Market Indifferent on Yellen and Draghi Speeches; U.S. GDP Growth in Focus

Yellen's testimony and Draghi's press conference yesterday were not enough to push the dollar and the euro out of their sideline paths. Neither of the two major banks' leaders said anything new on the economy. Looking at the big picture of the G10 currencies performance on Wednesday and Thursday sessions, just the Japanese yen and the Canadian dollar had significant volatility.

Fed Yellen Sees Rate Hike this Year but Not Convinced that is needed
The greenback kept its sideways trading mode on Wednesday and early Thursday as nothing new came out of Fed's Chairwoman Yellen's testimony and from the other scheduled speeches and economic indicators either. Fed's Yellen stated once again that she sees a rate hike most likely this year, however, the general dovish tone retained may signal that she does not think that a rate hike is necessary. Once again, she expressed its satisfaction for the labour market but she is disappointed on the productivity growth and stated that low inflation rate gives the Fed "some running room". The durable goods orders came out better than expected, however, they remained flat in August. Market forecasts were to drop 1.4% versus an increase of 3.6% the month before. Later in the day, U.S. GDP growth will be released and watched, as it isJapanese yen and the Canadian dollar had significant volatility. one significant factor for consideration for an interest rate hike.

ECB Draghi Defended the Ultra-Low Interest Rates Once Again
Euro, as we said before, remained in a quiet tone against its major rivals as ECB President Draghi pretty much repeated the same statements for the 19-nation economy. He defended the ultra-low interest rates and the other stimulus measures of ECB. He also expressed satisfaction for the path of the economy. Later today, various sentiment indicators for Eurozone will be eyed.

EUR/USD – Technical Outlook (Short-Term)
Not much movement in EUR/USD with prices trading within 1.1190 – 1.1230 in the past 24 hours. This is in stark contrast to what we've seen in the previous day where EUR/USD traded lower initially but started to climb sharply during early U.S. trading session. Important support to be seen resides at the 1.1200, as it coincides with both the 100-SMA and the 200-SMA on the daily chart, followed by the crucial 1.1150 and 1.1130 levels. A move back below the latter might lead to weakness in the pair. On the other hand, the 1.1280 level is acting as a key resistance. A surge above the latter might further strengthen the pair. All in all, the descending trend line that has been a significant obstacle since mid-August stands now around 1.1280, yet the price still needs to clearly extend beyond that level to gain some bullish traction, whilst below the 1.1200, the decline can extend down to 1.1150.

EUR/USD: Continues Trading in a Narrow Sideways Channel (Long-Term)
On the weekly chart, the EUR/USD pair continues trading in a sideways channel between the levels of 1.0450 and 1.1700. The Average Directional Index (ADX) rates how much a currency pair is trending on a scale from 0 – 100. A pair moving sideways shows an ADX level below 25 while a trending pair shows an ADX level of 25 or higher. Keep in mind that the ADX is directionally neutral, meaning it does not indicate a bearish or bullish trend, only if a trend exists or not.

Looking at the ADX slope gave earlier signals to a trending market where the pair fell more than 30%. The ADX slope turned positive at two points that hinted at a trending market. Following the aggressive move from the 1.4000, the ADX moved below the 25 level and came in line with the sideways move of the pair.

Once we confirm that the market is ranging, be doubtful of positive ADX slope signals as failed breakouts are common. Unless the positive ADX slope comes with a strong breakout from the trading range, assume that the breakout will fail. Therefore, we continue monitoring ADX over a weekly basis.

Sterling Quiet as Investors Wait Details for UK Exit from EU
Sterling also failed to rally against its major counterparts in the absence of significant news and worries over its way out of the European Union. The Gfk consumer confidence for September is coming later in the day and is expected to show a small improvement.

GBP/USD – Technical Outlook
The GBP/USD pair consolidated around Tuesday's high for most of the day, with an early spike above the 1.3030 level being quickly reverted. The pair is setting up for what it could be a strong reversal in the coming weeks with both the MACD and the Relative Strength Index (RSI) showing some bullish movements over the last few sessions. The pair is running a negative record, four negative months in a row and a few days before the end of the month is struggling to get on foot and record a positive month as is down -0.80% so far.

