The euro dipped against the dollar but its losses were limited after solid demand at Irish and Spanish bond auctions yesterday eased some jitters about heavily indebted euro zone countries. Euro is currently trading at 1.2845 levels, Immediate resistance comes at 1.2880-1.2920 levels (100 days daily EMA). It is holding the important support of 1.2700 levels (trend line support in daily charts) with a short term bearish bias. Breaking of 1.2700 levels in Euro and break of 83.45 in dollar index would be further bearish pressure on Euro. Medium term Neutral.
The Sterling fell ahead of the release of BOE policy meeting minutes. It struggled to track the Euro and the Aussie higher as July CPI came in at 3.1% vs. 3.2% previously y/y. The big move came in the EUR/GBP which rallied back towards 0.8300 after heavy selling last week. GBP/USD is currently trading at 1.5553.The GBP/USD is at a critical support. Sustained trading below there will indicate that whole rise from 1.4230 has finished and will bring deeper fall to 1.5123 cluster support (50% retracement of 1.4230 to 1.5997 at 1.5114) for confirmation. On the upside, break of 1.5997 is needed to confirm rally resumption. Otherwise, risk will now remain on the downside. Medium term Neutral to slight bearish.
The Japanese Yen failed to break through Y85.20 supports and grinded higher for the rest of the day on strong US data and talks in the market that PM Kan will meet with BOJ Shirakawa. AUD/JPY led the market higher in Asia and remains in good demand. The USD/JPY advanced by speculation that the Bank of Japan will intervene if the yen rises further. USD/JPY is currently trading at 85.41. The pair would be moving towards a 87 levels soon. Medium term : Yen bearish towards 87-88 levels.
The AUD was able to rally from the start of Asia for a big move back above 0.9000 to test 0.9080 resistance. AUD/JPY was strong as were most crosses with the high yielding Aussie outperforming in the 'risk on' environment. RBA minutes offered little extra direction reiterating current policy was appropriate. The AUDUSD is currently trading at 0.9018 levels .The pair could move till 0.8500-8700 levels where buying could be initiated. Medium term Bullish. Medium term Bullish
Gold is currently trading at 1225 levels and touched high of 1228 levels yesterday . Immediate support comes at 1204 levels. Buying can be initiated around these levels. Medium Term- Bullish
Dollar managed to hold above 80 cluster level and rebounded strongly since then. The development might reaffirmed our original view that fall from 88.70 was merely a correction to medium term rise from 74.19 only. We'll stay bullish in dollar index as long as 82.11 support holds and expect a test on 83.45 cluster resistance (38.2% retracement of 88.70 to 80.08 at 83.37). Decisive break there will confirm that whole fall from 88.70 has completed and should bring further rise to 85.40 at least. However, break of 82.11 support will dampen the immediate bullish view and turn outlook neutral first. Medium term Bullish on break of 83.45.(DI - 82.36)