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USD Strong Against Majors Following ECB Decision

USD Strong Against Majors Following ECB Decision

The US dollar was stronger against all the major currencies after the ECB’s decision to keep its monetary policy unchanged, leaving key policy rates at their historical lows. The dollar continued to gain throughout the day after the dovish comments by Mario Draghi. In terms of market reaction, the euro fell immediately just after the ECB conference started, breaking below the 1.3150 level against the dollar within one hour falling almost 120 pips during the US session.Moving north, the bank of England has been influenced by Governor Mark Carney policy to keep their interest rates in low levels amid strengthening economic recovery, thus the BoE kept their bond-buying program and interest rates unchanged. The GBP rose significantly against the EUR during the BoE announcement, and extended its gains during the ECB press conference recording a fresh low at 0.8407 EUR/GBP.Certainly, the biggest figure of the month is the US non-farm payrolls for August. The market is expecting an increase in the payrolls with survey showing 180k vs 161k the previous month. The unemployment rate is expected to remain unchanged at 7.4%. Yesterday’s US jobs data was encouraging; the ADP employment change for August was a modest +176k but initial jobless claims continued to move lower and the employment component of the non-manufacturing ISM index was extremely strong. A better-than-expected non-farm payrolls figure will likely put the Fed on track to begin tapering off its bond purchases in September, as expected, which would probably send the dollar still higher. At this point even a disappointing report might result in just a smaller degree of tapering, say USD 10bn a month instead of the USD 20bn or so that is expected. That could be neutral or even bearish for the dollar.Having as a “main course” today the US non-farm payrolls, we doubt if the rest of the economic indicators will have much impact on the today market as we expect the NFP report to drive the market. In today’s economic calendar, we have the German Trade balance and the current account for July. UK consumer inflations expectations and consumer confidence expectations for August. Also, UK will release figures on industrial production and on manufacturing production for July. Finally, Canada will release data on unemployment rate for August which is expected to remain unchanged at 7.2%.At the G20 meeting, U.S President Barack Obama came under pressure from Russia’s President Vladimir Putin and other world leaders as a possible US military strike against Syria could push the price of oil up and hurt the world economy.The MarketEUR/USD

EUR/USD” width=”1729″ height=”739″ />The EUR/USD moved lower and managed to break below the 1.3152 level (yesterday’s support). At the time of writing the pair is trading between the 1.3077 (S1) and 1.3152 (R1) levels and if selling pressure continues pushing the rate downwards I expect it to find support at the 1.3077 (S1). A clear downward break of that level would trigger extensions towards the psychological round number of 1.3000 (S2). It is worth noting that the MACD oscillator crossed below its trigger line in a bearish territory, adding significance to the negative picture of the price action.Support: Support is found at the 1.3077 (S1) level, followed by the psychological level of 1.3000 (S2) and 1.2895 (S3) respectively.Resistance: Resistance levels are 1.3152 (R1), followed by 1.3231 (R2) and the psychological level of 1.3300 (R3).USD/JPY

USD/JPY” width=”1729″ height=”742″ />The USD/JPY continued following the upward boundary of the uptrend channel and after finding resistance near the psychological level of 100.00 (R1), moved slightly lower. If the long holders are strong enough to win the battle at that hurdle, they should target the next resistance levels of 100.84 (R2) and 101.52 (R3) next. On the other hand, if they fail to do so, a pullback towards the 99.13 (S1) is probable, since both RSI and MACD oscillators might move away from their overbought levels in the next periods (although in recent months USD/JPY has occasionally remained in technically overbought territory for significant lengths of time). On the longer time frame (daily chart), the price remains above the upper boundary of a triangle formation, adding significance to the pair’s bullish picture.Support: Support levels are at 99.13 (S1), followed by 98.09 (S2), and the psychological level of 97.00 (S3).Resistance: Resistance levels are the round number of 100.00 (R1), followed by the 100.84 (R2) and the 101.52 (R3) levels respectively.GBP/USD

GBP/USD” width=”1729″ height=”741″ />The GBP/USD continued moving higher breaking above the 1.5569 level and confirming the end of the correction mentioned in previous comments. Currently the pair is heading towards the 1.5674 (R1) resistance level and a clear upward penetration of it should lead the price towards new short term highs. Moreover, the 20-period moving average lies above the 200-period moving average and alongside with the MACD’s positive value, they provide significance to the aforementioned scenario.Support: Support levels are identified at 1.5569(S1), 1.5425 (S2) and 1.5296 (S3) respectively.Resistance: Resistance found at the levels of 1.5674 (R1), 1.5752 (R2) and 1.5840 (R3), found from the daily chart.Gold

Gold

Gold continued moving lower, breaking below the 1376 level (yesterday’s support). Currently the price lies slightly above the 200-period moving average and I expect it to continue moving lower towards the trend line and maybe the 1347 (S1). However, since the precious metal remains in the uptrend channel, and the 20-period moving average is above the 200-period moving average, I still consider this downward movement as a correction, before the price reverses and continues its uptrend.Support: Support levels are at 1347 (S1), followed by 1320 (S2) and 1271 (S3).Resistance: Resistance is identified at the 1376 (R1) level, followed by 1394 (R2) and 1422 (R3).Oil

OIL

WTI moved once more towards the upper boundary of the trading range we are observing since the beginning of July. At the time of writing the price is testing the boundary at 108.85 (R1) and a clear break above this level might signal the real exit of the sideways action. However, both the RSI and MACD oscillator remained near their neutral levels giving no clues and indications about the forthcoming action of the oil.Support: Support levels are at 107.53(S1), 105.50(S2) and 103.44 (S3).Resistance: Resistance levels are at 108.85 (R1), followed by 112.14 (R2) and 114.21(R3), found from the weekly chart.BENCHMARK CURRENCY RATES – DAILY GAINERS AND LOSERS

BENCHMARK CURRENCY RATES

MARKETS SUMMARY

MARKETS SUMMARY

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