The American dollar closed the week with a strong tone against most of its major rivals

EUR/USD

The American dollar closed the week with a strong tone against most of its major rivals, underpinned by better-than-expected US inflation figures released on Friday. August CPI rose by 0.2% after being unchanged in the previous month, while the core monthly figure rose by 0.3%, compared to July. This week, the FOMC and the BOJ will have their economic policy meetings, and while investors expect the US Federal Reserve to leave rates unchanged, the pickup in inflation supported the case for a hike later this year. US Consumer confidence, according to the University of Michigan’s preliminary index,  also released in the last trading day of the week, resulted unchanged at 89.8, slightly below market's expectations. 

After trading in a tight range of barely 80 pips, for most of the week, the EUR/USD pair finally broke lower, ending the week at 1.1153, not far from the three-week low posted on August 31st at 1.1122, a strong static support. The common currency remains resilient to dollar's strength, in spite of the latest ECB's decision to leave its economic policy unchanged, making of a bearish case a limited one at this point. The daily chart for the pair shows that it's trading above a long term ascendant trend line, coming from 1.0505, November 2015 low, around 1.1050/60 for this upcoming days. In the same chart, the price is below its moving averages, which have been long missing directional strength, whilst technical indicators have turned lower within neutral territory, indicating that the risk is towards the downside. In the shorter term, and according to the 4 hours chart, the bearish potential is even clearer, as the Momentum indicator heads south well below its mid-line, while the RSI indicator consolidates around 28, and that the pair posted a long volume candle after breaking below its moving averages.

Support levels: 1.1120 1.1080 1.1040

Resistance levels: 1.1160 1.1200 1.1245

USD/JPY

The USD/JPY pair saw little action last week closing it flat around 102.30, as investors turned cautious ahead of the upcoming BOJ and FED's meeting, both taking place next September 21st. There were plenty of rumors over the last few days over what the Bank of Japan will do,  from cutting its rates into negative territory, to  shifting the focus of its bond-buying program to shorter-term bonds to offset downward pressure on longer-term yields, generating high expectations among investors. Still, the Central Bank may refrain from acting this month, which may result in a sharp appreciation of the Japanese currency. The decision will be announced some 12 hours after the US Federal Reserve makes its own. From a technical perspective, the long term bearish trend remains in place, as the price keeps developing well below a bearish 100 DMA in the daily chart. In the same time frame, technical indicators lack directional strength within negative territory, rather reflecting the latest range than suggesting diminishing bearish strength. In the 4 hours chart, the price is trapped between its 100 and 200 SMAs, with the shortest offering an immediate resistance around 102.50, whilst technical indicators have recovered from near oversold readings, but turned back south below their mid-lines, also indicating that the risk is towards the downside.

Support levels: 102.00 101.60 101.25 

Resistance levels:  102.50 102.90 103.35 

GBP/USD

The GBP/USD pair fell to its lowest since mid August, ending the week barely above the 1.3000 level. The Pound came under selling pressure on Thursday, after the BOE kept its monetary policy unchanged. The minutes reflected what the market already knew  that is, that the economy has been bearing much better than initially estimated with the Brexit, which means that the possibility of further easing has been reduced significantly. Still, the Central Bank left the door open for further easing if required. The pair accelerated its slide in the American afternoon and is poised to break below the psychological support of 1.3000, which will open doors for a retest of the post-Brexit low at 1.2793. The daily chart shows that the price has broken far below its 20 DMA, while technical indicators turned lower, entering bearish territory, with the RSI indicator heading south 38, anticipating a bearish extension. In the 4 hours chart, the price is far below its 20 SMA and the 200 EMA, reflecting the strength of the latest decline, while technical indicators have turned flat near oversold levels, but are still unable to confirm an upward corrective movement. 

Support levels: 1.2970 1.2930 1.2885 

Resistance levels: 1.3035 1.3080 1.3120 

AUD/USD

The AUD/USD pair closed the week below the 0.7500 mark, dragged lower by falling commodities and equities. The Aussie fell down to 0.7441 last week, after the Australian August employment report showed that jobs, during the month fell by 3,900 against  expectations of a rise of 15,000. The unemployment rate came in at 5.6%, below previous 5.7%, but that was a result of a slide in the participation rate, down to 64.7% from previous 64.9%. The daily chart presents a moderate bearish potential, as the technical indicators turned lower below their mid-lines, but lack enough downward momentum to confirm a bearish extension. In the same time frame, the 20 DMA heads south around 0.7560, offering a strong dynamic resistance in the case of an upward move. In the 4 hours chart, the price is hovering around a bearish 20 SMA, whilst indicators have turned modestly higher within neutral territory, limiting chances of a steeper decline at this point. Nevertheless, renewed selling interest below 0.7450, a long term Fibonacci support, should confirm a move lower, with scope to test 0.7250, during the upcoming sessions.

Support levels: 0.7450 0.7420 0.7370

Resistance levels: 0.7520 0.7560 0.7610 

Dow Jones

At the end of a volatile week, US indexes closed lower, down on Friday on better-than-expected US inflation for August, which fueled hopes of a rate hike in the world's largest economy, also weighed by lower oil prices. The Dow Jones Industrial  Average lost 88 points or 0.49%, to close the day at 18,123.80. The Nasdaq Composite and the S&P also closed in the red, down 0.10% and 0.38% respectively. An uptick in local inflation cleared the path from some FED action as soon as this September, although the market believes that policy makers will remain on-hold until December. As for the technical picture of the DJIA, the daily chart shows that the benchmark remained contained below its 100 DMA, currently at 18,182, while the 20 SMA heads strongly lower above it, and technical indicators remain flat within bearish territory after correcting oversold readings, all of which support some further slides. In the 4 hours chart, however, the index settled above a horizontal 20 SMA, while indicators turned modestly higher within neutral territory, pointing for some consolidation ahead, and before the next directional move. 

