eFXplus DATA

• GBP/USD flat in Asia after trading a 1.3142/75 range
• Initial rally fizzled as USD broadly back to opening levels
• Key resistance remains at the 100 DMA at 1.3165, close above bullish
• Initial support at 10 DMA at 1.3058, close below turns outlook neutral
• Set-up is bullish with s/t MAs and momentum studies heading higher
• Bulls need a close above the 100 DMA soon for further gains towards 1.35

• AUD/USD trading around 0.7225 after trading down to 0.7214 earlier
• Move up coinciding with move up in Asian equities and key commodities
• AXJ equity index +0.67%; Dalian iron ore +1.4% and Lon Copper +0.68%
• Resistance around 0.7235 where 50% of 0.7381/0.7085 and Sep 4 high converge
• Break above 0.7240 targets the 61.8 of that move at 0.7268
• Extended moves higher unlikely as US/China trade tensions remain high

Nordea research discusses its tactical views on EUR/USD and EUR/GBP for this week.

"EUR/USD: still slightly downwards biased, as USD liquidity will re-shrink in coming weeks. If 1.1750 breaks on the topside, it is a technical game changer. For now we target levels below 1.15.

We stay short EUR/GBP, as this week’s data could further underpin GBP. Especially the retail sales report on Thursday looks promising on our models. In any other case than a cliff-edge Brexit scenario, we consider the GBP very cheap," Nordea argues. 

• After breaking uptrend channel base, EUR/GBP testing 100 DMA at 0.8864
• Close below 50% retracement at 0.8859 targets 200 DMA at 0.8837
• Set-up is bearish with s/t MAs and momentum studies heading lower
• Initial resistance is at the 10 DMA at 0.8909 then 21 DMA at 0.8964
• Britain, EU close to achieving orderly Brexit deal - May nL8N1W46M6

• AUD/USD trading above yesterday's high and as high as 0.7230 in early Asia
• Resistance at 50% of 0.7381/0.7085 move at 0.7233 and Sept 4 high at 0.7236
• The 61.8 of that move comes in at 0.7268 with break targeting 0.7300/20
• AUD/USD strengthening despite US/China trade tensions and higher US yields
• Focus is on recovery in Chinese equities, CNH and 3% rise in NY copper

• EUR/USD opens 0.13% lower after the 6th fail above 1.1700 in last 16 days
• EUR/USD rally reversed on surging US yields with 10-yr rising 6 BPs to 3.05%
• Resistance at 1.1715/35, which has held on numerous attempts higher
• Support at 21-day MA at 1.1632 and 55-day MA at 1.1616
• Key to moves in Asia will be EUR/JPY flows out of Tokyo

CIBC Research discusses EUR/USD outlook and adopts a bullish bias over the medium-to-long term.

Looking beyond interest-sensitive capital flows, remember that the euro is also buttressed by an attractive Eurozone current account surplus that is expected to remain well above 3% of GDP.

A combination of ongoing capital flows, reduced political risk dynamics, still above-trend growth and the potential for earlier than expected central bank action in 2019 point towards medium run EUR gains.

Our end of 2019 target of 1.28 may seem like a reach, but it’s actually only a bit above the average level seen since the global financial crisis," CIBC argues. 

• USD/JPY rallies to 76.4% of July-Aug drop at 112.39 w risk-on
• Trade war escalation sell-off O/N proves a buying opportunity
• 10-yr Tsy yields clear 3%, FF price in terminal rate above 3%
• Stocks rising, big N225 breakout above 4-mo range top, VIX down
• July high (113.18 EBS), 61.8% of 2016-18 drop & 200-WMA @113.27
• BOJ seen on hold tonight, Aug trade deficit wider
• Close above 112.39 Fibo targets 113.18. Steady CNY helping risk

EUR/USD appears to have an underlying bullish sentiment even as U.S.-China trade tensions mount and are likely to escalate further.
Indeed, the U.S. dollar is suddenly lacking an impetus for strength, and that vacuum is a major factor in lifting EUR/USD.
And even as the 10-year U.S. Treasury yield nears 3.01/3.03% resistance, the greenback is unable to mount any serious rally.
This is likely because yield spread compression is aiding the Euro’s lift as well.
DE-US 2-year yields are narrowing as is the IT-US 2-year spread on the back of reduced concerns over Italy's upcoming budget.
Thus, EUR/USD is once again edging closer to 1.1750/1.1800 resistance and technicals continue to suggest a breakout is possible.
Daily and monthly RSIs provide a tailwind and are not overbought, while the nearly converged 10-, 21- and 55-DMAs exert positive influence.
A break above the resistance is likely to usher in a short squeeze with bulls then setting their sights on the 200-DMA which currently sits near 1.1950.
Above here can place the next major hurdle near 1.2100 in focus.

Bank of America Merrill lynch Research discusses the JPY outlook around tonight's BoJ September policy decision. 

"The BoJ is likely to leave its policy targets and guidance intact at its 19 Sep MPM. Kuroda press conference likely dovish. The JGB market and the BoJ are waiting for each other's next move, so the market has fallen back into a rigid state....

