FOREX PRO WEEKLY, August 22 - 26, 2016

[Sive Morten]

Fundamentals

(Reuters) The U.S. dollar rebounded from nearly eight-week lows against the euro and Swiss franc on Friday a day after a top Federal Reserve official joined a growing chorus signaling support for a U.S. interest rate hike in coming months.

San Francisco Fed President John Williams on Thursday said that, if the U.S. central bank waited too long to raise rates, it could be costly for the economy and that a possible rate hike in September should be in play.

Those comments added to statements perceived as hawkish from New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart in recent days. They also came after an essay Williams published this week calling for a recalibration of the Fed's long-term goals, which had fueled some speculation that the Fed would not raise rates this year.

"Williams's yesterday reversed people’s interpretation of his comments earlier in the week," said Ian Gordon, FX strategist at Bank of America Merrill Lynch in New York. "It increased the implied probability of hikes."

While the dollar index, which measures the greenback against a basket of six major rivals, was last up 0.37 percent at 94.508 .DXY, it remained on track for a 1.3 percent decline for the week given the earlier skepticism over a 2016 Fed rate hike. That would mark its second straight week of losses.

Federal funds futures on Friday suggested traders saw a 53.5 percent chance of a Fed rate hike this year, according to CME Group's FedWatch program. Investors were also awaiting the Fed's annual conference in Jackson Hole, Wyoming next week.

Analysts also said traders were likely taking profits on short bets against the dollar on nervousness about having bets against the U.S. currency ahead of the weekend.

"The dollar had taken a pretty big tumble in the first part of this week, so people had gotten short the dollar and now they're just buying back," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

The euro was last down 0.3 percent against the dollar at $1.1319 , below a nearly eight-week high of $1.1365 touched Thursday. The dollar was up 0.6 percent against the Swiss franc at 0.9599 franc after hitting a low of 0.9532 Thursday.

Against the yen, the dollar was last up 0.36 percent at 100.22 yen, but was set for its fourth straight week of losses against the yen.

The US pulls ahead
by Fantom Consulting
Despite a weaker-than-expected advance estimate of Q2 GDP growth, we remain upbeat about the US economy. Strong non-farm payrolls data for June and July confirm that May’s figure was a ‘blip’, with the three-month moving average back within a whisker of 200,000. That is well above the neutral level, with payroll gains in excess of 60,000 resulting in a tightening of the US labour market. We believe that the US is very close to full employment, and that wage growth will accelerate before long, putting upward pressure on core inflation. Consequently, US breakevens still look cheap to us.

In our central scenario, this forces the Federal Reserve’s hand, resulting in a 25 basis point increase in the federal funds rate later this year. A December tightening now looks more likely than September. We expect at least two more rate hikes in 2017. This is less than implied by the FOMC’s latest summary of economic projections, but more than investors expected at the time of writing.

we argued that low interest rates were holding back growth in productive potential by preventing the gales of creative destruction. We stand by that view, and implore Janet Yellen and her team to begin the process of interest rate normalisation in earnest. Bizarrely, a Trump victory may lend a helping hand, with his proposed fiscal stimulus easing the burden on monetary policy. Elsewhere, the policy mix has already begun to shift, with China leading the way.

COT Report
As we do not have yet data for last week, when most strong action has happened, but even on data that we have, we could make some concusions. Take a look that net short position is contracted 4 weeks in a row. In first 2 weeks this was mostly due closing of the shorts, because, as you can see net short position was reducing as well as open interest. Last week, net short position contracted more than open interest. It means that some new long positions were opened. Next week probably we will see brighter signs of this tendency. In general these changes suggest moderate bullish sentiment.

Technicals
Monthly

Recent action doesn't have strong impact on monthly chart by far, still it could change the shape of the chart. Although as July as August months right now are inside ones to June "high wave" candle, upward action, if it will continue further could change short term targets. Still, currently this action can't change long term bearish picture still.
Upside rally of most recent weeks could make an impact on reversal candle in May and could trigger action to YPR1 - that's what see right now.

Currently EUR stands at rather strong support area. This is lower border of downward channel and all-time 5/8 Fib support. Here EUR has formed Butterfly "buy" and it has reached first 1.27 extension here.

EUR is forming typical reversal candle in May. Price has moved above April top and closed below April's lows. It could not get extended continuation, but usually market shows downward continuation within next 1-3 candles.
Sometimes reversal candles lead to collapse, as it was on EUR around 1.40 area. Thrust down has started particularly by reversal candle in March 2014.

