EURO Cross Sellers Booking Profit

U.S. Dollar Trading (USD) traders were surprised by the strong move higher in the EUR/USD which took advantage of light trading conditions to return to the 1.23 handle. EUR/AUD and EUR/NOK short coverings where the main catalysts in the otherwise peculiar move higher in the Euro. Other Risk currencies lost ground against the Dollar with Gold and AUD the biggest losers. US Stocks have rallied each week for the last 10 weeks and could be close to correcting lower so traders will be closely watching downside moves such as yesterday’s. Looking ahead, July Retail Sales are forecast at 0.3% vs. -0.5% previously.

The Euro (EUR) in light trade the EUR/USD broke above 1.2300 and hit day highs of 1.2375 before easing into the US session close. The strong moves were on the back of Euro Cross unwinding but was a surprise given the relatively negative news flow over the weekend. Greece GDP was -6.2% y/y in Q2 but this was actually stronger than some economists expected and a preview for the larger Eurozone Countries GDP later this week. The Sterling (GBP) the 1.5700 level resistance proved too much for the GBP/USD and when EUR/GBP buyers entered the market and US stocks fell Cable eased back to 1.5680 supports. Looking ahead, August German ZEW Survey forecast at -19.6 vs. -19.6 previously.

The Japanese Yen (JPY) was quiet in a 20 pip range between Y78.15 and Y78.35 the outlook is mixed with range trader’s buying at the current levels and sellers hoping for a fresh downtrend on a break of Y78 in the near future. US Monetary policy and BOJ/MOF intervention risks are still the main drivers of the USD/JPY in the medium term. Australian Dollar (AUD) the AUD/USD was under pressure as it became clear no Chinese stimulus was coming imminently and US stocks eased later in the day which added to the Aussie weakness. Support was once again found at 1.0500 where dip buyers emerged looking for the uptrend to continue. Looking ahead, July NAB Business Confidence previously at -3.

Oil & Gold (XAU) XAU/USD fell back in a disappointing day for the bulls who hoped last week’s break of $1618 signaled more gains. OIL/USD was steady still well supported on the dip as the bulls remained in control of the energy.

Pairs to watch

EUR/USD to retest the 1.2460 highs?

EUR/AUD to unwind further or return to downtrend?

TECHNICAL COMMENTARY