eFXplus DATA

• Failed to register a daily close above key 1.1780 Fibo 4 sessions in a row
• 1.1780 is a 38.2 percent retrace of the 1.2556 to 1.1301 2018 fall
• Multiple failures a sign of a market that is struggling to break higher
• Instead it is likely to drop towards the 30-DMA now at 1.1632
• We are looking to get long on dips to 1.1650. Previous bullets
• EUR/USD downside risk grows, so protection is needed

• Price retraces beyond 61.8% of the Sept 21 1.3260 to 1.3041 drop
• Above 1.3186 and is now consolidating gains above the 100DMA
• Slow stochs bull cross but 14-day momentum slowing slightly
• A cloud twist a month out at 1.2998 might slow any further advances
• Weeklies confused and have a cloud twist out to Dec at 1.3567
• Await stronger signals

• AUD/USD up around 0.35% at 0.7275, as pair follows NZD/USD higher
• Asian equity markets a bit higher and helping to support AUD sentiment
• Extended moves in the AUD/USD unlikely ahead of FOMC meeting later today
• Resistance around 0.7305 where 55-day MA and Friday's high converge

MUFG Research discusses the EUR outlook in light of the recent hawkish turn in the ECB rhetoric which MUFG flags as a positive medium-term factor for the single currency through 2019 but not necessarily been reflected in the near-term. 

"The euro has staged a sharp rebound against the US dollar over the last month and is currently attempting to break above key resistance at the 1.1800-level. The recent turnaround for the euro supports our view that further downside for the euro from already undervalued levels should prove limited," MUFG argues. 

"The hawkish shift in ECB rhetoric is providing more support for the euro although upside potential in the near-term continues to be dampened by the ECB’s forward guidance to leave rates on hold at least through the summer of next year. The euro would begin to strengthen more notably if the market started to more seriously question the sustainability of low rates in the euro-zone. It is a development we expect to materialize in 2019 and supports our outlook for a stronger euro," MUFG adds. 

Both AUD/JPY and NZD/JPY have bounced relatively sharply from near two-year lows earlier this month, and may now attract selling interest from Japanese investors.
AUD/JPY rallied from a fresh trend low of 78.69 on September 7, its lowest since November 2016, to 82.35 Friday, while NZD/JPY rallied from a fresh trend low of 72.25 on September 10, the lowest since August 2016, to 75.54 Friday.
Both have since come off a touch, with AUD/USD and NZD/USD recovering more moderately this month and looking to have peaked on fall-out from U.S.-China trade tensions.
Both crosses also remain in downtrends, capped around their Ichimoku clouds.
Given the toppish nature of AUD/USD and NZD/USD, the Mrs Watanabe retail traders look likely to again take a swipe down in the less liquid AUD/JPY and NZD/JPY.
Japanese investment trusts could join in to hedge what remains of their thinned-out portfolios.
This is especially the case with high-beta trades losing allure for Japanese institutional investors who prefer the safety, liquidity and increasingly, higher yields of more major currencies.

• NZ Business Confidence & activity survey improvement and sent NZD/USD higher
• Survey follow stronger than expected NZ GDP last week
• RBNZ pessimistic last meeting & recent data may lift their tone on Thursday
• NZD/USD around 0.45% higher and Friday high at 0.6699 in focus
• More resistance at the Aug 28 trend high at 0.6728

• GBP/USD opens 0.4% higher as cable outperforms on Brexit news
• May rules out early election nL8N1WB681, Labour passes motion nS8N1S005F
• The move takes GBP/USD back above 100 DMA, turns tech signals positive
• Next resistance the s/t 61.8 Fibo at 1.3198, then recent highs at 1.3295
• Initial support is at 10 & 100 DMAs at 1.3142/45, then recent lows at 1.3041
• Fresh Brexit headlines, the Fed decision and remarks today's main drivers

• AUD/USD opens around 0.7250 - where it opened yesterday's session
• Quiet range trading overnight as the market positions itself for the FOMC
• Market split on whether Fed hike will be a hawkish or dovish hike
• Range trading likely to continue with eye on AUD/JPY flows out of Tokyo
• Support at the 10-day MA at 0.7233 and 38.2 0f 0.7085/0.7304 at 0.7220
• Resistance around 0.7305 where 55-day MA and Friday's high converge

Societe Generale Research discusses EUR/USD outlook and maintains a neutral view with an upside bias for the rest of the year. 

"Clearly, the next big event will come in the dissection of the FOMC statement, tomorrow..

EUR/USD is likely to find 1.18 are hard nut to crack, but the bottom of the range has moved up to 1.15 and absent negative shocks from the Italian budget, or from the economic data, we still think we're in this range until we break higher (slowly, step by step)," SocGen argues.

• USD/JPY through neckline resistance, tech objective 9 figs higher
• US data continues strong, consumer confidence best since Sep 2000
• Fed expected hawkish tomorrow, 4th 2018 rate hike 80% priced
• Event risk for FX is USD/CNH through 7.00, JPY move suggests rising prob
• Ratcheting of trade confrontations set stage for next USD leg up

• Cable drifting, trapped between competing Brexit narratives, coin toss
• Quiet pre-Fed NorAm session
• May hopeful but says no Brexit deal better than bad deal
• Labour vows to vote against, open to 2nd referendum
• Uncertainty creates fresh downside vulnerabilities, stops below 1.3050

Barclays Research discusses EUR/USD outlook and adopts and flags scope for upside in the near-term amid the release of the Italian and French budgets.

