Talking Forex: EUR/USD, GBP/USD - Pairs In Positive Territory

EUR/USD
Weaker USD stemming from WSJ article by a prolific Fed watcher Jon Hilsenrath who said many Fed officials are undecided on whether to scale back bond purchases in September meant that the pair finished the session in positive territory. Hilsenrath added that the Fed could wait or reduce the programme by a small amount at the upcoming meeting. There was little in terms of Eurozone specific news flow, but ahead of the September 22nd elections, the SPD have closed the gap with Merkel's CDU/CSU, rising to 25% against Merkel's 40%, according to the weekly Bild am Sonntag poll. Technical studies indicate that supports may be found at the 50% Fibonacci retracement of the 1.2755 to 1.3453 move at 1.3104, the Ichimoku Cloud base at 1.3086 and then at 1.3050. On the other hand, resistance levels are seen at the 10DMA line at 1.3224, 1.3237 (Sep 2nd high) and then at 1.3255 (Aug 30th high).

GBP/USD
Just like EUR/USD, the pair also benefited from a weaker USD and finished the session in positive territory. In terms of UK specific news flow, BoE's Fisher has said ‘read our lips: there are no plans to raise rates’, adding that the bank could hold off from further QE if forward guidance is successful, adding that it will take time for markets to understand the new policy. Separately, Lloyds have upgraded their UK growth estimate to 1.5% this year from 1.0% previously, and see further growth in 2014. In terms of technical levels, supports are seen at the 10DMA line at 1.5567, 1.5556 (Sep 4th low) and then at 1.5550. On the other hand, resistance levels are seen at 1.5718 (Aug 21st high), 1.5753 (Jun 17th high) and then at 1.5779, which is also the 30-Day upper Bollinger Band® level.

USD/JPY
Even though the decision to allow Tokyo to host 2020 Olympic Games buoyed USD/JPY overnight, the pair faced downside pressure stemming from interest rate differential flows amid better bid USTs. The price action in the US curve was partly driven by the latest article from a prolific Fed watcher Jon Hilsenrath who said many Fed officials are undecided on whether to scale back bond purchases in September. In other Japan specific commentary, the Japanese government may consider revising tax incentives to encourage companies to boost wages, according to unsourced reports. Technically, supports are seen at the Ichimoku Cloud Top at 99.29, which is followed by the Tenkan-Sen line at 98.57 and then the Kijun-Sen line at 98.03. On the other hand, resistance levels are noted at 100.24 (Sep 6th high), 100.45 (Jul 24/25th high) and then at 101.05 (Jul 22nd high).