Daily Report: EUR/USD and AUD/USD Finally Formed a Short Term Bottom?

Market Overview | Written by ActionForex.com | Aug 28 08 07:32 GMT |

Despite initial strength, the greenback is gradually turning soft this week following rebound in oil prices. USD/CAD and USD/JPY has correcting for some time already. Now it seems that EUR/USD and AUD/USD are both finally bottoming. Both pairs are now pressing near term resistance level with clear sign of loss of downside momentum. Further upside in both pairs will confirm this case and bring stronger rally. The tricky one is Sterling which remains under tremendous pressure, across the board. Some sell off is seen against yen and Swissy after nationwide house prices fell for the ninth month by -1.9% mom in Aug, dragging yoy rate to -10.5%. On the other hand, the Euro remains supported by comments from ECB weber yesterday that discussion in rate cut is premature. Focus will turn to Germany job report, Eurozone M3 and sentiments indicators. Germany unemployment rate is expected to remain unchanged at 7.8% in Aug. Eurozone M3 money supply growth is expected to continue to slow from 9.5% yoy to 9.0%. Business climate and Economic sentiments are expected to show further deterioration. Q2 GDP revision will be the main focus from US today. Markets expect a large upward revision from preliminary estimate of 1.9% to 2.7% mainly due to much better than expected performance of net exports in Jun. Though impact to the markets may be muted as the data is considered 'old'. Dollar strength and weakness will likely continue to be driven by developments in crude oil. AUD/USD Daily Outlook Daily Pivots: (S1) 0.8532; (P) 0.8584; (R1) 0.8638; More AUD/USD's recovery from 0.8493 continues today and is now pressing 0.8689 minor resistance and 4 hours 55 EMA. An intraday low should be in place with 4 hours MACD crossed above signal line again. Outlook is turned neutral for the moment. Further break of 0.8812 resistance will confirm that a short term bottom is in place after meeting mentioned 0.8512 cluster support target. In such case, stronger rebound should be seen to 38.2% retracement of 0.9849 to 0.8493 at 0.9011 or above but upside should be limited by 61.8% retracement at 0.9331 and bring fall resumption. On the downside, sustained break of 0.8512 cluster support will indicate decline from 0.9849 has resumed and bring deeper decline to test long term trend line support and 0.80/81 level. In the bigger picture, AUD/USD has completed a diagonal triangle pattern that started at 0.7675, with 0.9849 as a false break with bearish divergence conditions in daily and weekly MACD and RSI. Break of 55 weeks EMA reaffirmed that 0.9849 is an important top. Fall from 0.9849 has now dived into medium term support zone of 0.7675 and 0.8870, with 0.8008 key medium term support in between as expected. Firm break of 0.8512 cluster support (61.8% retracement of 0.7675 to 0.9849 at 0.8505) will put long term trend line support (0.4773 (01 low), 0.7015, now at 0.8105) into focus.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
6:00	GBP	U.K. Nationwide hse price Y/Y Aug	-10.50%	-9.50%	-8.10%
6:00	GBP	U.K. Nationwide hse price M/M Aug	-1.90%	-1.50%	-1.70%	-1.50%
8:00	EUR	Germany Unemployment change Aug		-10K	-20K
8:00	EUR	Germany Unemployment rate Aug		7.80%	7.80%
8:00	EUR	Eurozone M3 Y/Y Jul		9.00%	9.50%
8:00	EUR	Eurozone M3 3M Jul		9.50%	9.90%
9:00	EUR	Eurozone Business climate Aug		-0.3	-0.21
9:00	EUR	Eurozone Economic sentiment Aug		89.1	89.5
10:00	GBP	U.K. CBI Distributive Trades Aug		-30	-36
12:30	USD	U.S. PCE core M/M Q2		2.10%	2.10%
12:30	USD	U.S. PCE index M/M Q2		4.20%	3.90%
12:30	USD	U.S. GDP deflator Q2		1.10%	1.10%
12:30	USD	U.S. GDP Q2		2.70%	1.90%
12:30	USD	U.S. Jobless claims		428K	432K
12:30	CAD	Canada Current account Q2		8.00B	5.56B