UK inflation to rise 2.5%

The U.S. dollar maintained its dominance on Tuesday. Economic data showed China's industrial production rising 6.0% on the year. The data missed estimates of a 6.3% increase. Retail sales in China also came out lower than expected at 8.8%. The data underlined the fact that the trade wars were starting to have an impact.

In the Eurozone, German GDP advanced 0.5% coming out higher than the median forecasts of 0.4%. The data showed that economic momentum increased in Europe's largest economy. Revised estimates for the Eurozone showed that GDP rose 0.4%, up from 0.3% from the initial estimates.

In the UK, the average earnings index rose just 2.4% as the unemployment rate fell to 4.0% marking a 43 year low.

Looking ahead, the economic data today will see the release of the inflation figures from the UK. Median estimates show that consumer prices might have increased 2.5% on the year ending July, marking a higher increase in inflation. Core CPI is expected to remain steady at 1.9%.

In the U.S. retail sales is tipped to rise by 0.2% while core retail sales are forecast to rise 0.4% on the month.

Other second-tier data includes the Empire State manufacturing index and industrial production figures.

EURUSD intra-day analysis

EURUSD (1.1322): The EURUSD currency pair was seen attempting to recover some of the gains but price action gave up to extend the losses. The common currency closed the day with declines and a bearish engulfing pattern. This suggests potential declines as price action is likely to extend down to the 1.1200 level of support in the near term. The modest rebound seen at 1.1366 is likely to turn as resistance in the near term with any short-term gains likely to come above this level.

USDJPY intra-day analysis

USDJPY (111.25): The USDJPY currency pair extended gains for the second day. Price action managed to close back above the support/resistance level area of 111.13 - 110.85. The close above this level is likely to see further gains. In the near term, a retest of this level could keep the bias to the upside. Price action is likely to test the next resistance level at 112.00 region which marks the highs from early August.

XAUUSD intra-day analysis

XAUUSD (1187.64): Gold prices broke out from the short-term consolidation range and continue to trend lower. With the 1200 level being breached gold prices are seen currently testing the 1187.50 level. Near-term declines could keep the trend to the downside. The next major support level is seen at 1144.00 which marks a multi-year level of support. A retest of this level could potentially mark the completion of the downtrend.