EUR/USD: dollar's momentum to accelerate into the weekly opening

EUR/USD Current price: 1.1193

Live Chart for the EUR/USD

The American dollar skyrocketed through the FX board last Friday, after FED's Yellen said that the  "case for an increase in the federal funds rate has strengthened in recent months," in her opening remarks at the Jackson Hole Symposium. Quite hawkish comments against the usual neutral rhetoric that supported the greenback. The initial reaction, however, was quickly reverted as the market realized Yellen wasn´t suggesting a September hike, but rather preparing the ground for a December one. The EUR/USD pair jumped up to 1.1340 after that, to stabilize around 1.1300. Still, and before Wall Street's closing bell, FED's Fischer said that Yellen's speech was consistent with a possible September hike, unleashing hell for a third time in the day, and resulting in the dollar reaching fresh weekly high against most of its rivals, with the EUR/USD pair closing the week below 1.1200.

While the market has been concerned over the timing of the next rate hike to decide whether to buy or not the greenback, it has finally realized that a rate hike is coming, in a world where almost all major Central Banks are in the easing path. Indeed, an improvement in macroeconomic data will reinforce the case for a hike before the year-end, and will therefore help the greenback extend its latest gains. From a technical point of view, the daily chart shows that the bearish potential has increased strongly with indicators heading south almost vertically and ready to enter in negative territory. Furthermore, the week closed with the price below the 20 and 100 DMAs, with the 200 DMA around 1.1160, the immediate support. In the 4 hours chart, the price failed to establish above a now bearish 20 SMA, whilst the technical indicators hold near oversold readings, having posted shallow bounces at the end of the day, maintaining the risk towards the downside.

Support levels: 1.1160 1.1120 1.1075

Resistance levels: 1.1245 1.1290 1.1335

EUR/JPY Current price: 113.96

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The common currency self-weakness sent the EUR/JPY up to the top of its latest range on Friday, as despite the JPY weakened also against the greenback, the decline was more moderated. The  EUR/JPY closed the week around 114.00, the 50% retracement of the latest bullish run, and the level that has been containing the upside since late July. From a technical point of view, the pair has made little progress, and the daily chart shows that the price is still developing far below a bearish 100 DMA, currently around 117.50, although the technical indicators have advanced within positive territory, indicating that the pair may extend further on a break above 114.40, the immediate resistance. In the shorter term, the 4 hours chart shows that the price is between horizontal moving averages, with the 200 SMA now around 114.80 and the 100 SMA at 113.25. Indicators in this last time frame have lost upward strength well above their mid-lines, rather reflecting the limited price's range ahead of the weekly close than suggesting a reversal in price's direction.  

Support levels: 113.65 113.25 112.80

Resistance levels:  114.40 114.95 115.50                                              

GBP/USD Current price: 1.3131

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After hitting 1.3278, a fresh 3-week high, the GBP/USD pair sunk to 1.312, closing the week a handful of pips above this last, holding to modest gains weekly basis. The Pound has been outperforming most of its major rivals against the greenback, as macroeconomic data released over the last couple of weeks came in much better-than-expected, spooking the ghost of an economic collapse after the Brexit's victory in the EU referendum from late June. Although the risk to the economy is clearly big, the market is reconsidering its assessment of the consequences of the exit. Nevertheless, Pound's rally was also supported by a weakening greenback, but Yellen has changed this last, by hinting a soon-to-come rate hike, in quite a hawkish speech last Friday. Technically, the daily chart shows that the pair's advance stalled and reverted from below the 23.6% retracement of the post-Brexit slump at 1.3320, a major resistance, maintaining the pair in its 2-month range. In the same chart, technical indicators have turned modestly lower within bearish territory, while the 20 DMA heads modestly lower around 1.3000, indicating a limited bullish potential for the upcoming days. In the 4 hours chart, the 20 SMA and the 200 EMA converge around 1.3200, providing now a strong resistance, while technical indicators have settled near oversold readings, with no signs of downward exhaustion at this point, leaving doors open for further declines.

Support levels: 1.3120 1.3070 1.3020

Resistance levels: 1.3160 1.3200 1.3250

USD/JPY Current price: 101.84

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The USD/JPY pair surged to its highest in two weeks, rallying up to 101.94 on renewed hopes the US will raise its  rates during the upcoming months. Dollar's gains against its Japanese rival, brought some relief to Japan authorities, concerned about the continued strength of their currency. Early Friday, the Asian country released its latest CPI readings. The report showed that underlying inflation continues easing, as Japan's core CPI slowed to an annual rate of 0.5% in July from 0.7% in June and well below the peak of 1.3% recorded at the end of 2015. Lower inflation usually boosts hopes of more easing coming from the BOJ, and therefore tend to result in a weaker JPY, but at this point, the market is wondering if another round of stimulus would have any effect on the economy, or the currency, given the  null results of the latest actions. The daily chart shows that, despite this latest recovery, the long term trend remains bearish, as the price is developing far below its 100 and 200 DMAs, both clearly bearish. Nevertheless, with indicators heading higher above their mid-lines, there's room for further recoveries this week, with 102.80, this month's high, as the main bullish target to consider. In the 4 hours chart, technical indicators are retreating modestly from extreme overbought levels, while the 100 SMA stands horizontal around 101.00. If the price falls below this last, the risk will turn back towards the downside, with scope to return closer to the 100.00 critical support.       

Support levels: 101.40 100.95 100.65

Resistance levels: 102.00 102.35 102.80

AUD/USD Current price: 0.7560

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The Australian dollar plummeted below the 0.7600 level against the greenback, closing the week at its lowest in three weeks, at 0.7560. The Aussie has been losing ground ever since topping at 0.7755 early August, unable to extend gains beyond the 0.7700 level, as increasing risk to the economy coming from inflation fueled speculation of another rate cut in the country. The RBA will have its monthly economic policy meeting this week, and will also release its Q2 GDP figures, both meant to provide more clues on the local economic health and therefore determinate if the decline may extend further. In the meantime, the daily chart shows that the price has fallen sharply after failing to sustain gains beyond its 20 SMA, whilst the technical indicators accelerated lower within bearish territory, supporting a downward continuation. In the 4 hours chart, the price has broken below its 20 SMA and 200 EMA, this last converging with a long term Fibonacci resistance at 0.7600, while technical indicators pared losses near oversold readings. As long as the price remains below the mentioned 0.7600 level, there's room for a bearish extension down to 0.7450, another critical Fibonacci support, the 38.2% retracement of this yearly rally.  

Support levels: 0.7535 0.7490 0.7450

Resistance levels: 0.7600 0.7640 0.7690