EUR/USD: bearish risk persists, 1.1120 is the now the key

EUR/USD Current price: 1.1151

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The week started once again in slow motion, as US banks were closed due to the Labor Day holiday, with the American dollar closing the day mixed. The soft tone of the latest US jobs' report weighed on the greenback that lost some ground during the same half of the day, although the common currency failed to attract investors, with the EUR/USD pair being unable to surpass the 1.1200 level once again. Data coming from Europe was mixed, as the final August PMIs showed that German growth slowed, dragging the EU's rate of growth to a 19-month low. The final Markit Composite for Germany was of 53.3, as the Services sector came in at 51.7 against initial estimates of 53.3. The EU final composite number printed 52.9. Nevertheless, retail sales in the whole region increased by 1.1% in July when compared to June, and by 2.9% compared to a year before, against a downwardly revised to -0.1%.

The EUR/USD pair fell down to 1.1138 as the greenback recovered some ground after London's close, but settled a handful of pips below Friday's close, looking increasingly bearish in the short term, as in the 4 hours chart, the price is currently developing below all of its moving averages with the 20 and 200 SMAs converging around 1.1170, whilst the 100 SMA stands far above the current level. In the same chart, the Momentum indicator heads south within negative territory, while the RSI indicator hovers below its mid-line, with no clear directional strength. Furthermore, the price retreated from the 23.6% retracement of its latest slump, at 1.1180 and the immediate resistance, after testing the 50% retracement on a brief spike last Friday. An extension below 1.1120, should confirm additional declines, with the market then eyeing the 1.1000/40 region for this Tuesday.

Support levels: 1.1120 1.1080 1.1040

Resistance levels: 1.1180 1.1210 1.1250

EUR/JPY Current price: 115.27

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The Japanese yen strengthened at the beginning of the day, following some dovish comments from BOJ's Kuroda, who acknowledged the risk of the ongoing easing policy, but pledged to continue with it as long as it´s useful to achieve the 2% inflation target. Given the self-weakness of the common currency, the EUR/JPY pair erased all of its Friday's gains and fell down to 115.17, ending the day a handful of pips above it. Technically, the 1 hour chart shows that the price broke below a still bullish 100 SMA and remains unable to recover above it while technical indicators have turned modestly lower within negative territory, with no certain directional strength. In the 4 hours chart, technical indicators have lost their bearish strength within negative territory and turned flat, rather reflecting the absence of volume than suggesting downward exhaustion. The immediate support comes at 114.95, a strong Fibonacci support, with a break below it opening doors for a bearish continuation during the upcoming sessions.

Support levels: 114.95 114.40 114.00

Resistance levels:  115.50 115.85 116.30

GBP/USD Current price: 1.3304

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The GBP/USD pair surged to its highest since mid July, reaching 1.3375 after the release of the August Markit services PMI for the UK, showing that the sector bounced from 47.4 in July to post a healthy 52.9. UK data surprised to the upside after the initial post-Brexit contraction, as economic growth has been bolstered by a cheaper currency, supporting Pound's ongoing recovery. The pair retreated from the mentioned high to settle around the 1.3300 level, once again unable to rally beyond a critical long term resistance, 1.3320 the 23.6% retracement of the post-Brexit slide.  Modestly up daily basis, the 1 hour chart shows that the price is hovering around its 20 SMA, while the technical indicators are stuck within neutral readings, with no clear directional strength. In the 4 hours chart, the Momentum indicator has retreated from overbought territory and is now around its mid-line, although the RSI indicator aims higher around 6, while the 20 SMA maintains a sharp bullish slope below the current level, all of which indicates that the risk remains towards the upside, particularly on renewed buying interest above the mentioned Fibonacci resistance.

Support levels: 1.3265 1.3230 1.3180

Resistance levels: 1.3320 1.3370 1.3415

USD/JPY Current price: 103.37

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The USD/JPY pair eased down to 103.14 at the beginning of the day, as BOJ's Governor Kuroda in a speech entitled the Comprehensive Assessment of monetary policy, outlined the negative impact of cutting interest rates below zero. Despite he also remarked that the Central Bank is willing to proceed anyway, speculation over further rate cuts eased, helping lift the yen.  The BOJ will have its economic policy meeting next September 21st, while the US Federal Reserve will meet on September 16-17th. The short term picture suggests that the pair has entered in a consolidative stage, as the price is holding above the 103.00 mark. In the 1 hour chart, the price is hovering around a bullish 100 SMA, while the Momentum indicator aims higher below the 100 level, whilst the RSI heads nowhere around 44, with the upside now looking limited. In the 4 hours chart, indicators are hovering around their mid-lines, while the price remains well above the 100 and 200 SMAs.

Support levels: 103.05 102.70 102.25

Resistance levels: 103.60 104.00 104.40  

AUD/USD Current price: 0.7584

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The AUD/USD pair closed the day modestly higher, but was unable to hold on to gains above the critical 0.7600 level, despite an early spike beyond it on dollar's early weakness. The Aussie found some support on better-than-expected Chinese data, as the Caixin Services PMI for August, beat expectations of 51.9, printing 52.1. Also, Friday's recovery in commodities and stocks extended during the first half of the day, supporting the antipodean currencies. During the upcoming Asian session, the RBA will have its economic policy meeting, largely expected to keep rates at 1.5%. If that is the case, attention will turn to the bank's statement, the last with Governor Glenn Stevens, as incoming RBA Governor Philip Lowe is due to take office on September 18th. The technical picture for the AUD/USD pair in the short term favors the downside, as in the 1 hour chart, the price is now below its 20 SMA, whilst indicators head south around their mid-lines, with limited downward strength amid the reduce intraday volume. In the 4 hours chart, however, the price is hovering around its 200 EMA, while the 20 SMA heads strongly higher below the current level, as indicators turned flat between positive territory. The downside potential seems limited at this point, as it would take a break below 0.7490 to confirm a steeper decline during the upcoming sessions.

Support levels: 0.7535 0.7490 0.7450

Resistance levels: 0.7600 0.7645 0.7690