EUR/USD: dollar regains its charm, but would it last?

EUR/USD Current price: 1.1226

Live Chart for the EUR/USD

The American dollar firmed up on Friday, trimming most of its weekly losses as FED members bolstered the case for a rate hike this year, in spite of latest soft macroeconomic readings in the US, with only the EUR and the JPY ending the week with gains against the greenback. Boston Fed President, Eric Rosengren, warned that the US economy could "overheat" if rates remain low for too long, whilst Governor Daniel Tarullo said later on the day that he wants to see more evidence of sustained inflation before considering an interest rate increase, but he added that he can't rule out a hike this year. Both are FOMC voting members, and investors are eagerly waiting for the upcoming meeting on September 21st.

The EUR/USD pair closed the week with gains around 1.1226, but off its weekly high of 1.1326, this last  reached last Thursday, when the ECB made its economic policy announcement. Mario Draghi hit the common currency by maintaining the EU economic policy unchanged, and announcing that the Central Bank is still focused in implementing its latest decisions, rather than considering new ones. Holding above the 1.1200 figure, the daily chart shows that the pair is poised to start the week below a few pips below its 20 DMA, but above the 100 and 200 DMAs, both converging at 1.1160, while technical indicators in the mentioned time frame, turned modestly lower below their mid-lines, indicating that the pressure is towards the downside. In the 4 hours chart, technical indicates are also within bearish territory, but with no clear directional strength, while the price is between its 100 and 200 SMAs, reflecting the absence of directional convictions around the pair.

Support levels: 1.1160 1.1120 1.1075

Resistance levels: 1.1275 1.1310 1.1340

EUR/JPY Current price: 115.27

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The EUR/JPY pair closed Friday at 115.27, unchanged on the day as both currencies trade in even fashion against its American rival. The Japanese yen was trading generally higher last week, as uncertainty over next BOJ's decision fueled demand for the currency, albeit on Friday, market talks about the BOJ studding different options to steepen the bond yield curve, put it under selling pressure. The pair has been in a consolidative stage for over two months, confined within Fibonacci retracements, and still long-term bearish, given that in the daily chart, the price is developing below a sharply bearish 100 DMA, currently around 116.60, and the level to regain to see the downward pressure easing. In the mentioned time frame, technical indicators hold within positive territory, but show no directional momentum. Shorter term, the 4 hours chart, presents a modest bullish bias, given that the price has held above 115.05, the 38.2% retracement of the latest bullish run and the immediate support, while technical indicators remain within positive territory, although also without clear directional strength.

Support levels: 115.05 114.60 114.20

Resistance levels: 115.45 115.90 116.40

GBP/USD Current price: 1.3271

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The GBP/USD pair closed the week marginally lower below the 1.3300 figure. Despite a strong start of the week, the pair was unable to hold above the critical 1.3320 level, as the Pound was hit by some disappointing figures released last week, following a raft of upbeat data in the previous ones. The UK trade deficit narrowed in July, but not by as much as expected, printing  £-4.5bn against the £-4.2bn expected, while Manufacturing Production in the same month, posted a modest advance, but missed expectations. For these upcoming days, attention will focus in the BOE's meeting on Thursday, although no big announcements are expected, with the Central  Bank expected to remain on-hold. Daily basis, the price is holding above a modestly bullish 20 SMA, but technical indicators have lost upward strength and head lower within positive territory, poised to cross them towards the downside. In the 4 hours chart, the 200 EMA is the immediate support at 1.3230, while the 20 SMA turned lower well above the current level, as technical indicators hold within negative territory. The downward potential seems limited at this point, although a break through this last mentioned support should open doors for a steeper decline towards the 1.3140 region for this Monday.

Support levels: 1.3230 1.3185 1.3140

Resistance levels: 1.3320 1.3360 1.3400  

USD/JPY Current price: 102.68

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The USD/JPY pair edged higher for a second consecutive day last Friday, but the advance was not enough to erase early week looses, with the risk still towards the downside, in spite of FED's officers jawboning, favoring a rate hike. US 10-year yields traded  above 1.65% for the first time in over two months, as European and American equities plummeted, limiting yen's losses. From a technical point of view, the daily chart shows that the price continues developing well below a bearish 100 DMA, currently at 104.30, while the RSI indicator heads modestly higher around 53 and the Momentum indicator consolidates within bullish territory. In the 4 hours chart, the price is above the 100 and 200 SMAs, both around 101.80, while technical indicators have turned horizontal well above their mid-lines. Overall, the bearish potential seems limited in the short term, but it will take an advance beyond 103.00/10 to see the pair posting some additional gains this Monday, up to 104.31, last week high.

Support levels: 102.50 102.10 101.80   

Resistance levels: 103.05 103.50 103.95

AUD/USD Current price: 0.7546

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The AUD/USD pair reversed sharply after reaching 0.7732 mid last week, ending it at 0.7546. The antipodean currency was hit by a sharp decline in commodities and stocks, fueled by FED's officers supporting a rate hike in the near term in the US, despite dismal data released lately. The Aussie was also hit by disappointing local data, as  Australian Home Loans posted a sharp decline of 4.2%, much worse than the estimate of a 1.3% decline. The latest decline should be quite discouraging for those expecting a comeback of the previous bullish trend, and result in a deeper slide towards the 0.7450 level, a major Fibonacci support. The daily chart shows that the price broke below a now bearish 20 SMA while technical indicators have turned sharply lower after failing to hold within positive territory, supporting a bearish extension. In the shorter term, and according to the 4 hours chart, the price is at its Friday's low and well below its moving averages, while technical indicators stand within oversold readings, with no signs of changing bias, also in line with another leg lower.

Support levels: 0.7530 0.7490 0.7450

Resistance levels: 0.7600 0.7640 0.7685