollar index was also firmer to stand at 92.47, up 0.3% from Friday's close. The US currency was supported by relatively hawkish remarks from New York Fed President William Dudley. Speaking at a college in New York, Dudley said he expects inflation to "rise and stabilize around the 2 percent objective over the medium term" as the effect of temporary factors fade and a weaker dollar pushes up import prices.

The yen weakened slightly after the Japanese prime minister, Shinzo Abe, said he will dissolve parliament on September 28 and call early elections in October (slated for the 22nd). Earlier today, Abe announced a fiscal spending package amounting to two trillion yen to stimulate the Japanese economy.

The pound pared back some of Friday's losses when it tumbled after Prime Minister Theresa May's highly anticipated speech on Brexit failed to provide enough clarity on what kind of a deal the UK will be seeking with the EU once it leaves the bloc. However, hopes that the speech has done enough to unblock the stalemate in the negotiations lifted sterling against the dollar today. The pound last traded at $1.3514, down from a session high of $1.3570 but up 0.2% on the day, as the fourth round of talks between the EU and the UK got underway.

The New Zealand dollar was the day's worst performer as an inconclusive election outcome weighed on the currency. Saturday's general election left the country's third largest party, New Zealand First, holding the balance of power as it will have to decide whether it wants to form a government with the ruling National Party or with the opposition Labour. The kiwi fell to a one-week low of $0.7250 during Asian hours but managed to stabilize around $0.7275 by late European trading, though this was still 0.9% lower on the day.

Oil prices resumed their uptrend on Monday as investors became more optimistic about the outlook for the market. On Friday, OPEC and other major oil producers signalled they will likely decide in late 2017/early 2018 whether to extend the current output cap deal but said the market is now "evidently well on its way towards rebalancing." WTI crude hit a 4-month high of $51.43 a barrel but Brent crude fared even better, surging to a 9-month high of $58.05 a barrel.

The currency pair has opened with a gap down in the morning, signaling that the bears are in control on the short term. Price has come higher to close the morning gap, but has failed. EUR/USD is trading in the red right now and seems too heavy to be stopped.

Price erased the morning gains and could hit fresh new lows till the end of the day as the dollar index could breakout above the 92.49 static resistance. The dollar index moves somehow sideways on the short term, signaling a potential reversal. The behavior changed on the USDX as the rate has started to make higher lows, but we still need a confirmation that the index will really start a broader rebound, which will lead the USD much higher versus all its rivals. The Euro dropped further also because the German Ifo Business Climate decreased from 115.9 to 115.2 points, even if the estimate 116.0 points.

The price failed to close above the upper median line (uml) of the minor descending pitchfork and above the UML and now is going down again. Price also failed to retest the upper median line (uml) in the last attempt, so the bearish movement is natural.

It could be attracted by the confluence area formed between the median line (ml) with the ML of the ascending pitchfork. EUR/USD is narrowing right now, but I hope that we'll have a significant move very soon.

Price rallied aggressively and jumped much above the median line (ML) of the major ascending pitchfork, signaling that is strongly bullish. Has broken above the 150% Fibonacci line (descending dotted line) and above the upside line (uml) of the up channel. A retest of the broken levels will signal a further increase in the upcoming period.

Brent is almost to hit the $58.00 per barrel, it wasn't reached since July 2015, so the price could touch new peaks in the upcoming period.

Price increased a little today, but wasn't able to reach the 0.7985 Friday's high. It seems undecided right now because the USDX has managed to increase a little. Could retest the lower median line (LML) again, remains to see if we'll have a breakdown or a bounce back. A breakdown is favored if the USDX will jump and will stabilize above the 92.49 static resistance.

Earlier today the euro fell around 0.2% against its counterparts and 0.6% against the US dollar, following the German election. Angela Merkel remains in the driver's seat but the far right AfD party gained much more support than anticipated in recent surveys, though the formation of a coalition still remains to be seen. Weakened support for Markel's conservative alliance with only 33% of the vote and the rise in popularity of anti-immigration nationalist party makes it hard to consider it as a victory, at least for the financial markets. The President of European Central Bank, Mario Draghi, is due to speak later today and analysts will be looking for any clues on what to expect at the ECB's October policy meeting.

New Zealand's recent economic growth has surpassed all of the major countries except Canada, with special thanks to the high level of consumer confidence which has boosted the economy. It is widely anticipated that the general election result, where no party has succeeded in gaining a clear victory, may overshadow this week's economic data releases and central bank interest rate decision on Wednesday.

