Profit Taken on Brent and Cable; BoJ Kuroda Signals More Easing

Japanese yen gained ground versus the majors on the back of Kuroda comments that will continue easing to meet BoJ’s 2% inflation target. The Australian dollar also ended the session in green as RBA kept its monetary policy unchanged for now. Greenback has been quiet as the U.S. was on a holiday session, the euro fell on the pessimistic PMIs while sterling has been in a choppy session.

Greenback Calm after Jobs Report
The U.S. dollar enjoyed a calm session as the country was on a public holiday and after the worse-than-expected Friday’s non-farm payrolls report. The U.S. labour market had another weak August’s jobs report. The U.S. economy added only 151,000 new jobs, against the 180,000 expected, the wages rose just 0.1% while the unemployment rate held steady at 4.9% despite forecasts to fell at the record low of 4.8%. Fed, now, must be in serious thinking of raising interest rates this year. In my opinion, as the greenback gains ground September’s rate hike glooms. 

Eurozone’s PMIs disappoint
The single currency fell slightly against the majors on the back of the final Markit PMIs for August. The services sector in Eurozone as a whole missed market expectations and expanded at the pace of 52.8. Eurozone’s composite index was also below forecasts while the German PMIs for services and the composite came out less than expected as well. The retail sales for the 19-nation union managed to rise at a robust pace of 2.9% annually in July from 1.7% the month before. However, they failed to support the euro. Euro traders expect the ECB policy meeting on Thursday that will be monitored cautiously.

EUR/USD – Technical Outlook
The strength was seen in the euro following the worse-than-expected U.S. employment report, held it above the key support level of 1.1050 and has suggested some signs of recovery. The shared currency finished the week 0.4% lower against the greenback on Friday, its largest weekly losses against the U.S. dollar in four weeks. In addition, last week the pair fell for 2 weeks in a row following a negative start of the month. The direction remains unclear over the short-term and the long-term as the bulls are struggling to gain momentum above the critical level of 1.1400 while the bears are facing some hurdles below the 1.0800 – 1.0900 zone. Relying on medium-term oscillators does not seem a solid strategy since they lie near their neutral levels. Moreover, the 50-SMA moved higher, above the 200-SMA, but still not strong to provide any signal. 

U.K. Services Sector Surprises Positively
Sterling has been in a choppy session on Monday and early Tuesday despite the positive data came out for the services sector. The final Markit PMI for August surpassed market estimates of 50.0 and rose even further to 52.9 from 47.4 before. No major news is coming out today from U.K., however, some data later in the week will be closely eyed.

GBP/USD – Technical Outlook
Over the last three weeks, the GBP/USD pair surged more than 3% after the pullback at the 1.3060 support level. Currently, is recording the fourth positive week in a row and is trading near the 1.3320 price level. The pair gave further signs that it could leave the Brexit behind and turn positive over the medium and long terms. A break above the 1.3400 psychological level will open the doors for an ascending move. During yesterday’s session, the pair reached our suggested first target at 1.3369 resistance level  and surpass it, challenging the 1.3375 barrier. Our suggestion is a retest of the latter level since the 100-SMA had a bullish crossover with the 200-SMA on the 4-hour chart. The MACD oscillator is moving with some weak move, above the zero line, while the RSI indicator is approaching the overbought area.

Kuroda comments bolstered Japanese yen
The Japanese yen gained ground against the major rivals during Monday’s session, bolstered from the speech of the Bank of Japan Governor Haruhiko Kuroda. Kuroda signalled that will continue easing the monetary policy until the economy reaches BoJ’s inflation target of 2%. The economy started to overcome deflation that lasted for a prolonged period and the central bank’s Governor believes that meeting inflation target in the earliest possible is enormous for the economy.

USD/JPY - Technical Outlook
The USD/JPY pair surged more than 0.7% during Friday’s session and reached the 104.30 resistance level. The U.S. dollar rose to a fresh one-month high against the Japanese yen on the back of non-farm payrolls. The jobs report missed expectations and rose only 151K. During yesterday’s session, the pair fell 0.5% after it tested again the descending trend line. Currently, the pair is moving near the 103.50 price level, between the 50-SMA and 100-SMA on the daily chart.

