EUR/USD: risk remains towards the downside as long as below 1.1200

EUR/USD Current price: 1.1152

Live Chart for the EUR/USD

The American dollar retained its strength during the last day of the month, ending the day mixed, but not far from its weekly highs, as market participants continued to price in an interest rate hike from the US Federal Reserve. Volume was thin across the forex board, further reduced by the cautious mode adopted by speculators, ahead of Friday's US Nonfarm Payroll report.  Fundamentally, the day was a pretty busy one, with the EU releasing its preliminary August inflation figures that resulted lower than expected. Compared to August 2015, inflation remain stable at 0.2%, while the core reading dropped to 0.8% from 0.9%. Also, unemployment in the region remained unchanged at 10.1% for the fourth consecutive month,  missing expectations of a decline down to 10.0%, all of which suggest that growth is still weak in the area. Pending home sales expanded in July reaching second highest reading in over a decade, up by 1.3% in the month.

The EUR/USD pair fell down to 1.1122 before bouncing modestly in the US afternoon, paring gains at 1.1165, its daily high. Confined to a tight intraday range, the technical outlook keeps favoring the downside, as in the 4 hours chart, the price met selling interest after flirting with a sharply bearish 20 SMA, while holding far below the 100 SMA. In the same chart, technical indicators have recovered from oversold territory and head higher, but within negative territory, indicating that the upward potential is quite limited. At this point, the only a recovery above 1.1200 will deny the possibility of further slides, and see the pair attempting to recover further.

Support levels: 1.1120 1.1075 1.1040

Resistance levels: 1.1160 1.1200 1.1245

EUR/JPY Current price: 115.35

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The Japanese yen continued weakening against all of its major rivals, weighed by poor Japanese data that fueled speculation that the BOJ will extend its monetary stimulus and in spite of a sharp downturn in European and American equities. The EUR/JPY pair rallied to a fresh August high of 115.37, trading nearby by Wall Street's close, and with a strong upward potential in the short term, as the pair recovered above the 38.2% retracement of its latest bullish run, after consolidating around the 61.8% retracement of the same rally for over three weeks. In the 1 hour chart, the Momentum indicator heads modestly higher above its 100 level, while the RSI indicator heads north in overbought territory, at 77, as the 100 and 200 SMAs accelerate higher well below the current level. In the 4 hours chart, technical indicators  also head sharply higher  with the RSI at 80, and with no signs of changing bias. The mentioned 38.2% retracement stands around 114.95, now the immediate support, and the upward potential will persist as long as the level holds, with scope now to extend up to 116.10/30, the next Fibonacci resistance.

Support levels: 114.95 114.40 113.80

Resistance levels:  115.50 115.90 116.30

GBP/USD Current price: 1.3127

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The GBP/USD pair erased all of its weekly losses and settled a couple of pips above Friday's close, having traded as high as 1.3157 early Europe. There were no macroeconomic releases in the UK, but EUR and JPY weakness contributed to a rally in the British currencies, with the crosses rallying to fresh multi-week highs. On Thursday, the UK will release is final Markit Manufacturing PMI for August, expected at 49.0 from 48.2, and if that's the case, the Pound may continue advancing. The technical picture for the GBP/USD pair continues favoring an upward extension, given that in the 4 hours chart, the 20 SMA has turned flat below the current level, whilst the price settled above 1.320, a strong Fibonacci support. In the same chart, the Momentum indicator is advancing above its 100 level, whilst the RSI indicator consolidates around 50, limiting chances of a downward move.

 Support levels: 1.3085 1.3050 1.3020

Resistance levels: 1.3120 1.3160 1.3200

USD/JPY Current price: 103.40

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The USD/JPY pair extended its advance up to 103.53, a fresh August high, as the divergent bias of the BOJ and the US Federal Reserve continues to weight on the pair. Supporting dollar's rally were disappointing industrial production figures for July in Japan, as industrial output was down 3.8% year-over-year, against expectations of a 0.8% gain. The pair pared gains in the US session, spending most of it consolidating its daily gains, suggesting the advance may extend this Thursday. From a technical point of view, he 1 hour chart shows that the 100 and 200 SMAs continue heading sharply higher well below the current level, although technical indicators have lost upward strength and are turning lower above their mid-lines, indicating limited buying interest at this time of the day. In the 4 hours chart, the Momentum indicator heads modestly higher within positive  territory, while the RSI indicator remains within overbought levels, consolidating around 80. In this last time frame, the 100 and 200 SMAs are located well below the current level, but with no directional strength.

Support levels: 103.20 102.75 102.30

Resistance levels: 103.65 104.00 104.40

AUD/USD Current price: 0.7516

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The AUD/USD closed the day flat a few pips above the 0.7500 level, with trading being choppy around it ever since the Asian opening. A decline in commodities and stocks weighed on the Aussie, and was enough to neutralize positive data released in Australia, as latest news shown that private sector credit rose at an annualized rate of 6% in July compared to the expected growth of 6.1%. The pair fell intraday down to 0.7490, flirting with the monthly low set on August 2nd at 0.7485, overall at risk of extending its decline. From a technical point of view, the short term picture is now neutral, as in the 1 hour chart, the price is hovering around a horizontal 20 SMA, whilst technical indicators remain stuck around their mid-lines, with no certain directional strength. In the 4 hours chart, the technical outlook favors the downside, as the price remains below a bearish 20 SMA, the Momentum indicator heads south within negative territory, whist the RSI indicator holds flat around 37.

Support levels: 0.7490 0.7450 0.7410

Resistance levels: 0.7535 0.7570 0.7610