Fresh dollar’s bids against the basket of major currencies come on hawkish tone from Fed’s speakers that signaled possible rate hike action by the end of the year. Fed’s Vice Chairman Fischer, in his speech last night said that a rate hike this year is still under consideration, as the US economy shows signals of strengthening and is close to meeting Fed’s goals. Fischer continued hawkish tone of NY Fed president Dudley, who warned last week that the market is underestimating the likelihood of rate hike in 2016.

The greenback opened on Monday with gap-higher against the basket of major currencies. The Euro slid below 1.1300 handle vs the dollar, after last week’s strong rally peaked at 1.1365.
Cable remains below 1.3100 and threatens psychological 1.3000 support, following recovery stall at 1.3183 and Friday’s close in red. Sterling was down 1% on Friday, on speculation that Britain could formally begin the process of leaving the EU early next year.
However, the pound showed strong weekly performance after series of robust economic data eased persisting downside pressure.

The dollar/yen returned above 100.00 handle, following Monday’s gap-higher opening and subsequent rally that approached 101.00 barrier. Japanese yen came under pressure on expectations that the Bank of Japan would not rule out a deeper cut into negative interest rates.
Antipodean currencies are also lower against the US dollar. The Aussie hit fresh two-week low, extending bearish acceleration from Friday, after rating agency Moody’s cut the outlook on Australian banks to negative.
Spot Gold extended weakness on Monday, following Friday’s close in red and hit nearly two-week low, as dollar strengthened on renewed speculations on a US rate hike this year.
Oil prices eased on Monday, after three-week rally, with Brent returning back below $50 handle and US oil coming close to $48 support.
Augusts’ rally of more than 20% looks overblown and seen mainly as short-covering with fresh pressure coming on analysts doubts on success of coming oil producer meeting.

Highlights of the day

Monday’s calendar is very light, with no releases that could potentially move the markets.
Focus this week is on the annual Jackson Hole Economic Policy Symposium that starts on Thursday, with Fed’s chair Janet Yellen due to speak on Friday.

Important levels
EURUSD
The Euro pulls back from fresh recovery high at 1.1365, with significant barrier at 1.1345 (Fibo 61.8% of 1.1614/1.0909) being cracked. Strong weekly bullish close gives positive signal, with current action seen as correction. Initial barrier lies at 1.1365, with close above 1.1345 required to generate bullish signal for fresh rally through initial barrier at 1.1365, towards next targets at 1.1425 and 1.1448 (high of 16 June / Fibo 76.4% retracement).
Initial support lies at 1.1269 (session low), followed by 1.1242/37 (Fibo 38.2% of 1.1045/1.1365 upleg / rising daily Tenkan-sen and psychological 1.1200 support.
USDJPY
The pair establishes above 100.00, following Friday’s bullish close and subsequent extension that approached 101.00 barrier. Rally was so far capped by descending daily Tenkan-sen line at 100.91, which guards barriers at 101.00 and 101.45 pivot (Fibo 61.8% of 102.64/99.52 downleg).
Overall structure remains bearish, with sustained break above 101.45 needed to signal further recovery.
Initial support lies at 100.26 (session low), followed by psychological 100.00 support, loss of which would open downside pivot at 99.52 (16 Aug low).
US CRUDE OIL
Crude oil price pulls back from fresh three-week recovery peak at 49.34, with the move seen so far as corrective action. First good support lies at $47.39 (Fibo 23.6% of 41.09/49.34 upleg / top of thin daily cloud), below which, pullback could extend to $46.19 (Fibo 38.2% retracement), the first pivot and $45.22 (50% retracement / daily Tenkan-sen line) the second pivot.
At the upside, session high at $48.92 marks initial resistance, followed by Friday’s peak at $49.34. Sustained break above psychological $50 barrier is required to signal recovery resumption towards the breakpoint at $51.65 (09 June high)., Market Analysis