Speaking on big scale bearish signs, we have these ones:
EUR was not able to reach YPR1 and returned right back down to YPP, and now even stands slightly below it. This is bearish sign. Following this logic next destination could be YPS1 right around parity and 1.618 butterfly target. This is just another destination point that we have here.

That's being said, appearing of reversal candle brings nothing good to bulls. Currently we can't precisely forecast the consequences of its appearing, but even minor results will bring 1-2 months of downward action inside current 1.04 -1.15 consolidation... Although potential bearish impact could be even stronger.

Finally we have another bearish sign that looks like bearish dynamic pressure. Take a look that although trend holds bullish - market shows inablitity to move up, even from strong support area. Next strong support stands precisely at parity and will become a culmination of downward action, since this level includes support line, YPS1 and butterfly 1.618 target. Brexit results hardly will bring prosperity to EU and probably will become another bearish driving factor for EUR.

Right now as you can see, downward action (after May reversal candle has been formed) is interrupted and EUR has turned up. Our task is to find out what this upward action is, what to watch for and what targets to expect. The most important level that will determine everything is a top of reversal swing. If this top will be taking out - market could reach YPR1 or even higher levels (as butterfly "Sell" could be formed).
Conversely, downward butterflies are possible, until market stands below 1.16 highs.

Weekly

Weekly charts becomes very important for EUR, because it also breaks normal bearish market mechanics. One example of this we have seen 2 weeks ago on daily chart, when we have put the start our upside trading on EUR. Here we have similar signs but of a bigger scale, since this is weekly time frame.

As you can see EUR has not dropped lower right to 1.05 lows as it should for normal bearish behavior, but stopped precisely at 5/8 Fib support. Previously we've mentioned that EUR keeps small downward swings equality very accurate, and if it breaks it - it should double it down, as it was on a way from 1.17 to 1.05 lows.

But this has not happened, instead of that EUR has formed "222" Buy pattern. It has not doubled downward swing, but formed AB-CD retracement instead. Thus, weekly chart suggests next target around 1.16 top. This is minor 0.618 AB-CD extension. Other targets stand above OB level, so they are not really interesting to us by far.

Second moment - is a trend line. On Brext voting EUR has broken it down, but take a look what is going on right now - it is returning right back above it. Trend has turned bullish on weekly chart. Currently it is still flirting with the line, but if it will show true return back - this will be strong bullish sign that will bring a lot of confidence with upside continuation.

That's being said, weekly chart shows initial signs of cracking short-term bearish tendency. Here we do not talk on some global trend shifitng, but current action brings perspectives of moving to 1.16 top. As soon as this target will be hit - we will turn to next one...

Daily

So, on weekly chart we've estimated nearest upside target and here you can see "222" Buy setup that we've mentioned above.

Now it is a question how particularly it could be reached. I've drawn one of possible scenarios on daily picture. Trend is strongly bullish here, market right now stands at 5/8 Fib resistance. Also, as we've estimated on Fri, EUR has completed 1.618 butterfly target (not shown here).

Actually here we could get just two possible ways of upside breakout to 1.16 top. First one I'm putting here. This could be reverse H&S pattern. Upside breakout of Brexit range could become some problem for EUR, that's why we do not exclude deep retracement, before EUR will challenge Brexit candle top. This, in turn, will give us reverse H&S shape. Its target will lead market precisely to 1.16 level.

Another scenario is immediate upside action after breakout of Brexit candle range. But since OB level stands relatively close and market has intraday important target on a way up, this scenario, looks less probable, until it will be driven but some extraordinary events or news...

4-hour

Here we have another reasons why reverse H&S pattern on daily chart is more probable. Take a look that right around brexit candle top we have major 1.618 AB-CD target and WPR1. These combination increases chances on deep retracement before upside breakout will happen. Fib level that I've put on the chart, guys, are based not at current top but on 1.618 target, so they are slightly higher than should be, based on current market.

At the same time, deep retracement prior 1.618 target will be hit hardly will happen. That's why, in the beginning of the week, EUR could test WPP then continue move to major target:

Conclusion:
Last time we've said that support where market stands on monthly chart is very long-term and wide. Standing there could last for months or even years, and may be sometime upward action will happen there. And right now we see some hints on minor upward action. Still on a big scale EUR shows mostly bearish signs. Currently we can't talk on some very extended targets and better to treat current splash as tactical retracement yet.