Top Chinese bankers called last week's S&P sovereign rating downgrade simply biased and unfair in their press conference earlier today. According to the chief economist of a top industry representative, China's debt is expected to increase but at slower pace in the foreseeable future, mostly due to decreases in GDP growth. Corporate profits in the nation are at a 5 year high and economic growth has been better than expected this year, while the top China banks' average non performing loan ratio has stabilized.

GBPUSD:

GBPUSD recorded lower tops and lower bottoms in the last trading day. The pair is trading between the high and low of September 22nd. 1.3595 is a key resistance level and 1.3448 is a key support level. The pair is expected to trade with a bearish outlook and downward momentum is further reinforced by the declining of both the 50 period moving average and the 20 day moving average. As long as the price remains below 1.3595, the pair is expected to hit 1.3448 (Sept 22 low) and after that 1.3400. Alternatively if the price moves above 1.3595 (Sept 22 high) expect an upward target at 1.3655 (last week's high).

EURUSD:

EURUSD is under pressure and in the earlier session declined almost 0.2% against major currencies. The downside movement is supported by the declining trend line; also the bearish cross between the 50 day moving average and the 20 day moving average has been identified. The relative strength index is also heading downward. To conclude, as long as price is below 1.20039 (yesterday's high), expect a downside movement towards 1.1820 and 1.1775. Alternatively, if the price moves above 1.20039, expect further upside movement towards 1.20697 (last month's high) and 1.20922 (this year's high).

NZDUSD:

NZDUSD is also expected to trade in a lower range. The pair retreated from 0.7343 (Sept 22 low) and is expected to continue its downside movement. The pair broke below the lower boundary of the Bollinger Band™ which confirms the bearish movement, with 20 day moving average also turning down. So, as long as pair is trading below 0.7343 (Sept 22 low), look for further declines to 0.7246 (last week's low) and 0.7200. Alternatively, if it moves above 0.7343, expect a rebound toward 0.7385 (minor resistance) and 0.7433 (last week's high).

The British pound has dropped lower in the Monday session. In North American trade, GBP/USD is trading at 1.3452, down 0.34% on the day. On the release front, the Bank of England released the Financial Policy Committee statement. There are no US economic releases, but there are three FOMC members holding speaking engagements – William Dudley, Charles Evans and Neel Kashkari. On Tuesday, the US releases CB Consumer Confidence and New Home Sales. Federal Chair Janet Yellen will speak at an event in Cleveland.

The Bank of England remains worried about the British economy, and the FPC statement took aim at the British consumer, specifically credit levels. The BoE warned that unsecured consumer lending was growing at close to 10 percent each year, far outstripping income, and called on British banks to carry an extra GBP 10 billion to protect against consumer loan defaults. Although defaults were not currently a problem, the FPC statement expressed concern that in an economic downturn, defaults could spiral and hurt the banking sector. In August, the BoE forecast that the economy would slow down in 2018, with Brexit one of the contributing factors. At the BoE policy meeting earlier this month, the Bank hinted that it would raise interest rates, sending the pound sharply higher. The markets are taking the bank at its word – the odds for a November rate hike have jumped to 42%, up from just 18% just prior to the September rate statement, while the likelihood of a December increase is at 54%.

Federal Reserve policymakers have been divided over a rate hike in December, which would mark a third rate increase in 2017. With no clear message from the Fed, the markets really don't know what to expect, and fed futures have priced in a December hike at 55%. On Monday, New York Fed President William Dudley made a strong case to raise rates. Dudley cited a soft US dollar and strong global growth as reasons why inflation would increase and also translate into stronger wage growth. Dudley said he expects inflation to reach the Fed's target of 2% in the "medium term", and predicted that the Fed would continue to gradually remove monetary accommodation. In last week's rate statement, the Fed announced that it would reduce its $4.2 trillion balance sheet by $50 billion/mth, starting in October.

3 positions were entered last week with total loss of 5 points and the positions are listed below.

