The Euro was unable to gain against the greenback as resistance near 1.3100 capped buyers but the market finished well off lows after once again testing support below 1.3000. July CPI was 1.7% vs. 1.4% y/y previously and German Retail Sales slumped -0.9% in June. The short term bias in EUR/USD has turned neutral since its unable to break past 1.3125 levels. While another rise could still be seen, we'd continue to look for reversal signal as EUR/USD approaches cluster level of 1.3105/3123 (38.2% retracement of 1.5143 to 1.1875 at 1.3123) . On the downside, break of 1.2731 will indicate that EUR/USD has topped out and target 1.2450 support zone first. The increasing risk appetite and poor data from US has led to these gigantic moves in euro . Whether the long term trend has changed still needs to be confirmed. (EURUSD - 1.3075). Neutral.

The Sterling rally continued with EUR/GBP selling and GBP/JPY buying helping the Pound outperform. Cable is showing some reluctance to push above the USD 1.5700 area hindered by a reduction in risk appetite and a fall in July GfK consumer confidence. The charts of Gbp seems to be highly overbought and ripe for a major correction. Stay cautious. (GBPUSD 1.57200). Neutral

The USDJPY broke briefly below Y86 after the US GDP miss before the reversal of the stock market’s direction help crosses and the major lift. USDJPY is currently trading at 86.56 levels. We have seen an up move due to increased risk appetite. Overall the bullishness in yen has still not changed and bias of the pair is bearish. (USDJPY 86.50) Neutral.

The AUD was extremely strong after initially selling off below 0.9000 on AUD/JPY weakness and risk aversion after the US GDP miss before the sharp rally in US stocks helped lift the commodity currency back to the 0.9050’s. The market now turns its attention to the RBA decision tomorrow. The AUD is currently trading at 0.9097 levels and touched high at 0.9107. Any type of news signifying downward growth concerns for the emerging economies like China would seriously weigh down the currency. Immediate support at 0.8880 area. (AUDUSD - 0.90740). Neutral to Bullish.

Gold is currently trading at 1183 levels and does not seem to be very bullish now. It is holding below its important moving averages of 55 day in daily charts. Most likely target could be 1115 dollars in case we see 2-3 of closing below 1180- 90 dollar . Please note that risk will remain heavily on the downside as 1266.5 resistance holds, and we'd expect another decline sooner or later. Selling on upticks is recommended.(Gold— 1183).

The Dollar index drops sharply to as low as 81.43 so far today, as pressured by both Euro and Yen. The current decline from 88.70 is treated as a correction to medium term rally from 74.19. We'd stay bearish with 83.45 resistance intact and extend the current fall to extend towards 80.04, which is close to 80 psychological level as well as 61.8% retracement at 79.80. Hence, the greenback would continue to be soft for a while in general. Nevertheless, downside should be contained there to conclude the correction and bring rebound. Break of 83.45 will indicate that dollar index has bottomed and should then bring strong rebound towards 85.09/86.42 resistance zone. (Dollar Index– 81.43) Neutral.