Sat, Oct 23, 2021 @ 17:11 GMT
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USD Retreats As Attention Shifts To PMI Figures

The greenback weakened on Friday and during today’s Asian session against a number of its counterparts yet tends to remain at rather high levels fueled by worries regarding the pandemic, while the market’s attention turns to the Jackson Hole summit on Thursday and Friday. The Aussie recovered some ground against the USD during today’s Asian session, yet fundamentals tend to weigh given that a large part of the population back home is under lockdown rules, while iron ore prices recovered very little if any after their drop at the beginning of the month. EUR traders turn their attention to today’s release of the preliminary PMI figures for August and worries seem to concentrate on Germany’s manufacturing sector as its expansion of economic activity is expected to slow down. Gold prices remained rather stable given that the USD still remains at rather high levels yet worries about a possible economic slowdown due to the pandemic tend to feed it. US stockmarkets tended to recover some of the lost ground on Friday, as worries for a possible monetary policy tightening by the Fed tended to ease.

The USD Index dropped on Friday and during today’s Asian session, after testing the 93.65 (R1) resistance line, which held its ground. We tend to maintain a bias for a sideways motion for the index for the time being, given that the index’s price action has broken the upward trendline guiding it from the 16th of the month until the 20th. Please note that the RSI indicator below our 4-hour chart remains near but above the reading of 50, which may imply a rather indecisive market. Should a selling interest be displayed we may see the index breaking the 93.20 (S1) support line and aim for the 92.75 (S2) level. Should the USD be in high demand, we may see the index breaking the 93.65 (R1) resistance line which capped the index’s price action on Friday the 20th of August and aim for the 94.15 (R2) resistance level.

EUR/USD rose on Friday breaking the 1.1695 (S1) resistance line, now turned to support. Given that the pair’s downward motion was interrupted, we switch our bearish outlook in favor of a sideways movement initially. Please note that the RSI indicator below our 4-hour chart is at the reading of 50 underscoring the market’s indecisiveness. Should the bears take over, we may see EUR/USD breaking the 1.1695 (S1) support line and aim for the 1.1605 (S2) level. Should the buyers take over the initiative for the pair’s direction, we may see EUR/USD aiming if not breaking the 1.1785 (R1) line which created substantial commotion from the 19th to the 26th of July and if broken it could open the way for the 1.1885 (R2) resistance level.

Other economic highlights today and the following Asian session:

Today, we get France’s, Germany’s, the Eurozone’s, UK’s and the US preliminary Markit PMI readings for August, while we also note in the American session the release of the US existing home sales figure for July and Eurozone’s preliminary consumer confidence for August.

As for the rest of the week

On Tuesday, we get Germany’s GDP rate for Q2 and the US new home sales for July. On Wednesday, we get New Zealand’s Trade Balance for July, Germany’s Ifo indicators for August and the US durable goods orders for July. On Thursday, we get Australia‘s capital expenditure for Q2, Germany‘s GfK consumer sentiment for September, Frances‘ business climate for August the US GDP estimate for Q2, the US Core PCE prices for Q2, the weekly initial jobless claims figure while in Jackson Hole the Fed‘s three-day Summit begins. On Friday, we get from Japan Tokyo’s CPI rates for August Australia’s, Retail sales (final) for July and from the US the consumption rate for July, the core PCE price index for July and the final University of Michigan consumer sentiment for August.

USD Index H4 Chart

Support: 93.20 (S1), 92.75 (S2), 92.30 (S3)

Resistance: 93.65 (R1), 94.15 (R2), 94.75 (R3)

EUR/USD H4 Chart

Support: 1.1695 (S1), 1.1605 (S2), 1.1505 (S3)

Resistance: 1.1785 (R1), 1.1885 (R2), 1.1990 (R3)


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