In shorter -term perspective on Monday we expect testing of WPP and upside continuation to 1.618 target. After that we will see whether EUR will realise our setup for reverse H&S pattern or take immediate breakout of Brexit candle top. Our major target right now is 1.1615 area.

The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Good morning,

(Reuters) The dollar dipped against the yen on Tuesday, while the New Zealand dollar rose after the nation's central bank chief said he did not see the need for a rapid succession of interest rate cuts.

The dollar shed 0.1 percent to 100.220 against the safe-haven yen amid a pullback in Tokyo stocks.

The greenback had risen to almost 101.00 yen overnight following hawkish-sounding comments by Federal Reserve Vice Chair Stanley Fischer before it lost steam.

The euro edged up 0.1 percent to $1.1332, stepping off an overnight low of $1.1271.

The New Zealand dollar was a relatively big mover in an otherwise subdued Asian trading session.

The kiwi was up 0.6 percent at $0.7308 after Reserve Bank of New Zealand Governor Graeme Wheeler said the current interest rate track involves further monetary easing but did not see the need for a rapid series of rate cuts.

"We remain committed to the inflation goals in the Policy Targets Agreement. We do not believe that the outlook and balance of risks warrants a position of no policy change, nor a position of rapid easings," Wheeler said in a speech which was released on the RBNZ's website on Tuesday.

The RBNZ in early August cut interest rates by 25 basis points to a record low of 2.0 percent and said further policy easing may be needed.

The kiwi nevertheless rose to a 15-month high of $0.7351 mid-month, as it has proved resilient to falling cash rates at home given they remain far higher relative to those of other developed economies.

"As for now the kiwi has digested profit taking and risen, but whether it can maintain its medium-term uptrend will depend on how the dollar fares after (Fed Chair Janet) Yellen's appearance at Jackson Hole," said Junichi Ishikawa, forex analyst at IG Securities in Tokyo.

"From a technical viewpoint, the kiwi could head into a correction phase without more supportive factors."

While views expressed by various Fed officials over the past week have impacted the dollar, a wait-and-see mood has begun to take hold ahead of possibly the most decisive speech of them all - by Fed Chair Yellen on Friday.

Yellen will speak at the annual meeting of world central bankers in Jackson Hole, Wyoming.

The market's focus was on whether she would express hawkish views similar to those of Vice Chair Fischer and New York Fed President William Dudley, or take a more subdued stance in line with the July Fed policy meeting minutes that suggested the central bank was not in a hurry to raise rates.

Over the immediate horizon, the market is looking for catalysts from the euro zone and U.S. purchasing managers index (PMI) data and U.S. home sales numbers due later in the session.

"So far data from the Eurozone has been relatively healthy and regional officials believe the impact of Brexit on their local economies will be limited. Considering that U.K. PMIs took a nosedive recently, investors will be watching the Eurozone PMIs carefully," wrote Kathy Lien, managing director of FX strategy at BK Asset Management.

The Australian dollar was up 0.1 percent at $0.7638 , moving up on the coattails of the kiwi.

So, today we leave alone EUR for some time and take a look at CAD. It has very nice tactical setups, mostly due Crude Oil behavior. It has no relation to big picture in fact, and mostly tactical, but potential of 100 pips attracts our attention.

On daily CAD we have B&B "Sell" Pattern. Thrust down of 9 candles right to WPS1. On a way down loonie also has completed 1.168 AB-CD target. Nice bullish engulfing right at the bottom. Now it has crossed 3x3 DMA and hit important Fib level. Thus, overall setup is ready for B&B "Sell":

On 4-hour we have 2 important moments. First is reversal swing up. After it has been formed, market tends to show deep retracement. This brings confidence in possible drop to B&B target, which is 1.2840.

Second - here we could get minor bullish B&B "Buy" or DRPO "Sell". Because thrust on 4-hour chart is also suitable for that. This could give us signal for taking short position. Scalp traders could trade this setup as well:

So, for taking short posiion we could wait either for DRPO "Sell" on 4-hour chart, or for compeltion of B&B "Buy". In this case 1.2935 level potentially interesting for short entry - as retracement on hourly chart:

 

[Sive Morten]

Good morning,

(Reuters)
The dollar edged up on Wednesday, moving off lows touched against the yen overnight, as markets looked to a gathering of global central bankers in Jackson Hole, Wyoming for clues on whether the Federal Reserve is poised to hike interest rates again.

