The Euro took another leg higher as the market focused on USD weakness and the Euro as the world’s secondary reserve currency. June PPI increased 0.3% vs. 0.4% previously. EUR/JPY struggled as the Yen also benefited from the USD woes. The Euro broke higher after range trading last week the market push high of 1.3262. The market has turned cautiously bullish on the EUR. (EURUSD– 1.3212).
The Sterling consolidated recent gains but was unable to push above the key 1.6000 psychological level as the market recovers from overbought conditions. July UK Construction PMI fell 4.3 to 54.1 previously. The charts of Gbp seems to be highly overbought and ripe for a major correction. Stay cautious.( GBPUSD 1.5926)
The Japanese Yen was strong against the USD breaking below Y86 in the European session on market talk the FED may increase the Quantitative easing program as the US recovery falters. Market players note that the low from last year Y84.83 could act as a line in the sand where the Japanese Government may get involved to cap the recent strength. (USDJPY 85.42) Neutral
The AUDUSD finished roughly unchanged as some weaker than expected Retail sales was offset from an upbeat RBA assessment of the Global economy. June Retail Sales were at 0.2% vs. 0.3% forecast and the RBA held at 4.5% as expected. The AUD is currently trading at 0.9130 levels and touched high at 0.9149 today .Exporters can cover partially at current levels. Immediate support at 0.8880 area. (AUDUSD - 0.9130). Neutral to Bullish.
Gold is currently trading at 1193 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 1190-1200 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— 1193)
The Dollar index drops sharply to as low as 80.53 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– 80.53) Neutral