USD Under Pressure, Euro Tests 1.3100

U.S. Dollar Trading (USD) risk aversion helped the USD off lows but for most of the day the world's reserve currency was under pressure with EUR/USD leading the market higher. Q2 Company results were a little weaker than expected but Weekly Jobless Claims fell to 457k vs. 464k previously. In US stocks, DJIA -39 points closing at 10497, S&P -7 points closing at 1107 and NASDAQ -23 points closing at 2264. Looking ahead, Weekly Jobless Claims are forecast at 459k vs. 464k previously.  

The Euro (EUR) was strong in Europe pushing to month highs above 1.3100. The German Unemployment Rate fell to 7.6% in July with a drop of 20k unemployed. The market stalled above 1.3100 and when stocks turned negative in the US session the pair fell back to 1.3050 supports. EUR/USD traded with a low of 1.2976 and a high of 1.3109 before closing at 1.3070. Looking ahead, June German Retail Sales are forecast at -0.2% vs. 0.4% previously. Also released, July EU CPI forecast at 1.7% vs. 1.4% previously.

The Japanese Yen (JPY) dollar weakness in Europe was compounded in the US session due to stock market weakness to help the Yen perform well on the day. USD/JPY is close to the month support at Y86.30 and a break of this level targets Y85. Overall the USDJPY traded with a low of 86.55 and a high of 87.47 before closing the day around 86.70 in the New York session.

The Sterling (GBP) was strong tracking the Euro higher but the market stalled at 1.5660 twice and this prompted a pullback late in the day towards 1.5580 supports. The GBP/JPY was especially heavy falling near 2 Yen over the past 2 days. July Nationwide July House Prices fell -0.5% m/m. Overall the GBP/USD traded with a low of 1.5578 and a high of 1.5665 before closing the day at 1.5620 in the New York session.

The Australian Dollar (AUD) Broke back above 0.9000 in Europe as the market bought dips on the commodity currency aggressively. Weak US stocks put a lid on gain for now but the market is in a strong uptrend ahead of next Tuesday's RBA decision. Overall the AUD/USD traded with a low of 0.8921 and a high of 0.9045 before closing the US session at 0.9010.

Oil & Gold (XAU) Gold kept to a $10 range inside $1160-70. Overall trading with a low of USD$1159 and high of USD $1170 before ending the New York session at USD$1166 an ounce. Crude rebounded on USD weakness reversing 3 days of losses. WTI Oil Closed +$1.37 at $78.36 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2480

1.2709

1.3060

1.3107

1.3416

USD/JPY

85.87

86.27

86.50

88.12

89.16

GBP/USD

1.5125

1.5412

1.5610

1.5816

1.6069

AUD/USD

0.8738

0.8896

0.8980

0.9077

0.9389

XAU/USD

1146.00

1157

1166

1204

1218.00

OIL/USD

77.00

78.00

78.20

79.500

80.00

Euro - 1.3060

Initial support at 1.2709 (July 15 low) followed by 1.2480 (July 6 low). Initial resistance is now located at 1.3107 (July 29 high) followed by 1.3416 (April 27 high)

Yen - 87.50

Initial support is located at 86.27 (July 16 low) followed by 85.87 (Nov 30 2009 low). Initial resistance is now at 88.12 (July 28 high) followed by 89.16 (July 12 high).

Pound - 1.5610

Initial support at 1.5412 (July 26 low) followed by 1.5125 (July 20 low). Initial resistance is now at 1.5816 (Feb 17 high) followed by 1.6069 (Feb 3 high).

Australian Dollar - 0.8980

Initial support at 0.8896 (July 23 high) followed by the 0.8738 (July 22 high). Initial resistance is now at 0. 9077 (76.4% retrace of 0.9389-0.8067) followed by 0.9389 (April 12 high).

Gold - 1166

Initial support at 1157 (July 5 low) followed by 1157 (May 5 low). Initial resistance is now at 1218 (July 13 high) followed by 1244 (July 1 high).

Oil - 78.20

Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 79.50 (Intraday Resistance) followed by 80.00 (Intraday Resistance).