The Japanese currency experiences some safe haven outflows on Friday as market worries about the possible ripple effects of Evergrande, a giant Chinese developer, defaulting tended to ease. It should be noted that the USD tended to get considerable support against a number of its counterparts on Friday as US yields tended to be on the rise before correcting lower today, possibly reflecting also the more hawkish stance of the Fed on Wednesday. The common currency remained relatively stable, while EUR traders keep an eye out for the results of Germany’s elections as a long negotiation period seems about to follow the results to form a governing alliance. The Loonie gained against the USD during today’s Asian session, possibly also reflecting the positive market mood yet probably also supported by higher oil prices which continued to rise for a fifth consecutive day feeding on supply worries. US stockmarkets remained in the greens as market participants tended to shake off any worries for a possible Evergrande default, yet the Chinese developer seems to have missed yet another interest payment which could increase uncertainty in today’s session. Gold prices rose on Friday despite rising yields and a strengthening USD, possibly reflecting some market uncertainty. USD/JPY corrected lower during today’s Asian session after a five-day rally and before reaching the 110.90 (R1) resistance line. Given that in its correction lower the pair broke the upward trendline guiding it, we tend to switch our bullish outlook in favor of a sideways bias temporarily. The RSI indicator below our 4-hour chart seems to remain near the reading of 70, which on the one hand tends to confirm the bull’s dominance yet reminds us that the pair is near overbought levels. Should the bulls actually take charge once again of the pair’s direction, we may see it breaking 110.90 (R1) resistance line and aim for the 111.65 (R2) level. If the bears take over, we may see the pair breaking the 110.20 (S1) support line, aiming for the 109.25 (S2) level.
EUR/USD seems to have stabilised somewhat over the 1.1695 (R1) resistance line. In its stabilisation the pair seems to have broken the downward trendline guiding it since the 3rd of September, hence we tend to maintain a bias for a sideways motion currently. Please note that the RSI indicator below our 4-hour chart is near the reading of 50, implying a rather indecisive market. Should a selling interest be displayed by the market, we may see the pair breaking 1.1695 (S1) support line and aim for the 1.1615 (S2) level. If buyers take over the direction of the price action, we may see EUR/USD aiming if not breaching the 1.1785 (R1) line.
Other economic highlights today and the following Asian session:
Today we note the release of the US durable goods orders growth rate for August, while on the monetary front, BoJ Governor Kuroda, ECB President Lagarde and BoE Governor Bailey are scheduled to speak.
As for the rest of the week
On Tuesday, we note the release of Germany’s GfK Consumer Sentiment for October and the US consumer confidence while ECB’s two-day forum on central banking begins. On Wednesday, we get Eurozone’s business climate for September and the area’s final consumer confidence for the same month. On a packed Thursday we get Japan’s preliminary industrial output for August, China’s NBS and Caixin manufacturing PMI figures for September, Australia’s building approvals growth rate for August, UK’s nationwide house prices for September, France’s and Germany’s preliminary HICP rates for September, Switzerland’s KOF indicator for September, UK’s GDP rate for Q2, the US final GDP rate for Q2, the US weekly initial jobless claims figure and from the Czech Republic, CNB’s interest rate decision. On Friday we get Japan’s Tankan indicators for Q3, Eurozone’s preliminary HICP rate for September, the US consumption rate for August, Canada’s GDP rate for July and the Markit manufacturing PMI for September as well as the final US Un. Michigan consumer sentiment for September.
USD/JPY H4 Chart
Support: 110.20 (S1), 109.25 (S2), 108.45 (S3)
Resistance: 110.90 (R1), 111.65 (R2), 112.25 (R3)
EUR/USD Cash H4 Chart
Support: 1.1695 (S1), 1.1615 (S2), 1.1520 (S3)
Resistance: 1.1785 (R1), 1.1885 (R2), 1.1990 (R3)
