EURUSD tests critical support
The US dollar advanced after an acceleration in July’s retail sales figures. The pair is seeking support over the daily demand zone near 1.0870 at the base of the July breakout rally. This is an important level to keep the euro’s trajectory up in the medium-term as a bearish breakout could trigger a liquidation of a crowded long trade. Offers around the psychological level of 1.1000 are the first to go to ease the downward pressure then the bulls will need to clear 1.1150 before a solid recovery could materialise.
USDCAD continues higher
The Canadian dollar found limited support as July’s CPI remained stubbornly high. The US counterpart’s brief pullback has found bids at 1.3370 which used to be a former swing high in early July. A series of higher lows indicates a mounting buying pressure as sellers seem to be out of sight. A close above the latest peak of 1.3500 may attract momentum buyers and extend the rally to 1.3550, which would be a step towards the daily double top of 1.3650. On the downside, 1.3440 is the first support in case of a retracement.
UK 100 to test double bottom
The FTSE 100 tumbled as surging wages in the UK might foreshadow aggressive rate hikes. A plunge below the previous swing low of 7450 is a sign of capitulation of short-term long positions, invalidating the bounce in late July. The demand zone around 7230-7290 formed by a double bottom on the daily chart is the next level to hope for stabilisation. This is critical in keeping the index afloat and its breach could trigger a broader correction to 7000 or below. 7450 has turned into a fresh resistance in case of rebound.
