The Euro broke higher after range trading last week the market push above 1.3100 and quickly ran up to 1.3197. July PMI Manufacturing improved to 56.7 vs. 56.5. The market has turned cautiously bullish on the EUR. (EURUSD– 1.3154)

The Sterling gains accelerated as the shorts capitulated pushing above 1.5907 for the first time since February and the market is now targeting 1.6000 in the short term. July Manufacturing PMI remained strong at 57.3 vs. 57 forecast. The charts of Gbp seems to be highly overbought and ripe for a major correction. Stay cautious.( GBPUSD 1.5871)
The Yen was under pressure from the 'risk on' market but was relatively unchanged against the USD/JPY as the market failed to push above Y87. GBP/JPY led the market higher above Y137. Finance Minister Noda repeated his comments he is watching FX movements closely. USDJPY is currently trading at 86.82 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 86.82) Neutral

The AUD pushed higher but was capped at 0.9147 as the market awaits key risk events today Rate Decision forecast to remain at 4.5%. The AUD/JPY traded above Y79 and is poised to test Y80 if the market sentiment continues to improve. The AUD is currently trading at 0.9097 levels and touched high at 0.9120 today .Exporters can cover partially at current levels. Immediate support at 0.8880 area. (AUDUSD - 0.9097). 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 80.94 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– 80.95) Neutral