Data on Tuesday showed new U.S. single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years as demand increased broadly, brightening the housing market outlook.

At the end of the week, Fed Chair Janet Yellen is scheduled to address the central bankers gathered for the annual mountain retreat that begins on Thursday.

Recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley have raised some investors' expectations that Yellen might also take a less cautious tone.

The dollar inched 0.1 percent higher to 100.30 yen after nudging below 100 yen overnight to 99.925.

The dollar index, which tracks the U.S. unit against a basket of six major rivals, was up 0.1 percent at 94.593.

News that North Korea fired a submarine-launched missile had little impact on foreign exchange trading. The missile flew about 300 miles (480 km) before splashing into the Sea of Japan, a U.S. defence official said on Tuesday.

"It could have been an excuse for some people to trade, but it wasn't a major factor," said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities.

Instead, markets are waiting for Jackson Hole, for any fresh signals on the U.S. monetary policy outlook.

"The number two, number three officials have spoken. Will what she says be different?" Imaizumi said.

But minutes from the Fed's July 26-27 policy meeting showed officials were divided over whether to raise rates soon, with some insisting that more economic data were needed before any tightening.

The euro was flat against the greenback at $1.1304, though it crept 0.1 percent higher against the yen to 113.44 .

Data on Tuesday showed that surprisingly strong growth in France supported stable euro zone private business activity during August, underpinning the euro.

Let's take a look at EUR again. So first stage has been completed, market has made minor 3/8 retracement to 1.1275 Fib level, as we've expected. But at the same time it has not continued upward action right to 1.1410 target, but turned to some consolidation:

Theoretically market could form AB=CD retracement down, but our experience tells that some kind triangle consolidation is more probable. Although market has formed bearish grabber, even AB=CD completion will not cancel perspective of action to 1.1411 target. Market almost never abandons such targets in normal conditions. Some really outstanding event should happen to force market reverse and leave major target untouched:

That's being said, current action definitely is not a reversal yet, since the character of moving has the shape of retracement. Usually when action starts to take shape of triangle - this is preparation for upward action, whatever it will be - short term jump or real trend continuation. That's why we are tending to treat it as consolidation before upward breakout that could take the shape of butterfly. Butterfly has target precisely around daily 1.618 AB-CD:

 

[Sive Morten]

Good morning,

(Reuters) The dollar was range-bound in illiquid Asian trade on Thursday as major currencies continued to tread water ahead of the global central bankers' gathering in Jackson Hole, Wyoming, at which Federal Reserve Chair Janet Yellen may offer new clues on U.S. monetary policy.

Fed officials including Vice Chairman Stanley Fischer and New York Fed President William Dudley have recently prompted some investors to raise their bets that the Fed is poised to hike rates again sooner rather than later, and some predict Yellen to echo their signals.

Futures markets on Wednesday were indicating an 18 percent chance the U.S. central bank would hike rates at its policy meeting next month, and a roughly 50 percent chance of a rate increase in December, according to CME Group's FedWatch tool.

"A portion of the market is expecting hawkish overtones after Dudley," said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong. "So to that extent, we're expecting some would be disappointed if she ended up being more dovish than some people may have expected."

The dollar was flat at 100.44 yen, holding above the 100-yen level under which it has dipped in recent sessions.

The currencies have traded in a narrow 99.55-102.83 band this month, and could move back toward the upper end of that range depending on Yellen's remarks, analysts say.

"The dollar has finally caught a bid," wrote Kathy Lien, managing director of FX strategy at BK Asset Management, who said in a note that the U.S. unit was likely poised for a stronger recovery that could take it to 102 against the yen.

"It probably won't happen on the back of Yellen's comments but it could happen over the next few weeks as long as 99.00 holds," said Lien.

Also weighing on the yen were growing expectations that the Bank of Japan will decide to take additional stimulus steps at its next meeting in September, when it will review its policies against a backdrop of growing doubt that the BOJ's target of 2 percent inflation target is within reach.

Japan's government kept its assessment of the economy unchanged in August but offered a slightly more downbeat view on consumer inflation than last month, as prices slid on weak household spending and the strong yen pushed down import costs.

The Cabinet Office said in its monthly report for August that consumer prices were flat - a gloomier view than last month when price rises were slowing.

A Reuters poll on Thursday showed that a majority of economists expects the Bank of Japan will ease policy further next month, though about 40 percent of analysts surveyed said they expected the central bank to keep monetary policy unchanged.

