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USDJPY
The EUR/USD pair advanced this Monday, as optimism weighed on the dollar’s demand. Equities were up, amid encouraging signs of economic progress in China. Equities rallied, led by bank-related shares, which soared after Chinese Ping An Insurance announced that it would increase its stake in Europe’s largest lender, HSBC. The market mood was also underpinned by renewed hopes about a post-Brexit trade deal.
The pair, however, remained below Friday’s high and retreated during the American session, affected by comments from ECB’s President Christine Lagarde. While delivering the introductory statement at the ECON committee of the European Parliament in Brussels, Lagarde said that the external value of the shared currency has an impact on inflation, adding that policymakers monitor FX movements.
The EU didn’t publish macroeconomic data, while the US unveiled the Dallas Fed Manufacturing Index, which rose to 13.6 in September, from 8 in the previous month. This Tuesday, the Union will release the September Economic Sentiment Indicator, foreseen at 89.5 from 87.7 previously. The US will publish the August Trade Balance and the CB Consumer Confidence, expected at 90.0 from 84.8 in August.
The EUR/USD pair briefly surpassed the 23.6% retracement of its latest daily decline at 1.1673 but was unable to advance beyond it. The short-term picture suggests that the current advance was corrective, as the 4-hour chart shows that the price is battling to surpass a bearish 20 SMA. Technical indicators, in the meantime, have lost directional strength after reaching their midlines. The 38.2% retracement of the mentioned decline is around 1.1715, with bulls having better chances above it.
Support levels: 1.1605 1.1560 1.1520
Resistance levels: 1.1675 1.1715 1.1760
USDJPY
The USD/JPY pair has consolidated its latest gains this Monday, ending the day little changed in the 105.50 price zone. The better market mood that played against the American currency did not help the Japanese yen, as speculative interest preferred high-yielding assets. Equities rallied worldwide, although government bond yields remained depressed, somehow limiting the upside for the pair.
In the data front, Japan published at the beginning of the day its July Leading Economic Index, which came as expected at 86.9. The Coincident Index for the same month printed 76.2, also matching the market’s forecast. During the upcoming Asian session, the country will release September Tokyo inflation data. The yearly CPI is foreseen at 0.4%, better than the previous 0.3%. The core reading, excluding fresh food prices, is seen unchanged at -0.3% YoY.
From the technical point of the USD/JPY pair remains neutral. It is trading above the 61.8% retracement of its latest daily decline, but below its previous high at 105.69. The 4-hour chart shows that the pair is barely holding above its 20 and 100 SMA, with the shortest about to cross above the larger one, which somehow skews the risk to the upside. Technical indicators, however, remain directionless. The pair needs to advance the mentioned high to be able to extend its rally towards 106.26, September 11 daily high.
Support levels: 105.10 104.65 104.30
Resistance levels: 105.70 106.25 106.60
GBPUSD
Pound longs returned with a vengeance this Monday, driving GBP/USD to 1.2929 its highest in almost a week. The pair got boosted by mounting hopes for a UK-EU trade deal, as representatives from both economies head into the ninth round of talks with cautious optimism. UK PM Johnson’s spokesman stated that a deal is still possible while there remains much to be done. The British currency found additional support in comments from BOE’s Ramsden who dismissed chances of using negative rates in the near-term.
The UK macroeconomic calendar was empty at the beginning of the week, and this Tuesday it will offer some minor figures, as the UK will publish Mortgage Approvals and money data from August.
The GBP/USD pair is trading around 1.2835 at the end of the day, as the dollar recovered some of its attractiveness in the last trading session of the day. The 4-hour chart shows that the pair was rejected by selling interest aligned around a bearish 100 SMA, currently at 1.2900. The 20 SMA gains some bullish strength below the current level, while technical indicators retreat from overbought levels but hold above their midlines. Overall, the upside remains favored, as long as Brexit-related hopes persist.
Support levels: 1.2820 1.2770 1.2715
Resistance levels: 1.2900 1.2940 1.2990
AUDUSD
The AUD/USD pair has recovered some ground this Monday, trading ahead of the Asian opening near a daily high of 0.7073. The advance, however, was insignificant in terms of trend, moreover considering that global equities finished the day with substantial gains. Somehow, the tepid AUD/USD advance confirms investors are not willing to unwind dollar longs. The better market mood also helped gold, as the bright metal neared $1,880.00 a troy ounce, reaching a fresh 3-day high. Meanwhile, the Australian macroeconomic calendar will remain empty until next Wednesday.
