The American dollar plummeted this Tuesday

EUR/USD

The American dollar plummeted this Tuesday, following the release of a much worse-than-expected US non-manufacturing PMI. The index fell to its lowest since 2010, down to 51.4 in August from previous 55.5 in July and the expected 55.5. New orders fell to 51.4 from 60.3, the lowest level since December 2013 whilst the employment sub-component decreased to 50.7 from 51.4, a second straight drop. After trading uneventfully pretty much since the week started, the EUR/USD pair jumped to 1.1259, its highest since  August 26th, holding nearby at the end of the end.

Data coming from Europe showed that the region Q2 GDP  grew as initially estimated by 0.3%, while German Factory Orders rose in July by less than expected, up by 0.2% seasonally adjusted, and compared to the previous month. June reading was revised modestly higher, from -0.4% to -0.3%, while on a year-on-year basis, it fell 0.7%, in line with the downward revisions in manufacturing activity seen last week.

The  pair is now poised to extend its gains, as odds of a rate hike in the US this September have faded further. In the 4 hours chart, technical indicators present a strong upward momentum, near overbought territory, whilst the price broke above its moving averages that anyway present limited directional strength. More relevant, the pair is above the 50% retracement of its latest slide, and Friday's high around 1.1250, with the 61.8% retracement of the same rally being the immediate resistance around 1.1275. An extension beyond this last should open doors for a continued advance up to 1.1366, August monthly high. 

Support levels: 1.1240 1.1200 1.1155

Resistance levels: 1.1275 1.1310 1.1365 

USD/JPY

The USD/JPY pair fell down to 102.00, shedding almost all the gains achieved last week, as markets' participants rushed to  sell the greenback on diminishing hopes for a US rate hike as soon as this month. During the past Asian session, Koichi Hamada, PM Abe's advisor, hit the wires saying that the BOJ should wait for the US Federal Reserve decision before making their own, somehow suggesting that Japanese authorities are more inclined to wait than to cut rates further this month, adding to yen's strength. After trading as high as 104.31 last week, flirting there with a bearish 100 DMA, the pair is now struggling with the mentioned 102.00 level, presenting a strong bearish tone in the short term as in the 4 hours chat, technical indicators maintain sharp negative slopes near oversold readings, whilst the price is back below a bearish 200 SMA, but still holding above a bullish 100 SMA. August 30th low comes at 101.75, providing an immediate support for this Wednesday, with a break below it opening doors for a steeper decline down to 100.65, a major long term Fibonacci support. 

Support levels: 101.75 101.30 100.90

Resistance levels: 102.50 102.90 103.40  

GBP/USD

Being the strongest currency across the board, the Sterling soared in the US afternoon, following dismal American data, to reach a fresh 8-week high against the greenback of 1.3444. The GBP/USD pair fell briefly below the 1.3300 figure at the beginning of the day, but quickly recovered ground on the back of Pound's self strength. There were no macroeconomic releases in the UK, but data out lately showed that business sentiment has recovered firmly from its post-Brexit lows, suggesting that the kingdom will avoid an economic crisis in spite of the Brexit. This Wednesday, the UK will release its Industrial and Manufacturing Production data for July, which may be disappointing, considering that most of the economy's rebound has been seen in August. In the meantime, the 4 hours chart shows that the 20 SMA has extended its advance below the current level, now nearing 1.3320, a major Fibonacci support and now the line in the sand for this new-born bullish trend. Technical indicators in the mentioned time frame have pared gains near overbought levels, but given that the price holds near its highs, the risk towards the downside seems limited. Some consolidation around the current level could be expected, but further gains up to 1.3500 are likely for this Wednesday, particularly if the UK macroeconomic readings surprise to the upside. 

Support levels: 1.3410 1.3370 1.3320 

Resistance levels: 1.3450 1.3495 1.3530 

AUD/USD

The Aussie was among the best performers this Tuesday, rising at the beginning of the day after the RBA decided to left its key benchmark rate at 1.5%. The accompanying statement showed that policy makers consider that the current stance is "consistent with sustainable growth in the economy," and that they believe inflation target will be reached over time, despite acknowledging is still low. The AUD/USD pair recovered well above the 0.7600 mark, retreating partially during London trading hours. Nevertheless, dismal US data sent it up to current 0.7680 region, a fresh 2-week high. The pair is then back above a now invalid daily ascendant trend line, but more relevant, above the 23.6% retracement of this year´s decline. In the 4 hours chart, the 20 SMA has accelerated its advance and is now crossing above the 200 EMA, both well below the current level, while indicators consolidate in overbought territory, suggesting the pair may continue advancing, particularly on a break above 0.7692, August 26th daily high. 

Dow Jones

Wall Street closed higher this Tuesday, with the Dow Jones Industrial Average up 46 points to end at 18,538.12, while the S&P added 6 points, to 2,186.48. The Nasdaq Composite closed at record highs at 5,275.91, up by 0.50%. Stocks surged after a poor ISM non-manufacturing report, which increased chances of an on-hold Federal Reserve for this month. The recovery resulted in the Dow reaching the higher end of its latest range, but from a technical point of view, the neutral stance seen over the last two weeks persists, as the index is barely above  a still flat 20 SMA, while technical indicators remain attached to their mid-lines, with no clear directional strength. In the shorter term, however, the benchmark presents a modest bullish tone, given that in the 4 hours chart, it has recovered above all of its moving averages and the 38.2% retracement of its latest bullish run, this last around 18,506. Also, and in this last time frame, indicators have bounced from their mid-lines and continue heading north, supporting some additional gains for this Wednesday, which will likely accelerate if the index manages to extend beyond the 18,580 level, August 26th high. 