The euro inched up 0.1 percent to $1.1275, pushing down the dollar index, which tracks the greenback against a basket of six major rivals, to 94.715 .DXY, 0.1 percent lower on the day.

So, it seems that EUR and CAD right now provide brightest setups. On CAD we've said everything yesterday and now it stands in progress, while on EUR we've got some changes and need to make adjustment.
Thus, although we've counted on upward continuation right out from hourly triangle and possible butterfly pattern - market still has completed AB=CD pattern on 4-hour chart. This makes overall situation more sophisticated.
First of all we will need potential bullish grabber on daily chart. Whether we will get it or not - we will know only by close price.

If we will get it, then, market probably should stay around current levels - 1.1250 and this will let us to think about taking long position based on this grabber. Currently we think that it's better to stay aside, since EUR action right now doen't show any signs of reversal.
If we will not get the grabber - then we will wait for next support level around 1.12 - K-support and Agreeement on 4-hour chart and also will watch for bullish patterns there. It's not a secret that action, whatever it wll be, will be triggered by Yellen speech tomorrow. We just try to use technical patterns to anticipate, what will be said. For example, appearing of grabber on daily chart, will give clear hint on potentially dovish rethoric, etc...

That's being said, all steps will taken (or not taken) tomorrow morning. Today we wil wait for grabber on daily chart....

 

[Sive Morten]

Good morning,

(Reuters) The dollar remained on tenterhooks on Friday, on track for a modest weekly rise ahead of Federal Reserve Chair Janet Yellen's eagerly awaited speech that some believe could provide clarity on whether U.S. interest rates will rise this year.

The dollar index, which gauges the greenback against a basket of six major counterparts, edged down 0.1 percent to 94.718 .DXY, on track for a modest gain of 0.2 percent for the week.

Later on Friday, Yellen will deliver the keynote speech at a global central bank gathering in Jackson Hole, Wyoming. She could send a clear signal that the Fed is gearing up for a hike this year, though many analysts believe she will stick to her less concrete stance that monetary policy is data-dependent and a hike is possible.

"The anticipation is a bit too much. She is one of the more pragmatic and balanced speakers," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon.

"I think she will leave the door open for a rate hike sometime this year, but I don't see the Fed actually moving until December," she said.

Regional Fed presidents have pushed a hawkish message in recent weeks, which Vail said showed they were "trying to get the market expectations close to where the Fed is headed, so when they do execute, it's not a shock to the rates market."

Kansas City Fed President Esther George said on Thursday that it is time for the Fed to raise U.S. rates gradually, given progress on employment and inflation.

"The issue of overheating of the economy is being discussed within the Fed board," Fed Vice Chair Stanley Fischer told a room of labor activists who met with Fed officials to press them not to raise interest rates.

"Everything that's being argued here is being argued in the board as well," said Fischer.

Data overnight reinforced recent upbeat assessments of the U.S. economy. New orders for U.S. manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up, while the number of Americans filing for unemployment benefits unexpectedly dropped.

After the release of the U.S. data, futures markets were indicating a 24 percent chance the Fed will hike rates at its policy meeting next month and a roughly 57 percent chance of an increase in December, according to the CME Group's FedWatch.

The dollar inched down 0.1 percent against the yen at 100.46 yen, and was flat against the euro at $1.1290. It was on track for a 0.2 percent rise against the former and a 0.3 percent dip against the latter for the week, with major currency pairs largely rangebound ahead of Yellen's speech.

"The market may react to one word, or one phrase, but I don't think her speech will bring a new dollar/yen trend," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

"If Yellen shows less confidence about the U.S. economy, maybe people would like to buy the yen more, but I also think there are longterm investors who step in to buy dollars whenever it falls below 100 yen, so I think it will stay around current levels for a while," Murata said.

Japanese data released early on Friday added to evidence that the Bank of Japan has reason to increase its stimulus next month, as the economy slips back toward deflation.

Japan's core consumer prices fell for a fifth straight month and marked the biggest annual drop in more than three years in July, government data showed on Friday, keeping the central bank under pressure to expand an already massive stimulus program.

At its last meeting in July, the BOJ disappointed some investors by refraining from increasing its Japanese government bond purchases even as the government gears up to issue more debt to fund its latest stimulus drive.

The disappointment pushed JGB yields sharply higher, and underpinned the yen. Some analysts say the Japanese currency could be in for a bout of volatility and may even strengthen further in September, building on its recent boost from the rise in JGB yields.