Going to a lower timeframe the three SMAs are moving slightly below the 102.70 support level and the 100-SMA had a bullish crossover with the other two SMAs. The price probably will meet again the downtrend line and will rebound on it for retesting the 102.70 barrier. On the other hand, a break above the latter obstacle will open the doors to challenge the 105.50 resistance level. Technical indicators are falling and are moving near its mid-levels, endorsing our bearish thought.

Australian Dollar Bolstered of RBA Holding Decision
The Australian dollar picked up significantly against the U.S. dollar, following RBA’s decision to keep the cash rate unchanged at the record low of 1.5%. The RBA Governor Glenn Stevens stated that the stance of holding policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieve the inflation target over time. It should be noted that the central bank cut its interest rate twice in 2016, in May and August meetings.

AUD/USD – Technical Outlook
The AUD/USD pair has been in a clear downtrend over the last month and this appears to be coming back into focus today following the aggressive rebound from the 0.7580 level, after the RBA policy meeting. The price is now testing the descending trend line, which started back in early August, around 0.7620, and it will need a lot of effort from the bulls to push higher. Thus we should see the pair either finally break out of this formation or reverse back towards the downside. On the downside, the 50-SMA and the 100-SMA on the 4-hour chart, both are ready to provide a significant support near the 0.7580 area. The short-term picture favors the downside, as the price barely holds above Monday’s high, while the 50-SMA remains below the 100-SMA. On this timeframe (1-hour) the MACD outlook is certainly more bearish and this could point towards a deterioration that could lead to the move below 0.7600 that I am looking for.

Gold – Technical Outlook
The precious metal is looking bullish in the short-term, following the strong rebound on the significant zone at $1,302 - $1,305, which coincides with the 100-SMA on the daily chart. The XAU/USD pair surged more than 1% during the announcement of the NFP report on Friday. Also, the pair is recording the fifth daily positive candle in a row and is moving near the $1,326 price level. The technical structure suggests further upside movement towards the $1,330 resistance level which is near the 100-SMA on the 4-hour chart. If there is a successful penetration of the latter level then the yellow metal will expose until the $1,341 barrier, however, to get there the pair need to surpass above the 200-SMA on the 4-hour chart. On the other hand, a failed attempt to overcome the $1,330 barrier will reverse the trend to the downside. Even more, technical indicators have started to move north endorsing our bullish thought. The RSI indicator is approaching the 70 level while the MACD oscillator has just entered the positive territory and is moving above both, its zero and trigger, lines.

Brent Crude Oil – Technical Outlook
The Brent Crude Oil is still looking much more bullish, following the aggressive pullback from the $45.40 support level. The oil is creating the third consecutive positive day and surged more than 2.3% during yesterday’s session. The price surpassed above the 200-SMA while is currently trading slightly below the 100-SMA and 50-SMA on the 4-hour chart. On our yesterday’s session, we suggested an entry level above the $47.30 barrier and a target at $48.90 resistance level. The price reached our mentioned target and challenged the $49.46 resistance level. Technical indicators are endorsing the bullish tone since are rising the last couple of days. The MACD oscillator holds in a neutral area while the RSI indicator is following a positive path.

What to watch today
The first important event of the day is coming from Eurozone. The final Q2 GDP is coming out and the forecast is 1.6% yoy, the same with the previous quarter.

U.S. ISM manufacturing index is forecasted to incline to 55.7 in August from 55.5 before. The Markit services PMI is scheduled to be released with the previous to be 50.9 while investors will also keep a tab on the ISM non-manufacturing index. The IBD/TIPP economic optimism for September will be eyed by market participants, as a high number prompt traders to bullish dollar positions. During the night, the focus will be on Australia Q2 GDP. The Australian economy is expected to expand 0.4% qoq from a robust expansion of 1.1% before.