Article by ForexTime
Beginning with yesterday market developments, the U.S Dollar resumed its rally against the G10 currencies as FED rate hike is on the table again. The Dollar index traded higher on Tuesday and has reached two-week high at 96.14 boosted by a strong increase in the consumer confidence index during the month of August.
The Japanese Yen plunged by 1.13% against the Greenback to reach 103.10, highest level since July 29. In the meantime, both the Euro and the British pound extended last Friday decline to stabilize at 1.1140 and 1.3070 levels respectively.
In the equity market, the Dow fell by 49points, while the S&P500 was off 0.2%.Gold retreated to two-month low at $1310 per ounce, meanwhile, Oil prices settled down 1.34% at $46.35 on the back of a strong Dollar.
Now let us have a look at the technical picture of the Euro, the British pound, Gold and the U.S Dollar index.
The Euro resumed its decline after bears managed to push prices below 1.1240 hourly support. As of now, the trend remain bearish in the near-term, and a continuation to the downside is likely in the coming hours. However, when looking at momentum indicators, the pair is clearly oversold and a bounce can happen soon. Technically, the drop should find strong demand around 1.1110-1.1080, from where we expect to see the beginning of at least three corrective waves higher.
In the daily chart, the single currency remain under pressure below 1.1365 peak, meanwhile, prices are likely to test the 61.8% Fibonacci retracement of the entire recovery that began from 1.0910 low which stands at 1.1085. Consequently, the recent sell-off may slow down once prices get there.
The British pound keep fighting for a clear direction in the near-term and volatility is likely to increase in the coming hours, ahead of the U.S Non-farm payrolls due later this week.
From a technical standpoint, the Sterling remain positive in the hourly chart as far as 1.3025 support is in place. However, the current market environment is in favor of the U.S Dollar, which can keep the upside potential limited in this pair.
In the near-term, the focus should be 1.3070 support as a break below it will bring the bearish pressure and can send the pair to as low as 1.3025 in the next days.
In the flipside, a daily close above 1.3157 level can be the trigger for a move back up towards 1.3170/95 resistance zone will offer fresh selling opportunities for bears and another wave lower to be seen.
After several attempts to break above 1357 hourly resistance that failed, prices succeeded to break below the support zone of $1333/1328 in the daily chart, which cleared the path for a re-test of the daily support of $1305.
Technically, gold turned bearish in the near-term as prices has shown four consecutive lower highs (1375-1367-1357-1342) from the yearly peak of $1375, which reinforces the probability of further weakness in the coming days. As of now, $1325 represents the short-term resistance level and as far as prices keep trading below it, further weakness is here to stay in the coming hours.
To conclude, gold remain under pressure and the upside potential is likely to be limited, while another towards 1300 psychological support is imminent.
Looking at the U.S Dollar price action ahead of the U.S Jobs report scheduled for Friday. The Greenback continue to strengthen as FED rate hike bets increased significantly, the sentiment shifted towards buying the U.S Dollar in the recent days.
Technically, prices overtook 96.00 handle, which keeps the near-term outlook bullish for the U.S Dollar, in addition, the break above this resistance should expose 96.50 area in the coming days, and from where strong sellers may appear. From a larger perspective, the Dollar keep trading sideways in the weekly chart, as investors remain skeptical about the date of the next interest rates hike. Consequently, volatility can persist in the near-term unless we see a clear break above 97.65 peak or below 93.00 weekly support.
Meanwhile, we can see that bulls managed to preserve the higher lows structure that began from 92.95 low, which may lead to further gains in the Greenback especially if a daily close above 96.50 level happens.
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Article by ForexTime
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