So, on EUR we've got bullish grabber... What other bullish signs we have? Beyond the grabber we have untouched 1.618 AB-CD target and, as we think, shy dissapointment by Yellen speech. Yellen is mostly conservative chairman. We remember dovish surprises, but I do not remember any hawkish surprises from the Fed been made. Currently investors have too high expectations - clear hawkish rethoric and hints even on September rate hike. We will not get them. We think that maximum that we will get is a bit more clarity on December rate hiking. But this is investors know already. That's why although rethoric will be positive, but not as aggresive as investors expect. These are our bullish arguments.
What about bearish ones?
- Lazy action. Current action doesn't look like upside reversal, mostly it reminds retracement up after AB=CD action.
- Opposite action on gold market, which means that some action is "wrong".

It means that we could follow two ways. Conservative way is to wait for results of Yellen's speech. Any direction will be continued, as upside as downside, so, it should be enough time to take position.
If you still would like to trade grabber directly, then try to take position as closer to the bottom as possible. This is agressive tactics. You could take loss of 40 pips, but if market will jump up, your position will be right at lows:

For example, you could use these levels for long entry. If market indeed bullish and intends move higher - it should not erase grabber:

 

[Joh]

Hello Sir Sive hope you had a lovely holiday
Thank you for this concise report re the Euro with 2 scenario's - am waiting with baited breath to see what is going to happen and then hope to pounce
I was going to ask you a question re the USD but after reading above I assume with or without Trump the answer will eventually show itself that is if they make up their minds.
regards joh

 

[Robban68]

Good morning,

(Reuters)
The dollar edged up on Wednesday, moving off lows touched against the yen overnight, as markets looked to a gathering of global central bankers in Jackson Hole, Wyoming for clues on whether the Federal Reserve is poised to hike interest rates again.

Data on Tuesday showed new U.S. single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years as demand increased broadly, brightening the housing market outlook.

At the end of the week, Fed Chair Janet Yellen is scheduled to address the central bankers gathered for the annual mountain retreat that begins on Thursday.

Recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley have raised some investors' expectations that Yellen might also take a less cautious tone.

The dollar inched 0.1 percent higher to 100.30 yen after nudging below 100 yen overnight to 99.925.

The dollar index, which tracks the U.S. unit against a basket of six major rivals, was up 0.1 percent at 94.593.

News that North Korea fired a submarine-launched missile had little impact on foreign exchange trading. The missile flew about 300 miles (480 km) before splashing into the Sea of Japan, a U.S. defence official said on Tuesday.

"It could have been an excuse for some people to trade, but it wasn't a major factor," said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities.

Instead, markets are waiting for Jackson Hole, for any fresh signals on the U.S. monetary policy outlook.

"The number two, number three officials have spoken. Will what she says be different?" Imaizumi said.

But minutes from the Fed's July 26-27 policy meeting showed officials were divided over whether to raise rates soon, with some insisting that more economic data were needed before any tightening.

The euro was flat against the greenback at $1.1304, though it crept 0.1 percent higher against the yen to 113.44 .

Data on Tuesday showed that surprisingly strong growth in France supported stable euro zone private business activity during August, underpinning the euro.

Let's take a look at EUR again. So first stage has been completed, market has made minor 3/8 retracement to 1.1275 Fib level, as we've expected. But at the same time it has not continued upward action right to 1.1410 target, but turned to some consolidation:
View attachment 27025

Theoretically market could form AB=CD retracement down, but our experience tells that some kind triangle consolidation is more probable. Although market has formed bearish grabber, even AB=CD completion will not cancel perspective of action to 1.1411 target. Market almost never abandons such targets in normal conditions. Some really outstanding event should happen to force market reverse and leave major target untouched:
View attachment 27026

That's being said, current action definitely is not a reversal yet, since the character of moving has the shape of retracement. Usually when action starts to take shape of triangle - this is preparation for upward action, whatever it will be - short term jump or real trend continuation. That's why we are tending to treat it as consolidation before upward breakout that could take the shape of butterfly. Butterfly has target precisely around daily 1.618 AB-CD:
View attachment 27027

Potential Stopgrabber on Daily on its way?

 

[Mikegodman]

Thanks Sive.

 

[Sive Morten]

Potential Stopgrabber on Daily on its way?

Yep. but it needs to be confirmed by close price... let's see...