Support levels: 18,508 18,462 18,410

Resistance levels: 18,580 18,638 18,693

FTSE 100

The FTSE 100 fell 0.78% or 53 points to close the day at 6,826.05, undermined by financial-related equities. Standard Chartered fell 2.96%, after Barclays cut its rating to "underweight" from "equal weight," followed by Lloyds Banking group, down 2.63%. Mining related currencies, on the other hand, closed higher amid gold's comeback, with Anglo American and Fresnillo adding over 1%. A stronger Pound was behind the benchmark's decline, alongside with diminishing chances of further easing coming from the BOE. The risk has turned towards the downside, as in the daily chart, the benchmark is back below its 20 SMA, whilst indicators head south within neutral territory. In the 4 hours chart,  however, the index is bouncing from its 20 and 100 SMAs, both converging a few points below the current level, while indicators have bounced from their mid-lines, although with not enough upward momentum to confirm a recovery is underway. A decline below 6,817, the daily low, should open doors for further slides, albeit the decline could remain limited if base metals continue strengthening. 

Support levels: 6,817 6,754 6,712

Resistance levels: 6,868 6,931 6,968 

DAX

European equities closed generally lower, although the German DAX managed to add roughly 15 points to end up at 10,687.14. The slide in the region's stocks was led by persistent weakness in the banking sector, with Deutsche Bank being the biggest loser, down by 3.24%, followed by Commerzbank that shed 2.34%. A sharp advance in healthcare company Fresenius, up 6.4%, kept the index afloat, helped by automakers that also closed in positive territory. From a technical point of view, the daily chart shows that the index held above its 20 SMA, but the indicator is losing upward strength, whilst indicators continue lacking directional strength, slightly above their mid-lines. In the shorter term, and according to the 4 hours chart, the technical stance is neutral-to-bullish, as the index is above all of its moving averages, whilst the technical indicators aim modestly higher, also without enough strength to confirm a bullish extension ahead. 

Support levels: 10,675 10,626 10,560

Resistance levels: 10,728 10,766 10,807 

Nikkei

The Nikkei 225 closed modestly higher this Tuesday at 17,081.98, up by 44 points or 0.26%. The index, however, turned sharply lower in electronic trading, on renewed yen's strength after disappointing US macroeconomic data. The benchmark is poised to open the day nearly 150 points below the mentioned close, and while a bearish continuation is not yet confirmed, the daily chart shows that the technical indicators have turned lower, still within positive territory, while the benchmark is holding a few points above an increasingly bearish 200 DMA, all of which suggest that buying interest is limited. In the 4 hours chart, the index has been consolidating below a now horizontal 20 SMA at 16,987, providing a strong resistance in the case of a recovery, whilst the technical indicators have bounced modestly from their mid-lines, but maintain a neutral stance. 

Support levels: 16,915 16,860 16,792

Resistance levels: 16,987 17,083 17,153 

Gold

Gold buyers cheered negative news coming from the US, and sent spot up to $1,352.52, the highest since August 19th. The American dollar weakened against most of its rival currencies this Tuesday, as following a slowdown in job's creation, the services sector in the country contracted to levels last seen in 2010. The news tempered expectations of a rate hike in the US, fueling the gold's recovery. Now trading near the mentioned high, the daily chart shows that  the price is well above its 20 SMA and the 23.6% retracement of its latest bullish run, whist indicators head north above their mid-lines, reaching fresh 2-week highs  and therefore pointing for additional gains ahead. In the 4 hours chart, indicators have lost upward strength and turned modestly lower, but remain within overbought readings, limiting chances of a downward move. Furthermore, and in this last time frame the 20 SMA has turned sharply higher below the current level, while the price has also extended above its 100 and 200 SMAs. 

Support levels: 1,342.50 1,334.00 1,324.80 

Resistance levels: 1,353.50 1,364.30 1,375.11

WTI Crude Oil

Crude oil prices edged lower this Tuesday, weighed by speculation that Iran is not willing to join an output cap, which will result in other major producers´ countries pulling back from any possible deal. Saudi Arabia foreign minister, Al-Jubeir, said that the kingdom will agree on a freeze only if the rest of producing countries do so. Earlier this year, a deal on the matter faltered at the last minute due to Iran willingness to keep on pumping to reach its maximum levels of output. West Texas Intermediate crude oil prices, however, bounced from its daily low of $43.82 a barrel on dollar weakness, to settle a few cents below the critical 45.00 mark. From a technical point of view, the daily chart shows that  uncertainty is still dominating oil, as it ended up with a doji, not far from Monday's close. The price is still developing below its 20 and 100 SMAs, both converging around 47.20, while the technical indicators continue consolidating within negative territory. In the 4 hours chart, indicators head modestly lower, right above their mid-lines, while the moving averages remain horizontal, indicating also the absence of technical definitions. 

Support levels: 44.30 43.70 43.20 

Resistance levels: 45.65 46.50 47.20