• The dollar index (KTM: USDX) began Wednesday on a back foot following a mixed session. Besides U.S yields on the 10-year Treasuries closed at 3.21% down from Friday’s closing of 3.23%.

 

  • AUD and NZD continue to rebound against the USD this morning with 0.30% each and extends the overnight gains. The dollar is a little bit down against majors EUR and GBP by 0.15% each and down by 0.20% against CHF, CAD, DKK, NOK and SEK in the G10.

Wednesday FX insights:

GBPUSD is trading in line with our bullish trade and EURUSD has been forming a base at 1.1460. It seems intraday upward momentum is catching up for 1.1530 and 1.1550. At shorter time frame (H1) the price action traced out a short-term price bottom near 1.1460 via the formation of a double bottom. The shift in the sentiment indicated that rallies to resistance at 1.1550 and 1.1590/1.1615 with support against the recent lows at 1.1460.

Below here, the focus will move down to the 78.6%/80.0% fib reactions at 1.1410/1.1400, followed by near-term support at 1.1350.

Latest findings: 

  • Base formation at 1.1460
  • The daily RSI study has been developing positive divergence
  • Price action settles above the descending trendline


Day Ahead:
In Europe, lack of market movers for the single currency remains to focus on Italy assets and the U.S bond yields.

In the UK, we will GDP and August manufacturing (Wed). We expect UK GDP to have expanded 0.1% in August, down from 0.3% in July. According to ONS, the month-on-month gross domestic product (GDP) growth rate was 0.3% in May 2018, 0.1% in June and 0.3% in July.

In the past three months up to July, the growth in the economy picked up. Forecasting this week’s GDP figures, Danske Bank said in a note to clients “We estimate GDP grew 0.2% m/m in August”.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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