Kuroda's likely dovish tone a slight negative for JPY but USD/JPY to be driven by USD...The next major event for USDJPY is the US midterm election in November. The consensus, as well as our US experts, thinks a split congress is most likely. The reduction in the USD long position among spec money suggests the FX market at least partly expects this result. 

The domestic flow dynamic continues to support USD/JPY. Thus, we think risk reward still points to upside for USD/JPY. We expect the pair to rise gradually toward 115 by the end of this year," BofAML argues. 

• Cable tests 1.3173 (July 31 high) after extending north from 1.3120
• 1.3120 was Ldn am low, after half-cent fall from early Ldn high
• Price action suggests trade war tide might be turning on USD
• USD has risen on prior U.S/China trade dispute escalation episodes
• Trump accuses China of using trade to target mid-term election
• IMM speculators have been net long USD for 13 straight weeks

MUFG Research discusses the USD outlook in light of the latest round of US tariffs on China in which the Trump administration announced overnight that it will impose a 10% tariff on a further USD200 billion of Chinese imports from next week.

"The latest developments clearly highlight the risk that trade tensions continue to escalate between the US and China. The financial market reaction overnight to the fresh tariff announcement has been relatively muted. The market appears to have taken the announcement in its stride so far, which may reflect in part that it was well anticipated," MUFG notes.

"The shift to more protectionist US trade policies has already played a role in strengthening the US dollar so far this year, especially against high beta commodity related and emerging market currencies. Yet, the announcement overnight has not proven sufficient to trigger renewed upward momentum for the US dollar. It is a further example of disappointing price action for the US dollar in recent weeks," MUFG argues. 

• 50 pip range for cable thus far Tuesday, 1.3120-1.3170 (high before low)
• 1.3170 = seven-week peak, before China said will retaliate vs new US tariffs
• See: nL3N1W41ZW. Recent GBP gains aided by positive Brexit deal vibe
• German minister says Brexit deal possible by Nov nB5N1U600R nL8N1W4249
• More GBP shorts may be squeezed if vibe stays positive thru EU Salzburg meet
• IMM GBP gross shorts outnumber gross longs by nearly two to one

The monthly chart continues to target the 0.6827 low for AUD/USD from January 2016.
A bear trend, in place since the AUD peaked at 0.8136 in January, has shown some signs of stalling but continues to register lower lows.
Trade war escalation is the Tuesday focus, and despite AUD/USD gain consolidation it is hard to see the Australian currency escaping the tariff storm.
Shorter-term charts still offer some hope for those who caught the AUD on its recent dip to 0.7085, but the monthly picture gives a warning, and there are some negative pointers behind the bullish daily price action too.
Daily price is in a 0.7142 to 0.7229 range, against a backdrop of negative 14-day momentum, below zero since Aug.
9, and a neutral to bearish stochastic.
Bearishly aligned ichimoku study also highlights the fragile nature of the daily bull bias.
Weeklies are the most constructive, but failure to better the 0.7236 early September high this week could open up a reversal.

• Previous hour saw spot close up 25 pips on the EBS, biggest gain since July
• This hour sees a complete reversal as the market offloads on China's threat
• China: No choice but to retaliate against latest U.S. tariffs nB9N1VS029
• Heavy selling from the 112.28 peak. Big Japanese exporter offers weigh
• Major Fibo impedes , as does crowded long trade
• Decent support near 111.66 low hit on U.S. tariff announcement nL3N1W41ZW

• USD/JPY bulls remain in control, but need to break the major 112.38 Fibo
• 112.38 is a 76.4% retrace of the 113.18-109.78 (July to August) EBS fall
• We remain long at 111.25 for an overshoot to our 112.95 target
• Our trailing stop at 111.55 is being guarded by today's 111.66 session low
• Caution: "cloud twist" on daily chart in lower 111s on Sept 24 could draw
• USD/JPY bulls tighten grip to focus on key Fibo

• USD/JPY and EUR/JPY bid into Europe, 111.66 to 112.03, 130.30 to 131.03 EBS
• USD/JPY caught in gravitational pull of USD1.3 bln in 112.00 option expiries
• Pair buoyant but talk good offers trailing higher, Japan exporters
• Bounce in US Tsy yields supportive, 10s 2.977% early to 2.996%, Nikkei up
• EUR/JPY on hold ahead of gradually descending 200-DMA at 131.09
• Break up bullish though false break-out on July 17, high then 131.98

• AUD/USD has filled in most of the gap created after the latest Trump tariffs
• It fell from 0.7180 to 0.7144 and is now settling around 0.7175
• Relatively calm reaction in Asia to US/China trade war escalation supported
• Consolidation likely ahead of China's response to the tariffs
• Support @ 61.8 of 0.7085/0.7229 @ 0.7140/resistance @ 21-day MA @ 0.7225
• No reaction to RBA Minutes which didn't contain any surprises

ING discusses USD/JPY technical outlook and maintains a neutral bias on a multi-days basis.

"We note that last Friday’s close above the horizontal resistance around 111.95 is bullish suggesting further strength towards the target around 113.15 as a result of the completion of the falling wedge pattern around 110.60 at the end of August.

However, today’s price action looks toppish, suggesting a better buying opportunity within the next few days before moving higher. Short-term support comes in at the slowly rising MA-50 line at 111.37. We recommend buying the dips," ING argues.