The release of better than expected German IFO

EUR/USD

The release of better than expected German IFO has failed to encourage flows into riskier assets, as safe-haven flows continue to dominate amid growing expectations of potential military action by the US. As a result, the pair remained under pressure for much of the session as risk averse sentiment dominated the price action. The move lower saw the pair come close to making a test on the technically important 21DMA line at 1.3316. Going forward, the price action is set to remain a by- product of the risk on/off sentiment which continues to be driven by the developments surrounding Syria. Technically, support levels are seen at the 30DMA line at 1.3285, the weekly cloud top at 1.3259 and then at 1.3206 (Aug 15 th low). On the other hand, resistance levels are seen at 1.3410 (Aug 23 rd high), 1.3427 (Aug 21 st high) and then at the 30-Day Upper Bollinger level at 1.3438.

GBP/USD

The price action was largely driven by growing expectations of military intervention by the US in Syria which in turn spurred investor demand for the USD and consequently resulted in the pair settling the session lower. There was little in terms of UK related commentary, although trade volumes generally picked up given the fact that market participants in the UK returned following a bank holiday Monday. In terms of technical levels, supports are seen at the 21DMA line at 1.5476, 1.5375 (Aug 9 th low) and then at the 100DMA line at 1.5356. On the other hand, resistance levels are seen at the 10DMA line at 1.5601, 1.5612 (Aug 26 th high) and then at 1.5638 (Aug 23 rd high).

USD/JPY

JPY strength was observed across the board, supported by risk averse flows and also squaring of long USD/JPY positions on the back of better bid USTs which have been on an upward trend throughout the session today. In turn, EUR/JPY broke through both 50- and 100DMA levels to the downside at 130.03 and 129.90 respectively. Also, the gradual JPY strength also resulted in the pair itself moving below the 21DMA at 97.84. There was little in terms of Japan specific commentary, but cautious tone by Chinese officials, who downplayed the need for more stimulus, with China's vice finance minister Zhu Guangyao saying that there was no need for the government to stimulate China's economy, also acted as a catalyst to depress the sentiment. Looking at the price action technically, supports are seen at 97.13 (Aug 21 st low), the 61.8% Fibonacci retracement of the 95.81 to 98.66 move at 96.90 and then at 96.50. To the upside, resistance levels are expected to be found at the Ichimoku Cloud Base at 98.75, the Ichimoku Cloud Top at 98.81 and then at 99.15 (Aug 5/23 rd highs).