EUR/USD: mixed signals from the FED
EUR/USD Current price: 1.1245
The EUR/USD pair saw little action all through this Monday, confined to a tight range within 1.1210 and 1.1270, unable to attract investors amid a scarce macroeconomic calendar. Stocks plunged in Asia and Europe, tracking Wall Street's Friday losses, and maintaining risk-averse trading as the main theme over the first half of the day. The greenback also benefited from FED's jawboning, as Atlanta president, Dennis Lockhart, called for a "serious discussion" over rates during the upcoming September meeting. Also, a monthly survey from the New York FED showed that inflation expectations jumped to 2.8 % in August, the highest reading this year, from 2.5% in July.
A recovery in American indexes interrupted USD gains after the US opening, while mid US session, FED's governor Lael Brainard said that the US Central Bank must guard against the low-growth, low-inflation environment that bedevils Europe and Japan, adding that the case for raising rates is "not compelling." Her dovish words pushed the dollar lower across the board, with the EUR/USD pair advancing up to 1.1267, its daily high.
Closing the day marginally higher, the pair continues lacking definitions from a technical point of view, but the fact that is holding above the 1.1200 mark is keeping bulls interested. The 4 hour chart shows that the price is trapped within its moving averages with no directional strength, whilst technical indicators have turned higher within bearish territory, but remain below their mid-lines, suggesting a limited upward potential at the time being. A daily descendant trend line coming from this year high of 1.1615, stands today around 1.1290, being the level to surpass to see a more sustainable recovery during the upcoming sessions.
Support levels: 1.1200 1.1160 1.1120
Resistance levels: 1.1290 1.1335 1.1370
EUR/JPY Current price: 115.27
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The Japanese yen strengthened at the beginning of the day, as risk aversion dominate the Asian session, with the Nikkei plummeting 287 points in the first trading day of the week. The EUR/JPY fell down to 114.24, but pared losses with the US opening, as Wall Street traded positively. Nevertheless, the pair was unable to recover ground given the neutral stance of the common currency, holding near its daily low by the end of the day. The short term technical picture continues favoring the downside, as in the 1 hour chart, the price broke below its moving averages, and the 100 SMA gains bearish strength around 114.70, providing an immediate resistance, whilst technical indicators resumed their slides well below their mid-lines after correcting oversold readings. In the 4 hours chart, the price is developing a modestly bullish 100 SMA, while technical indicators have lost their bearish strength within negative territory, turning modestly higher, limiting chances of a downward extension. Still, a break below 113.85, the immediate support, should lead to further slides this Tuesday.
Support levels: 114.20 113.85 113.40
Resistance levels: 114.70 115.05 115.45
GBP/USD Current price: 1.3326
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The GBP/USD pair advanced in this dull Monday, spiking up to 1.3347 after FED's Brainard dovish wording, but quickly retreated back, struggling to establish itself above the key Fibonacci level of 1.3320. In the news front, there were no macroeconomic releases in the UK, but former Prime Minister, David Cameron, announced that he will stand down as a member of Parliament for his constituency of Witney immediately, triggering a by-election, arguing that he did not want to be a "distraction" for the new UK PM, Theresa May. The UK will release its August PPI and CPI figures this Tuesday, generally expected to beat July figures. If that is the case, the market will rush to price in some BOE's inaction this Thursday, which may result in the Pound edging lower, instead of rising on good news. Technically, the 1 hour chart shows that indicators are mostly flat near overbought readings, but also that the 20 SMA is gaining upward strength below the current level. In the 4 hours chart, technical indicators are entering positive territory, as the price advances above a now flat 20 SMA, all of which supports some further gains for the upcoming sessions.
Support levels: 1.3280 1.3230 1.3185
Resistance levels: 1.3365 1.3400 1.3445
USD/JPY Current price: 101.76
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After breaking below the 102.00 level, the USD/JPY pair accelerated its decline and tested 101.55, following FED's Brainard dovish comments over inflation being well below FED's target and therefore that the case for tighten monetary policy preemptively is less compelling. The Japanese yen got a boost from falling stocks during the first half of the day, and remained unable to recover above the 102.00 level afterwards, in spite of Lockhart hawkish comments, indicating that the bearish risk has increased exponentially. Short term, the 1 hour chart shows that the price is being capped by a bearish 100 SMA, whilst technical indicators head south near oversold readings, favoring a continued decline. In the 4 hours chart, the price has broken below its 100 and 200 SMAs, while technical indicators have turned sharply lower, with the Momentum entering negative territory and the RSI accelerating its decline around 36, supporting a continued decline towards 100.65, a major long term Fibonacci support.
Support levels: 101.50 101.10 100.65
Resistance levels: 102.10 102.50 102.90
AUD/USD Current price: 0.7563
View Live Chart for the AUD/USD
The AUD/USD pair fell down to 0.,7493 this Monday, weighed by a sharp decline in commodities and stocks, although the pair reversed course in the US session alongside with the mentioned assets, as FED's Brainard poured some cold water over an US rate hike hopes. The pair entered positive territory ahead of the US close, and maintains a strong bullish tone in the short term, as in the 1 hour chart, the price accelerated higher after breaking above its 20 SMA, now turning higher around 0.7280, while indicators head north within positive territory as the price advances to fresh daily highs. In the 4 hours chart, indicators are bouncing sharply from oversold levels, but remain well below their mid-lines, whilst the 200 EMA stands around a major Fibonacci resistance at 0.7600, and the 20 SMA maintains a strong bearish slope a few pips above this last. The ongoing recovery will face some selling interest if it extends up to the mentioned level, while further gains beyond it should lead to an approach to the 0.7700 region.
Support levels: 0.7490 0.7450 0.7410
Resistance levels: 0.7530 0.7565 0.7600
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
