August proved to be a low-volatility, directionless trading month in the Forex majors. Because of the summer vacation period ,this happens every year though so there is no use in complaining. With the arrival of September, normal trading conditions should return to the Forex markets which begs the question; "What now?".
Though the U.S. dollar has, on average, lost ground last month, September has historically been the month when stock markets experience their worst declines. We still see signs of the inverse relationship between stock markets and the Forex markets and as a consequence we feel the dollar may rally this month. The most vulnerable currency to suffer on the downside from this scenario is the British pound so we will be watching for opportunities to short cable on any sign of weakness in equities.
Intraday Market Outlook for Day Traders
EUR/USD
The pair is in unchanged attempt to break the 1.4400 resistance line against the Dollar, trading now at 1.4325 in a slight retreat move. We still doubt that this line will be broken, at least not in today's trading. based on the overbought market. First we see the current retreat move to continue, to the 1.4290 level, and from there fresh upward momentum setting in, leading to levels around 1.4380 again.
GBP/USD
All of the sharp up move of the Pound against the Dollar yesterday, based on economic data, was eliminated this European morning in an equal sharp down move, with the market now trading back at 1.6230. We expect a consolidation phase building up in today's market, between the marks 1.6270 and 1.6210, which could be repeatedly tested.
USD/CHF
The Dollar still hovers near its lows against the Swiss Franc, currently trading at 1.0570 in low volatility this European morning. Recovery moves, which could set in soon, will most probably not exceed substantially the 1.0640 level. A continued consolidation on low levels then is likely.
USD/JPY
The USD lost further ground against the Yen in late Asian trading, down to 92.50 and now recovering in early European trading, currently priced at 92.90. We expect this recovery move to fade out in today's market, leaving room again on the downside, this time to the 91.50 level.
