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Otmane El Rhazi from Dukascopy Bank SA.

Technical Analysis EUR/USD to stay below 1.35 “The euro’s fate will all be about the FOMC and then the nonfarm payrolls at the end of the week. I’m looking for a $1.3400 to $1.3470 range until then.” - Jeffrey Halley, Saxo Capital Markets (based on CNBC) Pair’s Outlook Right now this week appears to be quiet in terms of volatility, but this should change before the weekend. In any case, the currency pair is expected to be capped by 1.3530/00. Accordingly, the bias is negative. For the outlook

Otmane El Rhazi from Dukascopy Bank SA.

GBP/USD 1H Chart: Channel Down Comment: GBP/USD has been following a bearish trend since mid- July when one of the most traded currency pairs attained 1.7192, the highest level since at least 2009. As a result, the currency couple shaped a 188-bar long channel down pattern, inside which it is trading at the moment. Now the pair is vacillating between the 50-hour SMA at 1.6982 and a one-month low of 1.6963. It is hard to determine the future direction of the pair given neutral sentiment on the

Otmane El Rhazi from Dukascopy Bank SA.

Fundamental Analysis EUR “Speculation about an asset-purchase program from the ECB is likely to gain further traction” - Benjamin Schroeder, an interest-rates strategist at Commerzbank AG This week European Central Bank’s patience will be tested once again, as key inflation data for July are on the radar. While policy makers may feel there is a room for complacency at least for this summer that would be a terrible error, as Eurozone crisis is just sleeping and it is far away from being dead.

Otmane El Rhazi from Dukascopy Bank SA.

Market Highlights ASIA-PACIFIC REGION China’s manufacturing sector grows; Japan’s trade gap widens The preliminary data from China’s manufacturing industry showed that factory activity of the world second largest economy expanded more than expected in July. Flash HSBC manufacturing PMI came at 52 compared to a forecast of 51.2 and previous month’s reading of 50.7. A reading above 50 indicates growth of the sector. Meanwhile, another large Asian economy, Japan, released trade data last week.

Otmane El Rhazi from Dukascopy Bank SA.

Relative Currency Strength The top performers of the past week were the Swedish krona and the Australian dollar. The former made its winning surge on Friday, gaining 0.92% on its base value against the background of positive news on Sweden’s Retail Sales and Household Lending, while the Aussie took the leadership on Wednesday, when the currency rate surged in reaction to greater-than-previous CPI release. The same day was associated with the Kiwi’s drop. It lost 0.9% of base value on the spot

Otmane El Rhazi from Dukascopy Bank SA.

Geoffrey Yu, Senior FX Strategist, on the Euro zone According to ZEW President Professor Clemens Fuest, Germany has recently experienced a slight dent in economic activity– retail sales declined and industrial production as well as incoming orders dropped; nonetheless, the medium-term economic outlook remains favourable. Taking all into account, how strong is Europe’s biggest economy and what can we expect in the future? Leading indicators in Germany have certainly come off somewhat and other

Otmane El Rhazi from Dukascopy Bank SA.

EUR/TRY 1H Chart: Descending Triangle Comment: A dive to a nine-month low of 2.8071 took place when EUR/TRY exited a 100-bar long descending triangle pattern started in the second part of July. Despite plunging to the recent low, the pair managed to confirm that the breakout was false by settling above the lower boundary of the formation at 2.8134 a few hours earlier. However, market players still are not convinced in the pair’s ability to remain inside the pattern – more than 90% of all

Otmane El Rhazi from Dukascopy Bank SA.

Technical Analysis EUR/USD to remain bearish “We should brace for the euro breaking below key support at 1.34, given diverging U.S. and European monetary policies.” - IG Securities (based on Reuters) Pair’s Outlook Although the Euro refused to decline for two days, in the end the bears managed to push the currency below the monthly S2 level. The current downward tendency is expected to persist and could eventually result in a drop down to 1.28, the 2013 lows, even though a half of the monthly

Otmane El Rhazi from Dukascopy Bank SA.

Fundamental Analysis Last week’s overview, this week’s key events Over the last week markets were more active that 5 days earlier, with the market volatility entering the turbulence zone for 27% of the time, versus 22% a week ago. However, volatility of all 11 major currency pairs was distributed more evenly than earlier this month. At the same time, the Aussie gained 1.17% on the back of Glenn Stevens’ comments, while the second South Pacific currency, the Kiwi, posted the most significant

Otmane El Rhazi from Dukascopy Bank SA.

Technical Analysis EUR/USD refuses to go down “The prospect of additional sanctions against Russia is also a potential negative factor for the euro. We do not see the euro as a safe haven from recent developments in Russia/Ukraine, especially given Europe’s high level of exposure to the region.” - Morgan Stanley (based on CNBC) Pair’s Outlook For the time being the single European currency is reluctant to decline, even though it has just breached one of the key support lines, namely 1.35.