Technically, the 1.3030 price level has become once again the immediate resistance. Should the advance extend beyond this one, the pair is then expected to continue beyond the 1.3120 high and advance towards the 1.3150 barrier, where a battle is expected by both market forces, the bulls and bears. There also, the 100-SMA and the 200-SMA are ready to provide a significant resistance to the bulls, preventing any bullish moves above 1.3150.

The 1.2860 and the 1.2915 levels have been significant levels for the pound as both acted as a strong support for the sterling. The latter it also coincides with the long-term ascending trend line which also is the lower boundary of the upward sloping channel (daily chart). The reasons why this reversal is expected are twofold, firstly, on the 1-hour chart, the price is moving above the both the 50-SMA and the 100-SMA. Secondly, recent bearish moves have now pushed the 4-hour MACD above its trigger and it is getting ready to step in a positive territory.

EUR/GBP – Technical Outlook
The EUR/GBP pair is moving within an upward sloping channel since June, after the UK decision to leave the European Union. During Monday's session, the pair challenged the 0.8720 resistance level and had a rebound on it and now is moving near the 0.8615 price level. Also, the pair plunged more than 0.7% over the last two days as it is moving towards the 0.8500 strong psychological support level which overlaps with the 50-daily SMA. A break below the latter obstacle will open the door for the rising trend line and the 0.8330 support level.

From the technical point of view, and remaining on the same chart, the price continues developing above its moving averages, whilst the technical indicators are approaching their mid-levels. The MACD oscillator is moving below its trigger line confirming the recent bearish attitude of the price. The RSI indicator is still moving in a positive territory, however, is sloping downwards.

USD/JPY – Technical Outlook
The USD/JPY pair consolidated its latest gains around the 101.50 region, having held between a welllimited range zone within 99.000 and 104.30. The greenback corrected higher at the beginning of the Asian session, and the rally continued in early European morning.

From a technical point of view, the upside continues to be strong as long as the price remains above 101.00, over the short-term, and the 99.00 – 99.500, over the medium-term. Intraday readings continue favoring an upward continuation, particularly if the price manages to extend beyond the 50-SMA and the descending trend line, which started back in January 2016. Furthermore, the 100- SMA will be the next obstacle for the buyers if they manage to surpass the other two mentioned obstacles. Technical indicators are advancing within positive territory, with limited upward strength ahead of the European opening.

Gold – Technical Outlook
The yellow metal continues to be confined within a descending triangle over the last three months and during Monday's session retested the falling trend line without managing to break above it. The next initial target over the short-term will be the $1,318 support level and moreover the $1,306 strong obstacle, as it coincides with the lower band of the descending triangle. On the other hand, a level to watch upwards is the $1,331 resistance level on the 1-hour chart. Technical indicator seems to be in agreement with the downward movement since both of them are following a negative path. The MACD oscillator has just entered a negative territory while the RSI indicator is moving below the 50 level.

What to watch today
We start the day with the German unemployment rate which is expected to remain unchanged at 6.1%. In Euro area, various sentiment indicators are coming out. The economic sentiment indicator, services sentiment, and consumer confidence are expected to remain stable in September while industrial and business sectors are predicted to be more optimistic than the month before. In Germany, the preliminary consumer price index for September is forecasted to show an increase to 0.6% yoy from 0.4%. In the second half of the trading day, the U.S. GDP will be closely eyed. The annualized figure is predicted to rise 1.2% in Q2 from 1.1% before. The personal consumption expenditure for the Q2 is also scheduled to be released. The pending home sales for August will be the second report from the U.S. housing sector this week. Fed's Lockhart has a speech at 12:50 GMT and FOMC Member Powell at 14:00 GMT while the most important speech comes a while later by Fed Chairwoman Janet Yellen at 20:00 GMT.

Later in the day, UK's GFK consumer confidence for September is expected to reveal a slight improvement to -5 from -7 prior. Thereafter, attention will turn in Japan where many reports will be published. The inflation report is not expected to show significant changes in the related indicators as well as the employment report. Currently, the unemployment in Japan is 3% and the national inflation rate at -0.4%. Bank of Japan will publish its Summary of Opinions, a report that includes projections for inflation and economic growth. August's industrial production is also coming out.