Fundamental Analysis

Easing Tensions in Spain Led to Euro Strengthening

Typography

The euro reacted positively to the speech by Catalan leader Carles Puigdemont where he commented that negotiations with the Spanish authorities are required. The Spanish Prime minister, Mariano Rajoy, demanded the Catalan leader clarify his position but tensions eased and optimism returned to European markets. Some pressure on the dollar came from the decline in JOLTS Job Openings to 6.08 million in August versus the 6.13 million forecasted. One of the main events during this week will be the FOMC meeting minutes' release at 18:00 GMT today. If the probability of the third rate hike for this year increases then the EUR/USD may resume negative dynamics.

The greenback is losing positions against other major world currencies due to a lack of confidence in the ability of President Trump to pass tax reforms through Congress. Pressure on the USD/JPY quotes also came from the report on core machinery orders in Japan which increased by 3.4% in August which is much better than the 0.8% forecasted. Trader sentiment may be impacted today following the statistics from Japan on bank lending and the producer price index which will be published at 23:50 GMT.

The British pound stopped growing after seeing confident growth based on the expected tightening in monetary policy by the Bank of England. Investors are not in a hurry to accumulate long positions because of uncertainty surrounding the outcome of negotiations on the Brexit terms.

EUR/USD

The single currency keeps growing, and breaking through the 1.1825 resistance line may become a stimulus for continued rising movements to 1.1925 and 1.2000. The RSI on the 15-minute chart reached the overbought territory which points to a possible rollback with potential targets in the 1.1800-1.1825 range.

USD/JPY

The USD/JPY quotes have left the limits of the rising channel and are testing the 112.00 level. Breaking through the 111.70 support may become the basis for further drops to 110.00 and 109.60. A potential increase is likely to be restrained by resistance at 113.00. The RSI being near the oversold zone shows the possibility of the rebound soon.

GBP/USD

The GBP/USD price is consolidating after a confident rising movement during the previous trading session. In order to continue growth, the quotes need to break through 1.3250. The targets in this case will be located at 1.3400 and 1.3600. The immediate goals in case of the fall resuming are 1.3050 and 1.3000.

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