News Commentary
The dollar was heading up three-week lows against a currency basket after the latest U.S. jobs report on Friday showed wages grew less than expectation in June with 0.2% (forecast was 0.3%), even as the economy created more jobs than expected with 213K (forecast was 195K).
The average hourly earnings pointed to sustain inflation pressures that hold expectations back for a fourth rate hike by the Federal Reserve this year.
Brexit secretary David Davis resigned unexpectedly last night, to send a blow to Prime Minister Theresa May, as she struggles to end conflicts among her ministers who felt her plan to press for the closest possible trading ties with the European Union had betrayed their desire for a clean break with the bloc.
The pound had fallen responding to the following the reports, before having another turnaround amid indications that May would not face major trouble against her Brexit policy and hopes that a softer Brexit may be on the cards moving forward.
The Euro was boosted after data showing that German exports rose by more than imports in May, indicating that the euro area’s largest economy remains solid despite global trade tensions.
Chart Analysis
USD INDEX
As we expected on the daily chart, the price had bounced from the key resistance at 95.5, powered by divergence on RSI and a break beneath an ascending trend line.
The price also had shaped a reversal double top pattern.
So, the index is supposed to get back down to the support zone again of 93.2-92.6.
USD/JPY
On the daily chart, the pair retested the key resistance of 111.1 again and the descending trend from the high of 2017 to shape a double top reversal pattern.
So, the price is expected to assure the next bearish move that leads the price to the support zone of 108.65-108.15.
AUD/USD
On the daily chart, as we expected, the price has reversed from the support zone of 0.7325-0.7365.
The pair is supposed to go on in its bullish momentum powered by divergence on RSI to reach the key resistance of 0.758, where the descending trend from the high of February is located.
As we expected before, the price has reached and bounced from the support zone 81.2-80.5 as the price is moving sideways.
So, the price is expected to retest the head of the pattern to again reach the levels of 84-84.4.
On the 4 hour chart, we can see a break above the descending wedge along with shaping a head & shoulders pattern.
A GARTLEY harmonic pattern has enhanced the bullish bias before 84.35.
Watch the neckline of the H&S which is located at the mentioned resistance (84.35) with moving average 200 too.
A break above these levels would take the price up to the key resistance 87.
