EUR/USD: waiting for Central Bank's hints

EUR/USD Current price: 1.0986

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The American dollar ended marginally lower this Monday, falling alongside with Wall Street in a slow, uneventful start to the week.  The EUR/USD pair added 20 pips from Friday's close having been unable to advance beyond the 1.1000 level, supported partially by a better-than-expected German IFO survey, showing  that local businesses were barely affected by the Brexit, as the headline index slipped from 108.7 to 108.3, against market's expectations of 107.5. The assessment of current conditions rose to 114.7 from previous 114.6, while expectations edged lower to 102.2 from previous 102.2, but beat the 101.2 forecast. In the US, the Dallas FED manufacturing business index came in for July at -1.3 from previous -18.3, but barely affected the market.

Ahead of the Asian opening, the pair is trading below a bearish 20 SMA in the 4 hours chart, which stands around the 1.1000 level, providing an immediate dynamic resistance. In the same chart, the price is far below the 100 and 200 SMAs, indicating that the bearish trend remains in place, but the technical indicators have turned modestly higher within negative territory, far from suggesting the pair may extend its recovery further. Overall, the market is in wait-and-see mode ahead of the FED's economic policy meeting this Wednesday. The US Central Bank is expected to remain on-hold, but also to provide a more hawkish tone, amid recent upbeat data. In the meantime, the pair remains at risk of extending its decline towards the 1.0800/40 region, with spikes up to 1.1050 probably being seen as selling opportunities.

Support levels:  1.0955 1.0910 1.0840

Resistance levels: 1.1000 1.1050 1.1090

EUR/JPY Current price: 116.36

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The Japanese yen advanced during the American afternoon, following a sharp decline in US stocks, although a steadier EUR resulted in the EUR/JPY pair ending the day modestly lower, around  116.30, the base of last week's range. The short term picture for the pair favors some additional declines, despite the lack of technical momentum, as in the 1 hour chart, the price is below the 100 and 200 SMAs, both converging around 107.00, whilst the technical indicators head nowhere within negative territory. In the 4 hours chart, the price remains above their moving averages, with the 200 SMA heading lower and providing an immediate support at 115.95, while the technical indicators head modestly lower right below their midlines. The key resistance comes at 115.45 the immediate post-Brexit high, with a break below it needed to confirm a stepper decline towards the 114.00 region.

Support levels: 115.95 115.45 115.10

Resistance levels: 116.60 117.20 117.75

GBP/USD Current price: 1.3141

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The GBP/USD pair consolidated in a tight range in this first day of the week, adding some modest 40 pips daily basis. The Pound advanced up to 1.3164 against its American rival early Europe, but quickly retraced to the current level, holding nearby for the rest of the day. In the news front, Chancellor Philip Hammond reaffirmed that the MPC is ready to use "the monetary tolls at their disposal" during the weekend's G20 meeting, further signaling the UK's intention of loosening monetary policy in the nearest term. The CBI industrial trends survey for July saw total orders fall from -2 to -4, which was better than the -6 expected by consensus, in line with latest decline in local manufacturing confidence. From a technical point of view, there's little to add to recent updates, with the pair still in a consolidative phase ahead of a clearer economic and political picture. In the 4 hours chart, the price holds below a horizontal 20 SMA, currently around 1.3165, while the technical indicators hold within negative territory, with no directional strength.

Support levels: 1.3115 1.3080 1.3045

Resistance levels: 1.3165 1.3200 1.3245

USD/JPY Current price: 105.82

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The USD/JPY pair broke below the 106.00 level during US trading hours, weighed by the negative tone of US indexes, sharply down after flirting with record highs at the beginning of the day. Japan released its June trade balance data early Monday, showing that exports were down for the ninth straight month, but fell by less-than-expected, down by 7.4% against previous -11.3%. Imports declined by 18.8%, surpassing previous -13.8% but better than the -19.7% expected. The trade surplus came in at ¥692.8, much better than the previous  ¥-40.6B, overall positive for the local economy. Still market will wait for Friday's BOJ meeting before taking serious decision on the Japanese currency. In the short term, the 1 hour chart shows that the price has fallen below its 200 SMA for the first time since July 11th, whilst the technical indicators maintain their bearish slopes within negative territory, keeping the risk towards the downside. In the 4 hours chart, the 100 and 200 SMA converge around 104.00/15, providing a strong support in the case of a sudden decline, while the Momentum indicator retreated from the 100 level and the RSI indicator heads south around 44, also favoring a bearish extension for this Tuesday.

Support levels:  105.80 105.40 105.05

Resistance levels: 106.60 107.10 107.50

AUD/USD Current price: 0.7470

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The AUD/USD pair advanced up to 0.7492 at the beginning of the day, but trimmed most of its daily gains ahead of the close, amid the poor performance of commodities and stocks. There were no relevant data released in Australia, and there won't be any critical news until Wednesday, when the country will release its second quarter inflation figures, suggesting some further range trading for this Tuesday. Quarterly CPI has been the trigger for the latest RBA's rate cut, as during the first quarter, inflation fell beyond expected, suggesting another disappointing reading will produce a similar reaction from the Central Bank. Short term, the pair presents a neutral stance although the risk is towards the downside, particularly on a break below 0.7450, a strong Fibonacci support. In the 1 hour chart, the price is below its 20 SMA, while the technical indicators lack directional strength, stuck around their mid-lines. In the 4 hours chart, the 200 EMA contained advances around the mentioned daily high, while the price is currently developing also below a bearish 20 SMA and the technical indicators remain within negative territory, still heading nowhere.

Support levels: 0.7450 0.7410 0.7370  

Resistance levels: 0.7490 0.7540 0.7590