"We believe that risk-reward favors EUR/USD upside, given limited risks from the Italian and French budgets, and expected improvements in inflation prints. Italy is due to release an update to its medium-term economic and fiscal this week (by 27 September), and draft the 2019 budget by 15 October...," Barclays argues. 

"French budget will likely contain higher than previously projected public deficit and debt; however the focus will be on the government's strategic plan to reduce public spending and structural deficit....A more constructive plan from the French budget will likely support the single currency," Barclays adds. 

EUR/USD is making the most of the small crisis of confidence hindering the dollar, which remains weighed down by political and positioning issues.
EUR/USD is threatening to push back above 1.1800 after shrugging off euro-bearish comments by ECB's chief economist Praet, who attempted to damp speculation that Draghi's yesterday had hinted at a quicker normalization than previously expected. After spiking below 1.1740 on Praet -- a moved helped by German-U.S. yield spreads widening further in the greenback's favor -- EUR/USD quickly reversed its slide on the back of broad dollar sales. The price action betrayed the troubles sapping dollar bulls' vigor, including ongoing U.S. political issues in the form of Kavanaugh's Supreme Court nomination, uncertainty surrounding Deputy Attorney General Rosenstein and November's U.S. Also in EUR/USD's favor, typically contrarian retail traders are nearing net short in the pair while also adding to net-short euro positions versus most major currencies. EUR/USD's rise is likely to be a grind, however, as it approaches big 1.1850/55 resistance.
A break should intensify the rally and target the 200-DMA.

TD Research discusses the current market conditions and notes that the major currencies are sitting in a holding pattern awaiting the next impetus.

"We think it is the Fed, though the recent spike in oil has raised some eyebrows. The next move in oil matters insofar as it offers a good reason to keep the selloff in global rates moving, especially as global output gaps are closing. Higher oil prices would support the ECB's confidence that inflation is headed in the right direction,
" TD adds. 

This is more likely to benefit the ROW than the USD, given there is more room for a deeper selloff in the like of bunds. The 10y is up nearly 20bp over the past 3m.

The EUR has tracked bunds more closely than USTs, which also point to 1.20 on a break of 1.18. We also think EURCHF has room to run higher as CHF looks quite rich at current levels that also favors downside in CHFJPY," TD adds. 

• Modest 20 pip range for AUD/USD during the European am, 0.7237-0.7257
• 0.7236-0.7263 was Asia range, when lower copper prices weighed on AUD
• LME copper is currently down 1.2 pct having been down 2.2 pct in Asia
• U.S/China trade war blamed for copper price drop nL4N1WB0J4
• China says U.S. putting 'knife to its neck', hard to proceed on trade
• See: nL4N1WB0VJ. Waning trade concerns boosted copper and AUD last week

• EUR/USD rallies 1.1724-1.1815 day of Draghi's vigorous inflation comment
• 10-year spread narrowed yesterday to 257bp from Friday's trend wide nr 261bp
• Yet EUR/USD tops and trades a lower 1.1774-1.1731 range today
• Pattern may reflect the bias of spec positions, long ahead Fed tomorrow
• Profit-taking may therefore continue to weigh on EUR/USD near-term
• Confluence of 21/100-DMAs 1.1660-61 looks critical for still bullish techs

• Long tail on Mon's candle line increases scope for further gains
• Long tails are normally a sign that the downside is being rejected
• Scope is for growing for an eventual test of the 2018 113.40 peak
• We have raised our bid to 112.30 as this is ahead of Monday's 112.27 low
• 112.24 Fibo, a 23.6% of 109.78 to 113.00 (August-September) rise, supports
• Note the "cloud twist" in lower 111s today, means outside chance of a fall

• Cable down to 1.3095 ahead of speech from BoE MPC member Vlieghe at 0840GMT
• Vlieghe was relatively dovish in newspaper interview last week nL3N1W4531
• 1.3095 is low water-mark since Monday's M&A news-assisted high of 1.3167
• Sky shares up 8.6 pct Monday after Comcast cash offer Saturday nL8N1WA1EG
• 1.3041 was Friday's low after May fronted up to EU over Brexit nL8N1W71CG
• Starmer: Labour open to second EU vote with option of remaining nL9N1VT021

• Our 1.3105 short play survived Monday's corrective rally
• The 1.3175 stop intact and price opens Tuesday on a soft note
• Back at the 10DMA, 1.3122, and back below 100DMA, 1.3148
• Daily cloud top the challenge for bears. Top comes in at 1.3054
• Initial supp. 30HMA lower Bolli at 1.3070 then 1.3156 Monday low
• Weeklies remain positive but stalling at 21 and 100WMAs

• AUD/USD at session low below 0.7245 as copper falling in Asia
• NY Copper down over 1.5% since NY close and US 10 year yield up 2 BPs
• AUD/USD support at 10-day MA 0.7225 and 38.2 of 0.7085/0.7304 at 0.7220
• Both copper and AUD/USD rallied hard last week when trade war concerns waned
• US/China trade tensions back on the radar and both could be vulnerable now