The USD rallied with the release of the Fed’s last meeting minutes, which confirmed the current rate hike path. However as per analysts, the domestic US political turmoil caused by the judicial problems faced by Trump’s former associates continues to weigh on the USD. Especially, the guilty plea of his former lawyer Cohen weighs on the presidency, as he implicates president Trump in crime activities. Currently the White House has denied all wrong doing and president Trump lashed out on his former lawyer. Should there be further escalation of the situation we could see the USD weakening.
EUR/USD dropped yesterday and during today’s Asian session breaking the upward trend-line it had incepted on the 20th of August, aiming for the 1.1537 (S1) support line. We currently lift our bullish bias as the prementioned upward trend-line was broken and the pair could stabilize today. It should be noted though that the pair may prove sensitive to any further fundamental headlines especially on the USD side. Should the market be interested in buying the pair once again, we could see its price action aiming for the 1.1623 (R1) resistance line. Should it come under selling interest though we could see it breaking the 1.1537 (S1) support line and aim for the 1.1482 (S2) support barrier.
Political instability rises in Australia
Australia’s PM Malcolm Turnbull, faces the possibility of a second leadership vote within the Liberal party as three ministers deserted him. The ministers deserted the PM calling for a second leadership vote, after a leadership vote on Tuesday, which the PM won for only seven votes. Currently Turnbull is on the defensive and asked his opponent, former secretary of interiors Dutton, to show evidence of the support he enjoys for a second leadership vote. Currently parliament has been adjourned, however should there be further escalation we could see the Aussie weakening.
AUD/USD dropped steeply in today’s Asian session, breaking the 0.7325 (R1) support line (now turned to resistance). We could see the pair stabilising today however it might prove sensitive on fundamental news as both sides of the pair face a rising uncertainty. Should the bulls have the upper hand in the pairs direction we could see it breaking the 0.7325 (R1) resistance line, while on the other hand should the bears take over, we could see the pair breaking the 0.7265 (S1) support line and aim for the 0.7200 (S2) support area.
In today’s economic highlights: In the European session, we get the European preliminary PMIs for August and ECB is to publish the account of its last monetary policy meeting. In the American session from the US we get the preliminary PMI’s for August and the new home sales figure for July. Also in the American session, we get Eurozone’s preliminary consumer confidence indicator for August. Please note that the Jackson Hole symposium is about to begin today and could provide some volatility over the next few days, especially for the USD.