Sat, Oct 23, 2021 @ 17:25 GMT
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USD Remains Supported By Safe Haven Inflows

The greenback and the Japanese yen enjoyed further safe haven inflows yesterday and tended to gain against risker currencies such as the pound and the Australian dollar as worries for Covid’s Delta variant intensified. The highly contagious Delta variant of Covid 19 is now considered to be the dominant strain on a global level and its characteristic how the infections are on the rise in the US but also other parts of the world. The overall situation globally seems to suggest that virus restrictions such as lockdown measures may still be necessary for a longer period of time than expected, thus implying that the economic recovery may be delayed. It should be noted that the US stockmarkets tumbled yesterday as also did their European counterparts with all main US indexes, the Dow Jones, S&P 500 and Nasdaq retreating considerably. On the other hand, gold prices tended to be on the rise despite the strengthening of the USD, as US yields continued to drop. We note today’s US financial releases , which may have a bearing on the greenback’s direction, yet the market sentiment seems to remain risk avert.

Dow Jones tumbled breaking all of our support lines, now turned to resistance and landed just above the 33800 (S1) support line yesterday. We tend to maintain a bearish outlook for the index, albeit the RSI indicator below our 4-hour chart has broken below the reading of 30, which on the one hand reflects the dominance of the bears, yet on the other may imply that the index is oversold and a correction higher is possible. Should the bears actually remain in charge we may see the index breaking the 33800 (S1) support line and aim for the 33500 (S2) or even lower. Should the bulls say enough is enough and take over, we may see the index breaking the 34100 (R1) resistance line and aim for the 34400 (R2) level.

AUD continues to weaken

The Aussie retreated against the USD yesterday reaching 8 months low yet tended to gain against its neighbouring Kiwi. The Australian Dollar as a commodity currency is quite volatile to global growth sentiment and its possible impact on commodities prices and a possible delay in global economic recovery tended to weigh on the Aussie. Back home almost half of the Australian population is living under lockdown measures in an effort to suppress the spreading of the disease’s Delta variant and the Aussie has been under pressure in the past few days. The market sentiment seems to be adverse for Aussie bidders, yet we also note the release of Australia’s preliminary retail sales for June.

AUD/USD continued to weaken yesterday yet found some support at the 0.7335 (R1) line before breaking it during today’s Asian session and turning it to a resistance level. We tend to maintain a bearish outlook for the pair currently as a downward trend since the 15h of the month has formed. Also please note that the pair’s RSI indicator below our 4-hour chart runs along the reading of 30 underlining the strength of the bears, yet at the same time may imply that the pair is oversold. Should the selling interest persist, we may see the pair aiming if not breaking the 0.7265 (S1) support line and aim for lower grounds. Should a correction higher take place and Aussie bidders take control of the pair’s direction, we may see the pair breaking the 0.7335 (R1) resistance line and aim for the 0.7400 (R2) resistance level.

Other economic highlights today and the following Asian session:

Today during the European session we note the release of Germany’s producer prices for June and in the American session we get from the US the number of building permits and house starts for June, while just before the Asian session starts we get the US weekly API crude oil inventories figure. During Wednesday’s Asian session, we get Japan’s trade data for June and Australia’s preliminary retail sales growth rate for June, while BoJ will be releasing the minutes of its June meeting.

US 30 Cash H4 Chart

Support: 33800 (S1), 33500 (S2), 33200 (S3)
Resistance: 34100 (R1), 34400 (R2), 34700 (R3)

AUD/USD H4 Chart

Support: 0.7265 (S1), 0.7200 (S2), 0.7150 (S3)
Resistance: 0.7335 (R1), 0.7400 (R2), 0.7465 (R3)

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