Market Update: August 22nd 2017
The EUR/USD pair is seen correcting a part of yesterday’s extensive rally and now break below 1.1800 levels, as the US dollar extends its broad based recovery mode. Having ran into resistances near five-day tops of 1.1828 in the Asian trades, the spot drifted lower, now meeting fresh supply, as the USD recovery gains traction heading into the early European trading. The USD index rises +0.18% to hit daily highs at 93.17, reversing a dip below 93 handle. The latest upmove in the greenback versus its main competitors can be mainly attributed to rising Treasury yields, in the wake of risk recovery, as geopolitical tensions between North Korea and US appear to wane, while attention now turns towards the Jackson Hole Symposium for fresh insights on the global monetary policies. Moreover, expectations of a slight deterioration in the German economic sentiment also weigh negatively on the EUR/USD pair. Markets believe that the recent EUR appreciation is likely to sour the sentiment around the German businesses. Looking ahead, the major will receive fresh impetus from the ZEW surveys, while the ECB President Draghi’s speech and German flash PMIs due tomorrow are eagerly awaited, in absence of significant macro news due out from the US today. Immediate resistance is located at 1.1850 followed by 1.1886 while support is seen at 1.1753 ahead of 1.1693.
EUR/USD – 1 Hour Chart.
Resistance: 1.1850 / 1.1886
Support: 1.1753 / 1.1693
GBP/USD regained bid tone on Monday as suggested by the options activity, although the bullish move ran out of steam near Friday’s high of 1.2918. The spot has been restricted to a narrow range of 1.2920-1.2830 for the last four trading days. The daily chart shows, the range has been established around the 100-DMA, which currently stands at 1.2877 levels. Furthermore, the spot continues its romance with the trend line sloping upwards from the March low and June low. The UK CBI Industrial trends survey - orders index for Aug due at 10:00 GMT is seen printing at 10.00 m/m. A better-than-expected CBI data could yield an upside break of the four-day trading range. On the other hand, the rise in the treasury yields and the weak CBI data may result in a downside break of the trading range. Immediate resistance is located at 1.2915 followed by 1.2958, while support is seen at 1.2831 ahead of 1.2788.
GBP/USD - 1 Hour Chart
Resistance: 1.2915 / 1.2958
Support: 1.2831 / 1.2788
Currently, USD/JPY is trading at 109.28, having posted a daily high at 109.32 and low at 108.86. USD/JPY fell from 109.25 to 108.64 overnight and back to test a familiar support area with continued geopolitical concerns and continued concerns around the turnover of staff at the White House with the subsequent potential hold ups around any potential legislative requirements on key fiscal issues. Subsequently, US 10yr treasury yields slipped from 2.20% to 2.17%, 2yr yields from 1.32% to 1.30%. Fed fund futures yields continued to price the chance of a December rate hike at around 40%. Meanwhile, Trump announced plans overnight to increase US military presence in Afghanistan contrary to his campaign pledge while the N.Korean situation took a temporary back seat. Markets await Trump's outline of the US strategy for Afghanistan in a TV address today, (US Monday 9 PM ET). Immediate resistance is located at 109.66 followed by 110.12, while support is seen at 108.66 ahead of 108.13.
USD/JPY– 1 Hour Chart
Resistance: 109.66 / 110.12
Support: 108.66 / 108.13
Currently, AUD/USD is trading at 0.7935, down -0.06% on the day, having posted a daily high at 0.7942 and low at 0.7932. AUD/USD has been lifted by metal prices on the rise, specifically in iron ore's 2.6% gains overnight. The dollar was also pressured overnight, with the US dollar index is down -0.3% on the day. For the day ahead, analysts at Westpac argued that positive momentum could take the AUD above 0.7960 today if the USD remains depressed. "If the RBA remains firmly on hold, as we expect, and the US dollar rises on tighter Fed policy, then AUD/USD could fall to 0.76 by year-end," explained the analysts in a longer-term outlook. Immediate resistance is located at 0.7954 followed by 0.7971 while support is seen at 0.7914 followed by 0.7891.
AUD/USD – 1 Hour Chart
Resistance: 0.7954 / 0.7971
Support: 0.7914 / 0.7891
For the 24 hours to 23:00 GMT, Gold rose 0.43% against the USD and closed at USD1296.60 per ounce, amid a broad weakness in the greenback. In the Asian session, at GMT0300, the pair is trading at 1287.00, with the gold trading 0.22% lower against the USD from yesterday’s close. Yesterday, the pair rose to its session high at $1293 as the market sentiment remained negative amid revived geopolitical tensions on the Korean peninsula. The demand for the traditional safe-havens like gold and U.S. Treasury-bonds remained high while the falling yields weighed on the greenback, providing an additional boost for the pair. In the short-term, the pair is likely to respond to the market sentiment as the economic calendar will be lacking any significant data that could potentially impact the price action in the remainder of the session and on Wednesday. Immediate resistance is located at $1296.5 followed by $1301.5 while support is seen at $1283.5 followed by $1275.4.
XAU/USD – 1 Hour Chart
Resistance: $1296.5 / $1301.5
Support: $1283.5 / $1275.4
Disclaimer — Risk Warning: This document should not be relied upon as being an impartial or objective assessment of the subject matter and is not deemed to be "investment research" as defined by the applicable law. This document has been issued by EZInvest.com only for information purposes and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action.
Internet communications are not secure and therefore EZInvest.com does not accept legal responsibility for the contents of this message. Any views or opinions presented are solely those of the author and do not necessarily represent those of EZInvest.com unless otherwise specifically stated. Trading in financial instruments may result in losses as well as profits.