The pair jumped near the 100.50 support level mentioned previously, which coincide with the head and shoulders pattern target seen in the 4hours chart.
Prices managed to break above 102.00 handle clearing the path for a re-test of 102.95-103.50 resistance zone in the week ahead. Looking at technical indicators, the bearish pressure remain strong and the recent rally may be temporary before another dip towards the 100.00 psychological support occur.
Looking at the daily chart, the pair keep printing lower highs/ lower lows since 114.90 peak and consequently the upside potential is likely to remain limited.
In the other side, only a daily close above 103.00 barrier will cancel the near-term negative outlook in this pair.
The Sterling/Dollar lurched higher during trading on Wednesday and this has nothing to do with an improved sentiment towards the Sterling but Dollar weakness. Sentiment towards the Sterling remains firmly bearish with further declines expected as the growing expectations of the BoE cutting UK rates to near zero encourages sellers to attack. From a domestic standpoint, UK manufacturing has repeatedly displayed signs of weakness while the recent regional PMI’s painted a discouraging picture. Uncertainty is still a recurrent theme which continues to haunt investor attraction towards the Sterling consequently obstructing upside gains. Sterling/Dollar remains bearish and the divergence in monetary policy between the BoE and Fed could entice bears to send prices towards 1.2800.
Gold displayed an incredible rebound during trading on Wednesday with the metal lurching back above $1350 as Dollar weakness encouraged bullish investors to install a heavy round of buying. This yellow metal is becoming increasingly sensitive to US interest rate rise expectations and explosive movements could become commonplace as the Fed policy meetings loom. Although optimism has slightly deteriorated over the Fed taking action anytime soon following the weak U.S productivity data, there is still a 40% likelihood that action may be taken in December potentially capping upside gains. Gold remains engaged in a fierce tug of war against risk aversion and US rate hike expectations with risk aversion currently dominating. Bulls may be commended on their ability to propel Gold to such levels and a daily close back above $1365 could encourage buyers to propel prices higher.
The Euro remain steady in the near-term after prices managed to overtake 1.1100 handle. As of now, the pair should continue to trade sideways ahead of the Eurozone GDP figures scheduled for tomorrow.
Technically, the pair should find some support between 1.1138 and 1.1115 levels as momentum indicators remain positive in the hourly chart and as far as 1.1045 low is in place, the single currency should continue to strengthen in the short-term.
In the meantime, the daily trend still calling for further weakness and we will focus on a break above 1.1230 peak in the coming days, to confirm another extension higher in the Euro.
Finally, the trend remain bearish in the daily chart while in the hourly chart, the outlook is bullish and traders should wait for a clear break outside of 1.1230 / 1.1115 zone in order to confirm the next directional move.
Gold traded in a choppy manner and for the time being, the outlook remain positive in the yellow metal as far as prices continue to trade above 1340 low, which represents 61.8% retracement of the recent rally that began from $1329 per ounce.
Technically, a re-test of the yearly high around 1375 level still possible. However, we still need additional bullish momentum to drive prices higher. In the near-term, gold is heading towards 1357 resistance and we will see the reaction of the sellers once we get there.
In the flipside, only a daily close below 1340/1338 support zone should push prices in the direction of 1329/28 daily support while a break below this zone will cancel the near-term bullish outlook for the yellow metal.
The pair remain one of the strongest currencies this year as the Aussie has benefited from the big rally in commodities despite the recent rate cut by the Reserve Bank of Australia.
Looking at the recent price action, the pair overtook the psychological barrier of 0.7700, reinforcing the positive outlook in the daily chart. Therefore, the Aussie can be heading towards a major resistance located at 0.7760 level in the coming hours.
In the other side, as far as prices keep trading above 0.7570low, the Aussie is likely to keep trading higher for the rest of the quarter and another re-test of 0.7830 yearly peak remain possible from a swing trading perspective.
Actually, we maintain the positive outlook for the pair and only a close below 0.7570 level, will confirm a bearish reversal in the hourly chart while a drop towards 0.7675/50 zone may offer fresh long opportunities for bulls.
USD/CAD has failed to overtake the 1.3200 handle for the second time in a row despite the big jump, which followed the worse than expected jobs report from Canada during last Friday.
The pair has erased the entire gains of last week and slid below the 1.3000 psychological support for the fourth time in less than one month.
As of now, we believe that the pair has found a temporary top at 1.3250 during last month and looking at momentum indicators, we expect an acceleration to the downside in the coming hours that will likely come with a clear break below 1.3000 support.
Therefore, the upside potential should be limited below 1.3085 peak and as far as this resistance holds, USD/CAD will remain under pressure in the short-term.
The pair found support around 101.00 level and for the time being, prices keep fighting for a clear direction in the near-term.
Looking at the hourly chart, prices managed to break above 102.00 handle earlier this week but failed to overtake 102.80 resistance level before to begin another wave to the downside that can extends to as low as 100.50 level followed by 100.00 psychological support in the coming days. Meanwhile, the pair should break below 101.00/100.85 support zone to confirm this negative scenario; in the meantime, the pair should not close above 102.00 hourly resistance.
In the daily chart, the pair keep printing lower highs/ lower lows since 114.90 peak and consequently the upside potential is likely to remain limited.
The Sterling continue treading water, as the bearish momentum remain intact. Looking at the recent price action, the pair has confirmed a negative signal in the hourly chart as prices managed to break below 1.3055 major support and showed a bearish pullback around this level yesterday. The reached as high as 1.3093 level before the rally fades reinforcing the bearish outlook in this pair.
Actually, traders should focus on 1.2950/35 support zone in the coming hours, as a daily close below it should expose 1.2900 psychological support followed by 1.2875/65 levels in extension.
In the near-term, the pair is likely to remain capped below 1.3005/20 resistance zone and only a clear breakout above those levels, will warn about a potential larger correction to the upside.
To summarize, the British pound still bearish in both the daily and the hourly chart, consequently further weakness can be seen unless a break above the mentioned above resistance zone happens.
Daily Technical Outlook - August 11th- Dollar index
After bouncing from 95.00 psychological support, the U.S Dollar found strong resistance at the 61.8% Fibonacci retracement of the recent drop seen from 97.50 peak, which keep our view neutral in the near-term.
From a technical standpoint, the index is likely to remain steady above 95.00-94.75 support zone and another rally remain possible in the coming days. Meanwhile, the Greenback has lost its bullish momentum in the hourly chart, and is heading to a negative weekly close. Therefore, we prefer to wait for a clear break above 95.90 resistance level or below 95.00/94.75 support zone to confirm the next directional move in the short-term.
Finally, traders should expect an increase in volatility as FOMC September meeting looms.
