The US dollar maintains positive sentiment which was regained on speculations of US rate hike, after top Fed official showed quite hawkish stance about rate policy on Friday. The dollar index holds under two-week high in early Tuesday’s trading, as investor took a breather, awaiting next key release, US Non-Farm Payrolls data, due on Friday.
Traders are looking for Friday’s release to see whether the situation in the jobs sector is stable, as solid job figures would further reinforce recent hawkish comments about rate hike in coming months.
Monday’s US data release showed consumer spending increased for a four straight month, signaling a pickup in US economy growth, which supports scenario of interest rate hike.
The Euro stands near fresh three-week low against the dollar at 1.1156, with dips so far contained by strong technical supports at this zone. Sentiment for the single currency remains negative, as technical studies are weakening.
The British pound remains under pressure and retests Monday’s low at 1.3057, signaling further easing towards psychological 1.3000 support against US dollar.
Dollar / yen is accelerating higher again after shallow pullback from Monday’s high at 102.37 that found support at 101.73. Japanese household spending data fell less than expected and jobless rate hit 21-year low, offered a little support to the Japanese currency. The pair is looking for final push towards key short-term resistance at 102.64, to open way for further upside action.
Gold remains steady in early Tuesday’s trading and remains within narrow range, as investors are waiting for US jobs data, to get more clues about the timing of US rate hike. Technical studies remain weak and favor further weakness towards strong supports at $1310/00 zone initially.
Highlights of the day

Europe

Swiss KOF Leading Indicators that predicts the direction of the economy over the following six months, came at 99.8 in August, well below forecasted 102.0 and July’s upward-revised 103.5 release.
German inflation is expected to move lower to 0.1% in August on m/m, compared to 0.3% in July, while y/y inflation is forecasted at 0.5% in August, above July’s release at 0.4%
America

Canada’s current account data release is due at 12:30 GMT and forecast signals widening of trade gap in Q2 to 20.5 billion C$, compared to Q1 gap of 16.8 billion C$.
From the US, release of S&P / CS HPI index for June, is expected to remain unchanged at 5.2%. Data is due at 13:00 GMT.
US CB Consumer Confidence is the highlight of the American session. Forecast for August is at 97.0, compared to July’s release at 97.3, holding near the high of the year at 98.0. Data is due at 14:00 GMT.

Important levels

EURUSD
The single currency holds below 1.1200 barrier, following fresh weakness overnight that posted marginally lower low at 1.1153. Strong supports at 1.1155/70 zone hold for now, however, weak technical studies favor further downside. Break below 1.1150 zone would attract for extension towards key supports at 1.1112 (200SMA / daily cloud base).
Limited upside action is seen for now, with session high at 1.1192 and Monday’s high at 1.1206, offering initial resistance, ahead of 1.1225 (Fibo 38.2% barrier) and former low of 24 Aug at 1.1243, which is expected to ideally limit extended rallies.
GBPUSD
Cable maintains negative tone but near-term action shows signals of hesitation after yesterday’s Doji candle. Near-term price action holds within 1.3053/1.3118 congestion, with range boundaries marking pivotal points.
Extended corrective rallies above 1.3118 could stretch towards former lows at 1.3170, possibly to 1.3190, before fresh push lower. The pair keeps targets at 1.3120 and 1.3000 in near-term focus.
GOLD
Near-term price action is holding within narrow range of $1.1315/25, as traders are awaiting for confirmation of recent Fed’s hawkish comments about the interest rates. Extended consolidation ahead of US jobs data could be anticipated.
Overall structure remains bearish, eyeing key short-term support at $1310 and psychological $1300 support.
Congestion top at $1325 marks initial resistance, ahead of former low at $1330 and daily Tenkan-sen & Kijun-sen lines in bearish setup at $1335 and $1340 respectively., Market Analysis