The AUD/USD pair seems poised to extend its advance, at least in the short-term. The 4-hour chart shows that the pair is now developing above a bearish 20 SMA, while technical indicators maintain their bullish slopes, the Momentum above its midline and the RSI at around 45. Failure to advance sustainably beyond 0.7120, however, could see the pair returning to the bearish path and attempt a break below 0.7000.
Support levels: 0.7040 0.7000 0.6965
Resistance levels: 0.7085 0.7120 0.7165
GOLD
Gold found support on Monday as the USD index DXY retraced slightly after hitting its highest level since the end of July. On the other hand, 10-year US yields continue its flat run around 0.66% levels. While the current risk-off environment favours USD, in the long run, negative interest rates in practice combined with extreme liquidity supplied by the central banks will most likely support precious metals with Gold leading. On the physical demand side, in the first seven months of this year, central banks purchased 8.4 million ounces of Gold (260 tonnes) in total compared to 15.8 ounces (490 tonnes) in 2019. The increase in Gold prices drifted the central banks further away from Gold while The People’s Bank Of China did not report any fresh Gold purchase so far this year.
Gold is trying to get away from the critical support zone at $1,860. Below this level, the supports can be followed at $1,763 ($1,451-$2,075 61.80%) and $1,700 levels. Over the $1,860 level, the resistances can be followed at $1,900 with $1,956 ($1,451-$2,075 38.20%) and $2,000 levels.
Support Levels: $1,860 $1,763 $1,700
Resistance Levels: $1,900 $1,956 $2,000
SILVER
Silver outperformed Gold on Monday trading as both precious metals benefitted from the retracement seen in the USD index DXY. While Gold managed to gain 1.02% on a daily basis, Silver printed 3.43% pushing Gold to Silver ratio to 79.00 levels. Silver tested levels last seen by the end of July as the growing concerns on the outlook of the global economy favoured the USD. Possible new lockdown restrictions might most likely to pressure precious metals while on the long run current monetary policies favour Gold and Silver as safe-havens.
Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the targets up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.
Support Levels: $22.90 $20.75 $18.42
Resistance Levels: $25.21 $26.00 $27.00
CRUDE WTI
WTI is trying to keep its $40.00 zone with the help of the retracement seen in the USD index DXY. As the fears of the second wave of Covid-19 is mounting, a possible decline in demand is pressuring WTI despite OPEC+ effort to balance production. OPEC+ is set to taper its historic deal once more in December easing the production quota by 2 million BDP. On the other hand, a possible return of Libyan production might delay this move.
If WTI manages to hold over $40.56 ($65.62-$0.00 61.80%) level, the targets upside can be followed at $41.00, $46.57 (March decline start) and $50.00 levels. Below $40.00, the supports can be followed at $39.00 and $32.81 ($65.62-$0.00 50.00%) and $31.00 levels.
Support Levels: $39.00 $32.81 $31.00
Resistance Levels: $41.00 $46.57 $50.00
DOW JONES
Dow Jones started the day with a bullish gap well over 27,000 level as heightened hopes of an additional stimulus package emerged. This time, mostly energy and financial shares led the rally rather than the tech-shares. On the other hand, despite the bullish trade on Monday the US indexes are set to print first decline on a monthly basis since March. The US House of Representatives Speaker Nancy Pelosi stated in an interview with MSNBC that stimulus talks with Treasury Secretary Steven Mnuchin are set to continue on Monday with possible progress. On the other hand, Trump and Biden will come face to face in a debate today while Biden extends his lead on the presidential campaign.
If Dow Jones keeps its stance over 27,000 level decisively, 27,583 (June 2020 high), 28,000 and 28,402 levels can be followed as resistances. Below the 27,000 level, the supports can be followed at 26,000 with 25,210 (29,568-18,158 61.80%) and 24,690 (2020 April-May resistance) levels.
Support Levels: 26,000 25,210 24,690
Resistance Levels: 27,583 28,000 28,402
MACROECONOMIC EVENTS
* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.
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