U.S. Politics Add Pressure on the Dollar; Euro Area Resilient After Brexit; EUR/USD Lacks Direction

The first U.S. Presidential debate has not benefited any of the major currencies as both the U.S. and European currencies ended the day mixed against their major rivals. The rest of the week is also expected to be driven mainly by political events and speeches. As it is widely known, in the forex market, politics can easily overshadow the economics.

U.S. Dollar Under Pressure On Political Mixture
Out of the pressure on the U.S. dollar from the political mixture, the indicators released yesterday from the housing sector were mixed for the month of August. The new home sales were above expectations at 609K versus 600K the market forecast, however, they fell 7.6% compared with the last month that rose 13.8%. Later today, the Case-Shiller home price index for July will be released. Moreover, the consumer confidence for and the preliminary Markit services PMI for September are expected.

Draghi: Euro Area is Coping Well with Global Uncertainty and Risks
The German IFO Survey revealed that the business climate and the expectations jumped over three points in September and the current assessment was also better than expected, adding more than two points on its figure. The ECB President Mario Draghi stated that Euro area is coping well with global uncertainty and both internal and external risks – including Britain's vote to leave the European Union. However, the optimistic data from Euro area failed to bolster the euro crosses.

EUR/USD – Technical Outlook
We are into the final week of September and it looks like the currency pairs will record another nontrending month as most of the pairs are continued to lack direction. There has been no clear directional bias in these markets for several weeks now. The EUR/USD remained in a sideways move the last year and a half. Lately, the bulls made several attempts to reach the critical level at 1.1365 but without any success. The corrections below the 1.1365, saw the pair close around 1.1200, which technically speaking could be viewed as quite bearish given the bearish descending triangle pattern that formed as a result.

The pair surged at the beginning of the day and reached a two-week high, before retreating back towards the 1.1250 area. The medium-term picture is bearish, given that the daily 50-SMA moved below its 200-SMA at the beginning of the week, whilst the technical indicators present modest downward slopes near their mid-levels. On the 4-hour chart, the technical indicator presents a strong bearish slope, after entering the positive territory, while the momentum indicators turned south suggesting the continuation of the correction.

Having in mind the above, over the short-term, the level to watch will be the 1.1200. There, all of the moving averages (50-SMA, 100-SMA, and 200-SMA) on the 4-hour chart are ready to provide a significant support to the price action. From there, we would expect more consolidation below the 1.1300 since the pair is not in a trending phase, yet.

EUR/AUD – Technical Outlook
EUR/AUD plunged on heavy selling during yesterday's session, after rejecting the 1.5100 barrier. The pair managed to surpass the psychological level at 1.4800 a few days ago but it failed to maintain the position above it, as a result, the pair to turn bearish over the short and the medium terms. As it is, if the selling pressure continues over the next couple of days then I would expect extensions towards the significant zone at 1.4350 – 1.4400. As long as the pair is moving below the key resistance level of 1.4800 the bearish scenario will remain intact.

Quiet Calendar from U.K. for the Next Days
The sterling remained unchanged against the greenback and mixed against its G10 counterparts in the absence of market driver news from U.K. I would expect the British pound to keep a mild volatility mode until Friday's GDP growth comes out or further details of U.K.'s way out of the European Union revealed.

GBP/USD – Technical Outlook
The GBP/USD is trading in a sideways channel over the medium-term as it failed several times to break the significant level at 1.3500 to the upside, while the 1.2870 – 1.2910 kept the pair in a nontrending mode. It should be noted that the pair is moving within an upward sloping channel after the U.K. decision to leave the European Union. Even though the channel appears to be a rising channel this does not tell us anything as the direction bias remains neutral over the medium and long terms.

Sterling ended the day virtually unchanged against the greenback for a third consecutive day as a battle is going on near the aforementioned support zone. Currently, the pair is retesting the lower band of the channel and had several failed attempts the last days to penetrate it. The significant support area at 1.2870 – 1.2910 is a strong obstacle for the bears and if there is a successful break of the latter zone the price will challenge the all-time low psychological level at 1.2800. On the other hand, the pair seems to have some weak movement for a downward break the last sessions and a retest of the 1.3120 resistance level is also possible.

From the technical point of view, on the daily chart, the price continues developing well below its moving averages, whilst the technical indicators hold in the negative territory, although with no clear directional strength. Both of them seems to be in agreement with the bearish thought since MACD oscillator is moving below its zero and trigger lines and the RSI indicator is flattening between the 30 and 50 levels.

USD/CAD – Technical Outlook
Following three positive sessions, the USD/CAD pair traded within a negative tone the last few hours as it rejected a fresh six months high, at 1.3275. The commodity pair over the last 6 months is in the process to regain some ground following the aggressive sell-off from the 1.4700 resistance level until the 1.2460 on the long-term timeframe. Also, the price is establishing within a rising channel the last almost five months and made several failed attempts to break this pattern.

On the short-term timeframe, the price is currently moving near the 1.3180 price level slightly above the 50-SMA after the rebound on the first resistance pivot point at 1.3275. The next initial target is the 1.3130 support barrier or moreover, the 1.3080 which overlaps with the 200-daily SMA. The MACD oscillator is following an upward path despite the RSI indicator which is approaching the 50 level.

What to watch today
Early on Tuesday import price index in Germany will be announced and is estimated to fell 2.4% from a drop of 3.8% the previous month. Eurozone's M3 money supply is forecasted to have grown at +4.9% yoy pace in August, a slight acceleration from +4.8% yoy in July. From the U.K., the Confederation of British industry releases its latest CBI distributive trades survey. In the U.S. the S&P/Case-Shiller housing price indices for March are also due out at the same time with the flash Markit services PMI and Markit composite PMI. The Markit services PMI forecasted to rise up to 51.2 from 51.0 before. In addition, the consumer confidence figure for September is expected to fall 99.8 from 101.1 previously. Overnight, the RBA Assist Governor Edey will give a speech.