AUD/USD bulls got tired on approach to 0.8770 resistance

FXStreet (Moscow) – AUD/USD recovered from the Asian low at 0.8693 and climbed close to the resistance of 0.8770 on the back of positive Aussie sentiments.

The respite is temporary

Aussie regained ground above 0.8700 pivot after a disgraceful decline towards 0.8686 on Monday. The recovery was caused mainly by technical factors and profit-taking from deeply oversold levels as fundamental picture remained basically unchanged. Despite current upside correction, from the longer-term perspective AUD/USD is vulnerable to a further move lower due to its strong correlation with US Treasuries and rather dovish sentiments among RBA officials. Later during the day don’t miss Chicago PMI and US consumer sentiment index as they may shape USD dynamics and thus influence AUD/USD movements. The key levels to watch: 0.8790 and 0.8813 on the upside and strong demand at 0.8680 on the downside.

What are today’s key AUD/USD levels?

Today’s central pivot point can be found at 0.8721, with support below at 0.8681, 0.8623 and 0.8606 with resistance above at 0.8759, 0.8799 and 0.8837. Hourly Moving Averages are bearish, with the 200SMA bearish at 0.88862 and the daily 20EMA bearish at 0.8995. Hourly RSI is bullishat 59.
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USD/JPY upside still likely above 108.50

FXStreet (Guatemala) – USD/JPY is trading at 109.39, up 0.10% on the day, having posted a daily high at 109.76 and low at 109.13.

USD/JPY has been caught up below the mid pint of the handle after a drop from the highest levels seen for sometime when the pair lost commitment from the bulls and the greenback stepped back a few paces at the start of the US open. Below the 109 handle though, as Karen Jones, chief analyst at Commerzbank pints out, the market is finding some good nearby support circa 108.50/25 and remains under pinned by the 107.05 short term uptrend. “We will assume while above here that the market remains well placed for further gains. The market remains capable of gains to the 110.67 August 2008 high”, she said. “Directly above here lies the 50% retracement of the entire move down from the 1998 peak at 111.47 and we would allow for some profit taking in this vicinity”.

USD/JPY noteworthy levels

Current price is 109.40, with resistance ahead at 109.55, 109.73 (Daily Classic R1), 109.76, 109.81 (Weekly Classic R1) and 110.18 (Daily Classic R2). Next support to the downside can be found at 109.38 (Hourly 20 EMA) and 109.29 ahead of 109.10.
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ECB should pressure EU/USD lower – RBS

FXStreet (Guatemala) – Analysts at RBS explained that the ECB meets this week amid a further decline in medium-term inflation expectations.

Key Quotes:

“We do not expect the ECB to change policy rates, but we do anticipate a clear signal that the likelihood of sovereign asset purchases has increased”.

“The flash estimate for September inflation is released in the Euro-area tomorrow, and the upside surprise in German inflation (+0.8% y/y vs. consensus +0.7% on an EU harmonized basis) suggests that there may be risks to the upside for the Euro-area composite tomorrow”.

“While on the margin a positive for EUR, focus should stay on stagnant growth and falling medium-term inflation expectations. On the growth front, German unemployment statistics are released. EUR/USD downside preferred through the ECB meeting”.
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