The dollar maintains strong bullish footing against the basket of major currencies, with fresh support for Fed’s rate hike action in coming months, given by Tuesday’s upbeat US data. Consumer Confidence rose to 11-month high at 101.1 in August, well above forecasted 97.2 figure, signaling further strengthening of the US economy.
With fresh support from investors’ raising bets for Federal Reserve rate hike, the greenback showed top performance against Japanese yen. The pair broke above 103 barrier and hit one-month high at, levels last traded at the end of July. Dollar/yen rallied strongly from 100 zone in past couple of days on renewed rate hike speculations, offsetting hopes of further strengthening of yen that failed to clearly break below psychological 100.00 support.
The Euro is also among the top losers, as it eventually broke strong supports at 1.1165 zone and eyes, heading towards next layer of strong technical supports at 1.1115. The single currency entered the second week of easing against the dollar, with technical studies coming into full bullish mode and suggesting further losses. Release of US jobs data on Friday is eyed for confirmation of expectations of US interest rate hike that would send the US dollar further up against its major counterparts.
The British Pound holds within consolidation range against the US dollar in past two days, but overall outlook remains negative for Sterling. Investors are increasing their bets that US interest rate could rise by the end of the year, while UK’s interest rates may be cut again to reduce the Brexit impact. Possible further divergence in the rate policies is expected to keep the pound under pressure.
Antipodean currencies remain at the back foot against the greenback, with Australian dollar hitting near one-month low on test of strong 0.7500 support. On the other side, Kiwi dollar received support from strong Business Confidence data, released overnight and bounced from strong support at 0.7200 zone.
The New Zealand dollar also gained against Aussie, as AUDNZD pair broke below strong technical support at 1.0390, eyeing key med-term support at 1.0300 zone.
Gold fell on Tuesday, pressured by strong US rate hike speculations that lent further support to the US dollar. The Yellow metal hit two-month low on a brief probe below strong support at $1310. Traders see risk of further easing and retest of psychological $1300, on rising of positive sentiment for hike of US interest rates in coming months. Near-term focus is on Friday’s US jobs data, which is expected to provide more clues about strength of US economy and Fed’s next steps.

Highlights of the day

Europe

German Retail Sales beat the expectations in July, coming at 1.7% m/m vs forecast at 0.5% and negative release in June at -0.6%.
On the year, annual Retail Sales in Europe’s largest economy fell by 1.5%, compared to 0.3% forecast.

Germany’s unemployment rate in August is expected to remain steady at 6.1%, a 25-year low, while analysts expect a 5,000 drop in seasonally adjusted unemployment claims, as the economy continues to grow. The country’s robust labour market mirrors a wider improvement in unemployment across the Eurozone, where the jobless rate has fallen to its lowest level since 2011. Data is due at 0.7:55 GMT.

UK Nationwide HPI is one of two major monthly house price surveys in the UK and this month’s print should contain more post-Brexit data. House price information is derived from Nationwide’s lending for owner/occupier house purchases at the post-survey approval stage. July’s year-on-year number of 5.2% beat economists’ expectations of 4.5% and June’s reading of 5.1%.

America

US ADP payrolls report is the highlight of the US session, as it is used as an indication for more significant release of US monthly non-farm payrolls data, due on Friday.
Analysts expect growth of 174K jobs in August vs July’s 179K release. Data is due at 12:15 GMT.

US Pending home Sales are expected to rise in July, according to the forecast at 0.6%, compared to 0.2% in June. Data is due at 14:00 GMT.
Important levels

EURUSD
The Euro heads lower and looks for test of strong 1.1112 support (daily cloud base / 200SMA), after Tuesday’s strong fall marked break below daily cloud top and Kijun-sen line that previously marked strong support.
Loss of 1.1112 support would open way towards 1.1045 (05 Aug trough) and psychological 1.1000 support.
Solid resistance lies at 1.1165 zone, former strong support, followed by 1.1200/20 zone.
USDJPY
The pair establishes above 103 handle, former strong resistance that now offers initial support. Firm bullish tone favors further upside, with 103.50 marking initial target ahead of 104.00 and more significant 104.43 (daily cloud base / Fibo 61.8% of larger 107.47/99.52 descend).
Below 103.00, next supports lay at 102.84, 102.55 and 102.37.

GOLD
Gold fell further on Tuesday and tested strong technical support at $1310/08 zone, after three-day consolidation. After penetrating daily cloud, final break below $1310/08 is expected to trigger further bearish acceleration towards $1300 and $1290 in extension.
Initial resistance lies at $1317, followed by $1325, n/t consolidation top and former low at $1329., Market Analysis