The Euro held the hourly support zone of 1.1120/40, and for the time being, prices keep fighting for another extension to the upside. Meanwhile, the recent rally attempt faded around 1.1200 psychological barrier, which keeps the short-term outlook neutral in this pair.
In the meantime, another attempt to overtake 1.1200 psychological barrier can be seen in the beginning of this week and a daily close above 1.1230 peak in the coming days will bring an additional positive signal for the future price action in the pair, and can expose 1.1300/20 zone. In the opposite, bulls are likely to protect 1.1045 low as it represents the bullish pivot in the hourly chart and only a clear break below this level, will put the single currency under pressure again.
The Sterling turned sharply lower on Friday despite weaker retail sales data from the U.S.
The pair jumped above 1.3000 near-term barrier before to fail below 1.3095 peak and precisely at 1.3035 level, which represents 50% retracement of the recent drop in the hourly chart. Looking at the week ahead expected price action, we believe that the British pound may challenge 1.2875/50 support zone in the coming days and we will focus on inflation and employment change figures from the U.K later this week to confirm the next wave in this pair.
In the near-term, the pair is likely to remain capped below 1.3030/40 resistance zone and only a clear breakout above those levels, will warn about a potential larger correction to the upside.
While in the daily chart, the British pound remain bearish, consequently, recovery attempts are set to be short-lived below 1.3095 peak.
Gold failed to overtake 1357 hourly resistance for the second time in a row and the yellow metal showed a strong negative rejection candle on Friday. As of now, we can see that momentum indicators are beginning to turn lower, which warns about a potential corrective wave during the beginning of this week.
Technically, a re-test of the yearly high around 1375 level still possible. However, gold has shown three consecutive lower highs (1375-1367-1357) from its yearly peak and we will focus on a daily close below $1328 support to confirm a bearish reversal in the next hours.
In the flipside, a break above 1367 zone will bring the bullish outlook in the short-term and should expose $1400 psychological barrier in the coming weeks.
To summarize, the positive trend started to show some signs of weakness in the hourly chart and traders should not be surprised if gold extend its losses soon as far as 1357 peak remain intact.
The pair lost some of its bullish momentum by the end of last week as bears managed to push prices below 0.7700 handle.
Looking at the recent price action, the Aussie found strong resistance after reaching the daily resistance of 0.7760 , which is considered as the last barrier before to reach the yearly high of 0.7830 and by now, a deeper correction in the direction of 0.7625-0.7595 support zone remain possible.
This zone coincide with the 50-61.8% retracement of the entire bullish cycle that began from 0.7495 low, and therefore we may see some buyers around it.
Actually, we maintain the positive outlook for the pair in the daily chart and only a close below 0.7495 level, will confirm a bearish reversal. While in the hourly chart, the trend has turned neutral and prices should break above 0.7720 resistance to re-gain its strength.
The pair has become strongly bearish after breaking below 1.3000 psychological support.
The pair has erased the entire gains posted after the recent NFP release, reinforcing the bearish outlook in the near-term. Actually, 1.3000 zone turned resistance in the hourly chart and as far as this level holds, we believe that the pair has found a temporary top at 1.3250 and should see further weakness in the week ahead, to reach as low as 1.2875/50 levels. In the other side, only a break above 1.3085 peak will cancel this negative view and should push prices into a larger correction to the upside.
Otherwise, USD/CAD will remain under pressure in the short-term.
The pair found support around 101.00 level and rallied towards 102.30 level before to retreat sharply lower after the Greenback weakened across the board as retail sales data sank in July.
Looking at the hourly chart, prices managed to break above 102.00 handle but failed just few pips away from 102.70/80 resistance zone, which keeps the bearish structure intact in this pair. 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.
For the time being, the pair may continue its path in the direction of 100.00 psychological support in the coming days especially if we see a 4hour close below 100.85 short-term support.
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, we can see that the Dollar has failed to break above 95.90/96.00 hourly resistance for the third time this week, which signals a clear slowdown in the bullish momentum in the hourly chart.
In addition, the index has closed in the negative territory. Therefore, another re-test of 95.00 support remain possible during the week ahead while a daily close above 95.90/96.00 resistance area will confirm another extension to the upside.
Finally, the focus will be on inflation data from the U.S tomorrow, followed by the FOMC meeting minutes on Wednesday.
The Dollar displayed extreme signs of sensitivity on Tuesday with prices left vulnerable to heavy losses as expectations fluctuated over the Federal Reserve raising US interest rates in 2016. Conflicting data such as the strong NFP and poor retails sales have placed the Dollar in a fierce tug of war with investor anxiety mounting ahead of Wednesday’s FOMC meeting minutes. Although US CPI for July remained unchanged at 0%, hawkish comments from the New York Federal Reserve President William Dudley on the possibility of a September hike successfully elevated the Dollar higher. With Dollar sensitivity becoming a dominant theme, further explosive movements could be expected ahead of September’s FOMC meeting.
Investors may direct their attention towards the FOMC meeting minutes which could provide some direction on when the Fed may break the trend of central bank caution by raising US rates. In July financial markets were offered a breath of fresh air from the hawkish statement which amplified expectations over the Fed taking action. The central bank acknowledged the stabilisation of US labour while domestic economic activity expanded at a moderate pace. If Wednesday’s minutes illustrate a similar stance, then Dollar bulls could be provided a lifeline to install a heavy round of buying.
From a technical standpoint, the Dollar Index is turning bearish on the daily timeframe as there have been lower lows and lower highs. Prices are trading below both the 20 and 50 SMA while the MACD has crossed to the downside. Previous support around 95.50 could transform into a resistance which could encourage a steep decline back towards 94.00.
Sterling bulls were installed with inspiration during trading on Tuesday following July’s positive CPI of 0.6% which reduced some concerns over the health of the UK economy. Although the CPI figure was the highest seen since November 2014, the eye-catcher was the shocking 6.5% rise in imports which was the most seen since 2011. Sterling vulnerability is becoming a recurrent theme with concerns potentially elevating in the coming months as the weaker currency feeds into higher import prices.
Investors may direct their attention towards the UK employment report which could offer some clarity on how the Brexit may have impacted UK employment. If the release displays a decline in employment and earnings post Brexit then the Sterling could be left vulnerable to further losses. Despite the rise in July’s CPI, sentiment still remains somewhat bearish towards the Sterling with further declines expected as speculations mount over the BoE cutting UK rates to near zero in 2016. With uncertainty still haunting investor attraction towards the pound, most upside gains could be capped.
The Sterling/Dollar surged ferociously towards 1.3050 on Tuesday and this has nothing to do with an improved sentiment towards the Sterling but Dollar weakness. This relief rally could entice bears to attack the pair with the divergence in monetary policy between the Fed and BoE sending the currency lower. From a technical standpoint, previous support at 1.3100 could act as a dynamic resistance that encourages sellers to send the GBPUSD lower towards 1.2900.
The Euro rallied as expected after bulls managed to overtake 1.1230 hourly resistance and by now, another extension to the upside remain possible and can reach as high as 1.1375/1.1400 resistance zone.
Technically, the single currency has turned bullish in the near-term as prices broke above the hourly bearish trend line that comes from 1.1612 peak reinforcing the positive outlook in this pair.
In the meantime, a corrective move to the downside is likely as momentum indicators are clearly overbought. Meanwhile, 1.1240 is considered as the short-term support and the pair should remain well supported above this level. From a wider angle, 1.1045 represents the bullish pivot in the daily chart and only a clear break below this level, will put the single currency under pressure again. Otherwise, the Euro should continue heading north in the coming sessions.
