US dollar taking a rest

In FX markets, Ms. USA (AKA the US dollar) seems to be taking a rest as it starts to fall slightly away from multi-month highs against a lot of her peers, although she showed moderate up-moves after the better-than expected GDP reading in the US and almost unchanged unemployment claims.

The Germans believe that Mario Draghi’s comments from last Friday’s Jackson Hole meeting may have been blown out of proportion though and they seem to still be in a bit of denial about what Mario Draghi wants to happen – which is potentially problematic, as Germany’s influence at the ECB table is significant to say the least. We’ve got the ECB’s next meeting on Thursday next week and investors are unlikely to be able to move the prospect of QE from their minds between now and then, despite what politicians might say.

Angela Merkel has also had words with Francois Hollande, urging him to keep up with his economic reforms. The failed French president has restructured his cabinet, but put an ex banker at the head of the economy ministry, which markets will like but his socialist allies probably won’t. The move could earn him back some brownie points with his international peers though – they could be forgiven for thinking he was going to make his last stand as president count.

Meanwhile France’s possible future leadership could be in trouble as Christine Lagarde, head of the IMF, has been placed under formal investigation of negligence, in a case that dates back to when she was France’s Finance Minister. Ms Lagarde has vehemently disputed the claims and has said that there will be no resignation from the IMF.

Angela Merkel, who would certainly back Ms Lagarde to lead France in the future, is having words with Vladimir Putin, asking him to explain the fact that his troops seem to be openly operating in Eastern Ukraine. So far the only response has been denial of this activity, but by all accounts it’s pretty clear that it’s going on, but then even if Putin were to acknowledge it he may not be able to back down for fears that this would show him as weak in front of his countrymen, which could cause big problems for him at home.

Overnight from the UK, briefly, the British Chamber of Commerce have raised their UK GDP forecasts to 3.2% for this year, but cut export forecasts by more than half from 1.9% to 0.8%. It looks like a short term fall though as they see 2015 roaring back with export growth of more than 4%.

Overalls, stock markets in Asia have fallen overnight and look to have dragged European futures down with them slightly. Fears over Russia saw some demand for the Japanese Yen, which has pushed the Nikkei lower and that has had a knock on effect across the region. Even better-than-expected Private Capital Expenditure reading in Australia didn’t help and Mr. Aussie dollar has been falling.

Short Term Technical Analysis

GBP/USD 4-hour: Consolidating.

Invest Diva Likes: Short positions below 1.6566 with targets at 1.6535 and 1.6486.

If Pair Goes Nuts: Above 1.6615 look for further upside towards 1.6610 and 1.6731.

What’s up on the Forex Dance Floor: The pair remains on a downtrend below the Ichimoku cloud with the RSI around the neutrality area.

Supports and Resistances
1.6610

1.6615

1.6566 Pivot point

1.6535

1.6486

USD/CHF 4-hour: Moving up.

Invest Diva Likes: Long positions above 0.9155 with targets at 0.91843 and 0.92250.

If Pair Goes Nuts: Below 0.91550 look for further downside towards 0.91120 and 0.90974.

What’s up on the Forex Dance Floor: The pair was moving down for 8 periods but remains above the Ichimoku cloud and then formed a morning star candle stick pattern, a reversal pattern which means the trend could turn up. The RSI is moving up from the neutrality areas as well.

Supports and Resistances
0.92250

0.91843

0.91550 Pivot point

0.91120

0.90974

USD/JPY 4-hour: Reaching support level at 103.62.

Invest Diva Likes: Long positions above 103.62 with targets at 103.92 and 104.25.

If Pair Goes Nuts: Below 103.62 look for further downside towards 103.22 and 102.90.

What’s up on the Forex Dance Floor: After hitting a resistance level at 10424, the pair has been consolidating and testing the 76% Fibonacci level and teasing the Bollinger Band’s lower boundary, while remaining above the Ichimoku cloud.

Supports and Resistances
104.25

103.92

103.62 Pivot point

103.22

102.90

AUD/USD 4-hour: Under Pressure

Invest Diva likes: Short positions below 0.9360 with targets and 0.9338 and 0.9325 in extension.

If pair goes nuts: Above 0.9360 look for further upside with 0.9393 & 0.9471 as targets.

What’s up on the forex dance floor: The pair is testing the 50% Fibonacci level without clear evidence of being able to break above it. The RSI is heading down from the overbought zone

Supports and resistances:

0.9471

0.9393

0.9360

0.9338 pivot point

0.9325

0.9282