Sat, Sep 25, 2021 @ 18:11 GMT

USD Takes A Break

The greenback continued to gain against a number of its counterparts yesterday yet at a more eased pace while gold prices ended to remain relatively stable and US stockmarkets reversed course and regained a substantial part of Monday’s losses. In regard to US stockmarkets it seems that investors took the opportunity to buy at low levels as confidence over the US economic recovery allowed them to see through the fog created by the spreading of the disease. The spreading of the pandemic is ongoing, and particularly the contagious Delta variant, continues to torment especially Asian economies but other parts of the world as well, with new lockdowns being deployed. It should be noted that the improvement in investors’ confidence was also depicted in US yields and characteristically the US 10-year yield rose to reach 1.21%, despite a downward trend still being present. Given the lack of high impact financial releases, we expect fundamentals taking the lead and should the market’s optimism grow, safe havens could retreat and vice versa.

Dow Jones reversed its downward course and reverted also a substantial part of Mondays’ losses yesterday by breaking the 34100 (S2) and the 34400 (S1) resistance lines, both now turned to support, before stabilising. As the index’s direction has reversed, we abandon our or bearish outlook for Dow jones and adopt a bias for a sideways motion initially until the index decides on the direction of its next leg given the index’s stabilisation in the late session yesterday. We note that the RSI indicator below our 1 hour chart is between the readings of 50 and 70, implying a slight advantage for the bulls. Should the bulls actually take charge of Dow Jones’ direction once again we may see it breaking the 34700 (R1) resistance line which reversed the upward motion of Dow Jones on the 7th of July, and aim for the 35100 (R2) resistance level, which marks an all-time high for the index. Should the bears take over, we may see the index breaking the 34400 (S1) support line and aim which stopped the index’s drop on the 6th of July and aim for the 34100 (S2) support level.

CAD gains on investors’ confidence

The Looney strengthened against the USD but also against the pound yesterday as the commodity currency benefited from the investors’ confidence overspilling north of the US border. As economically sensitive stocks performed a comeback on Tuesday, and oil, one of Canada’s major exports, tended to stabilize somewhat after the steep drop performed on Monday for oil prices, reaching an almost two-month low, the looney was supported. It should be noted that oil prices tended to stabilize despite a surprise built up of US oil inventories which turns oil traders attention towards the EIA weekly crude oil inventories figure. Also, Canadian government bond yields sent some mixed signals overall, following though the U.S. Treasuries as the 10-year yield rose reaching 1.18% after dropping on Monday. We expect oil prices along with fundamentals to provide direction for the Looney today, despite some financial data from Canada being also released.

USD/CAD dropped yesterday reflecting the strengthening of the CAD and broke the 1.2745 (R1) support line, now turned to resistance. Despite the drop we tend to remain rather bullish for the pair, and for it to change we would require a clear breaking of the 1.2650 (S1) support line currently. Also note that the RSI indicator below our 4-hour chart is between the readings of 50 and 70 underscoring the presence of the bulls for the pair. Should buyers regain control over the pair, we may see it breaking the 1.2745 (R1) resistance line and aim for the 1.2835 (R2) level. Should a selling interest be displayed for the pair, we may see it breaking the 1.2650 (S1) support line and aim for the 1.2560 (S2) level.

Other economic highlights today and the following Asian session:

Today we have a light calendar, yet we note during the American session the release of the US EIA crude oil inventories figure.

US 30 Cash H1 Chart

Support: 34400 (S1), 34100 (S2), 33800 (S3)
Resistance: 34700 (R1), 35100 (R2), 35400 (R3)

USD/CAD H4 Chart

Support: 1.2650 (S1), 1.2560 (S2), 1.2470 (S3)
Resistance: 1.2745 (R1), 1.2835 (R2), 1.2915 (R3)


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