Support levels: 18,077 18,012 17,961

Resistance levels: 18,179 18,248 18,306 

FTSE 100

London equities edged lower in the last trading day of the week, leading to the FTSE 100 to close at 6,710.28, down by 20 points. The banking sector was among the worst performers, dragged lower by Deutsche bank news over a $14 billion fine to be imposed by the US Department of Justice. Royal Bank of Scotland closed 4.43% lower, Barclays lost 2.83%, while Standard Chartered shed 2.74%. Mining-related equities also ended lower amid base metals' decline, with Fresnillo down 1.82% and BHP Billiton losing 1.59%. The daily chart for the index shows that it managed to recover some ground after the close, but also that it remains below a bearish 20 DMA, while technical indicators have lost directional strength within neutral territory. In the 4 hours chart, the index presents a slightly bullish tone, as the index is now above its 20 SMA, while indicators head modestly higher within positive territory, not enough to confirm a strong recovery, but enough to limit slides at the beginning of the week. 

Support levels: 6,693 6,646 6,585  

Resistance levels: 6,765 6,811 6,855

DAX

European equities turned lower after Thursday's gains and sunk on Friday, with the German DAX closing the day at 10,276.17, down by 155 points or 1.49%. The banking sector led the decline, on news that the US Department of Justice has suggested a $14 billon fine be paid by Deutsche Bank over its issuance and underwriting of residential mortgage-backed securities. Deutsche closed 8.62% lower, while Commerzbank shed 2.39%, with only two components closing in the green. The German benchmark closed at its lowest since early August, and the daily chart suggests that more declines are yet to be seen, given that the index is well below a bearish 20 SMA, while technical indicators present strong bearish slopes within negative territory. In the 4 hours chart, technical indicators bounced from oversold readings, but remain well below their mid-lines, whilst the 20 SMA presents a sharp bearish slope above the current level, now converging with the 200 SMA at 10,405. It would take a recovery beyond this last to revert, at least temporarily, the negative tone and prevent the index from falling further. 

Support levels: 10,244 10,206 10,149

Resistance levels: 10,339 10,405 10,465 

Nikkei

The Nikkei 225 closed up 115 points or 0.70% on Friday at 16,519.29, logging its first gain after a three-day slide, but turned south again in after hours trading, tracking Wall Street's decline. A stronger yen also undermined the Japanese benchmark, as the USD/JPY pair traded below the ¥102.00 level last week, to settle a few pips above it, unchanged on the week. The index closed near a 4-week low, set on August 26th at 16,332, the immediate support, and a few points below the 100 DMA, while technical indicators in the daily hart head south within bearish territory, indicating that further slides are likely for this Monday. In the 4 hours chart, a sharply bearish 20 SMA continues heading south above the current level, and after crossing below the 100 and 200 SMAs, whilst indicators lack directional strength butt remain near oversold readings, also supporting a continued decline for the upcoming sessions. 

Support levels: 16,332 16,247 16,165

Resistance levels: 16,406 16,497 16,579

Gold

Spot gold extended its decline ahead of the key FOMC meeting, extending its weekly slide down to $1,306.20 a troy ounce, on Friday,  to close around 1,311.00. Renewed hopes of a soon-to-come rate hike in the US put the commodity under selling pressure  after the release of better-than-expected inflation figures in the US. Weekend news show that the precious metal continues showing signs of weakness, as prices fell midday local time, in Dubai this Sunday. Spot gold is trading around its post-Brexit lows, presenting a neutral-to-bearish stance in the daily chart, given that the Momentum indicator continues heading nowhere around its 100 line, but the price is below a bearish 20 DMA and around a bullish 100 DMA, while the RSI indicator gained bearish strength, now around 38. In the shorter term, and according to the 4 hours chart, the risk is also towards the downside, as the price is below all of its moving averages, with the 20 SMA accelerating its slide below the longer ones, and currently at 1,318.70. Technical indicators in the mentioned time frame have bounced modestly, but remain within oversold readings, suggesting the commodity may correct higher before resuming its slide. 

Support levels: 1,302.45 1,296.85 1,287.50

Resistance levels: 1,314.90 1,326.10 1,333.90 

WTI Crude Oil

Crude oil prices fell further last Friday, on news that Iran, the third-biggest OPEC producer raised crude exports to more than 2 million bpd in August, nearing pre-sanctions levels, fueling fears of a global glut. Adding to the negative tone of crude was the Baker Hughes weekly report, showing that the number of active rigs in the US rose by 2 to 416 in the week, up eleven of the last twelve weeks. West Texas Intermediate crude oil futures fell down to $43.33 a barrel before bouncing modestly  ahead of the close. According to the daily chart, the commodity maintains a negative tone, further below its 20 and 100 DMAs, and with the 200 DMA being a critical support for the upcoming days at 42.45.  The RSI indicator in the mentioned time frame heads south around 41, while the Momentum indicator heads modestly higher within bearish territory. In the 4 hours chart, the 20 SMA has accelerated its decline below the 100 and 200 SMAs, although technical indicators have lost their bearish strength within negative territory. 

Support levels: 43.00 42.50 41.90 

Resistance levels: 44.20 44.80 45.50