14 Sep : USD/CAD - Short at 1.2240, exited at 1.2240 ( 0 point)
20 Sep : GBP/JPY - Short at 151.00, exited at 151.05 (- 5 points)
22 Sep : USD/CAD - Long at 1.2285, 

|                 AUD          EUR/JPY           EUR/GBP         CAD          GBP         GBPJPY
Jan             - 15             -275                - 35              -120
Feb           + 140            -17                  - 40              +11
Mar            - 20            +115                +132            - 19
Apr             + 30                                  - 40             +120                              + 45
May                             - 55                  +100             - 6               -65             -60         
Jun            + 81           +150                - 10             +185           -120           +205
Jul                                                       - 40                                                   - 60
Aug           +155          +200                 + 100           + 195           -45            - 50
Sep                               -50                                                                          + 5   
Oct           
Nov         
Dec                                                                                                                                               
Y-T-D        + 371           + 68               +167            +658             -230            +85

USD/JPY has started the week quietly. In Monday's North American session, the pair is trading at 111.75, down 0.22% on the day. On the release front, Japanese Flash Manufacturing PMI edged lower to 52.6, short of the forecast of 53.4 points. Later in the day, the BoJ releases the minutes of its monetary policy meeting, and Japan publishes the Services Producer Price Index, which is expected to improve to 0.7%. There are no US economic releases, but there are three FOMC members holding speaking engagements – William Dudley, Charles Evans and Neel Kashkari. On Tuesday, the US releases CB Consumer Confidence and New Home Sales. Federal Chair Janet Yellen will speak at an event in Cleveland.

Japanese Prime Minister Shinzo Abe called a snap general election on Monday, which will be held on October 22. The announcement was a poorly held secret, with news outlets reporting last week that Abe would make the announcement on Monday. Abe has seen his ratings improve over the North Korean crisis and hopes to take advantage of a divided opposition and an improved economy. Japan's GDP expanded 2.5% in the second quarter, and the economy has now expanded for six consecutive quarters, as stronger global demand has boosted the manufacturing and export sectors. However, the country's radical stimulus program, known as 'Abenomics', has failed to improve inflation, which remains well the BoJ's target of just below 2.0%.

Federal Reserve policymakers have been divided over a rate hike in December, which would mark a third rate increase in 2017. With no clear message from the Fed, the markets really don't know what to expect, and fed futures have priced in a December hike at 55%. On Monday, New York Fed President William Dudley made a strong case to raise rates. Dudley cited a soft US dollar and strong global growth as reasons why inflation would increase and also translate into stronger wage growth. Dudley said he expects inflation to reach the Fed's target of 2% in the "medium term", and predicted that the Fed would continue to gradually remove monetary accommodation. In last week's rate statement, the Fed announced that it would reduce its $4.2 trillion balance sheet by $50 billion/mth, starting in October.

4 positions were entered among all 4 currency pairs with total profit of 55 points and the positions are listed below:

19 Sep : EUR/USD - Long at 1.1970, exited at 1.1950 (- 20 points)
19 Sep : USD/CHF - Short at 0.9625, exited at 0.9650 (- 25 points)
22 Sep : USD/JPY - Long at 111.70, exited at
22 Sep : EUR/USD - Short at 1.1970, exited at 1.1870 (+ 100 points)

|                 JPY             EUR             CHF            GBP

Jan          + 167             - 85              - 10            + 50
Feb          + 200            +150             +93            - 59
Mar              -23              -70               -23            - 35
Apr             + 65            + 93             + 50            - 40
May            - 65             - 35             + 100          -175
Jun            -100               -10                - 10          +175
Jul             + 85             - 35                   - 8
Aug           + 35            +210                + 35          +65        
Sep           +109            +210              +175           - 35         
Oct         
Nov        
Dec                                                                                               
Y-T-D       + 472            +423               +402           - 44     

USD/CHF - 0.9700

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9717

Kijun-Sen level                    : 0.9713

Ichimoku cloud top                 : 0.9696

Ichimoku cloud bottom              : 0.9669

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the greenback has edged higher after rebound from Friday’s low of 0.9668 and marginal gain from here cannot be ruled out, break of last week’s high at 0.9748 is needed to signal recent rise from 0.9421 low has resumed and extend gain to 0.9761-66 (50% Fibonacci retracement of 1.0100-0.9421 and previous resistance), then test of another previous resistance at 0.9773.

On the downside, below said support at 0.9668 would extend weakness to previous minor resistance at 0.9649 but break there is needed to signal top has been formed, bring further fall to 0.9620, however, price should stay well above indicated support at 0.9589, bring rebound later. As near term outlook is still mixed, would be prudent to stand aside for now.