- The greenback corrected previous declines and rallied in the short term below a descending trend line resistance on the 1 hour chart.
- Economic data released Tuesday caused little reaction and markets keep an eye on U.S. ADP employment report for July which is also well known as a leading indicator to the official non-farm payroll data.
- Oil slumped as much as 3% as news that OPEC countries increased supplies, along with U.S. added production, according to API.
The Dollar Index rallied slightly to correct its previous declines in the consolidation mode Tuesday, 1 August 2017. EU preliminary Q2 GDP grew in-line-with expectation at 2.1%, against previous month reading at 1.9%. However, the euro made little reaction and continued to consolidate. As to economic release from U.S., core PCE annualized for June rose 1.5%, against its previous and consensus reading at 1.4%. Meanwhile, ISM manufacturing index fell slightly to 56.3, lower than last month and consensus reading. U.S. ADP employment for July due to release today will provide some insight to the upcoming official non-farm payroll, thus we will keep an eye on the leading indicator.
The dollar index (DXY) has consolidated its declines and rallied for several days. Its short term moving averages clawed higher after converging and hit its long term moving averages which were diverging in relatively steady state. Wait and see if its short term moving averages would change their flattened tendency and moved higher further to penetrate its long term moving averages, watching H1-period EMA60 and EMA 30 resistance.
（DXY H1 chart）
As to non-U.S. currencies, the euro moved downwards despite the in-line-with expectation of EU GDP figure to test a rising trend line support in a consolidation mode on Monday, given it has rose so much in the short term. The pound hit noted upside targets before corrective decline signals appeared, with downside support to watch at H1-period EMA60. The Aussie dollar extended its corrective decline after creating a lower high on its 4 hour chart. The commodity currency could test its downside support at H4-period EMA60.
（AUD/USD H4 chart）
Let’s take a look at precious metals now. Gold whipsawed in heightened volatility, indicating that bulls and bears were in a fierce struggle. It has started to turn lower and break below H1-period EMA60 after posting a monthly high of 1273.9 from its rally. We are on the lookout for a possible breakdown to test its H4-period EMA support.
（Gold H1 chart）
By Jason Zou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.