A release of better that expected data on the US ISM Non-Manufacturing PMI led to sharp appreciation of the buck against the common European currency and resulted in a breakout from two junior ascending channels. An active recovery of the exchange rate seems unlikely, as the northern is contains a bunch of technical indicators, such as the weekly PP at 1.1631 and the falling 55- and 100-hour SMAs. Moreover, there is a slope on a daily chart that is likely to serve as an additional barrier. For this reason, the pair is expected to gradually slip to the bottom towards support area near the 1.1580 mark. However, for now the rate is squeezed between two vises at 1.1625 and 1.1600 and might continue this horizontal movement until catching a proper momentum.
The pair spiked to fresh nearly eight-month high at 114.73 in early Monday’s trading, but probes above previous peaks at 114.36/49 (10 May / 11 July) were so far short-lived, adding to strong indecision signals from last Thu/Fri long-legged Dojis.
The Euro stands at the back foot on Monday and pressuring 1.1600 support, which guards post ECB's multi-month low at 1.1574, posted on 27 Sep. Last Friday's close in red which formed bearish Outside Day pattern, weighs on near-term action for renewed attempt at 1.1574 pivot and extension of the downleg from 1.2092.
EURUSD maintains its bearish outlook after the breakdown of the key level at 1.1660. The chart pattern on the daily time frame indicates a head and shoulders pattern with a break below the neckline giving a bearish signal.
The euro continues to remain weak against the U.S dollar, following solid U.S economic data, and another bearish technical weekly price-close. The EURUSD pair is currently trading just above the key 1.1610 support level, after again being swiftly rejected from its 200-week moving average, located at 1.1670. Euro traders now await a raft of economic data coming out from the Eurozone this morning and the start of the Eurogroup meetings from Luxembourg.
The U.S dollar has moved sharply higher against the Japanese yen, hitting 114.73, as Asian investors reacted to Friday's solid NFP job report from the United States. Price-action has now pulled back towards 114.35 support region, following the Bank of Japan Meeting Minutes. The Meeting Minutes showed no change in fiscal policy, however, Goushi Kataoka, a new member of the policy board, dissented and argued against the BOJ's view that current policy is sufficient to meet its target.
USDJPY (114.26): The USDJPY closed with a doji candlestick pattern on the daily chart on Friday. This comes near the resistance level of 114.31 - 114.07. Price action has been struggling to break out from this resistance level in the past few sessions but with little success. On the 4-hour chart, the inverse head and shoulders pattern was, however, validated as USDJPY broke out above 114.24. As long as this price level holds, USDJPY could be seen pushing higher. A close below 114.24 on the intraday basis could, however, signal the sideways momentum to continue.
EURUSD (1.1609): The EURUSD closed on a bearish note on Friday. The bearish engulfing pattern formed on the daily chart could suggest further downside momentum. On the 4-hour chart, price action has broken out from the bearish flag pattern. However, the EURUSD will be seen testing the previous lows near 1.1573. A break down below this low will indicate further declines in price. Alternately, if support is established higher, EURUSD could remain range bound and potentially invalidating the bearish outlook.
The Euro started a recovery from the 1.1575 low against the US Dollar this past week. However, the EUR/USD pair failed near 1.1680, declined once again and is now back in the bearish zone. During the upside correction, the pair traded above the 23.6% Fib retracement level of the last decline from the 1.1836 high to 1.1575 low. However, it faced a strong selling interest near 1.1680 and the 38.2% Fib retracement level of the last decline from the 1.1836 high to 1.1575 low.
EURUSD - With the pair trading flat following price rejection the past week, more weakness is likely. Resistance comes in at 1.1650 level with a cut through here opening the door for more upside towards the 1.1700 level. Further up, resistance lies at the 1.1700 level where a break will expose the 1.1750 level. Conversely, support lies at the 1.1600 level where a violation will aim at the 1.1550 level. A break of here will aim at the 1.1500 level. Below here will open the door for more weakness towards the 1.1450. All in all, EURUSD faces further recovery higher.
USDCHF is on a strong rise after breaking through some important levels on a daily chart last week, so we see market turning bullish, currently making a five wave rise. Specifically we see price trading within corrective wave 4), that can cause a strong push higher soon into wave 5.
USDJPY: The pair retains its upside leaving risk of more strength on the cards. On the downside, support comes in at the 113.50 level where a break if seen will aim at the 113.00 level. A cut through here will turn focus to the 112.50 level and possibly lower towards the 112.00 level. On the upside, resistance resides at the 114.50 level.
The British pound continues to trade towards the bottom end of its one-month range against the U.S dollar, despite better than expected UK Services PMI data earlier. The GBPUSD pair currently trades around the 1.3080 level, managing only a muted reaction to much better UK data. Sterling traders now awaits the release of the NFP jobs report, with expectations for the headline jobs figure skewed to the upside
The pound has managed to bounce back a little this Friday morning after taking a plunge on Thursday when the Bank of England delivered a so-called dovish rate rise. Sterling found mild support on the back of the latest PMI data from the dominant services sector, which suggested business activity grew at its strongest pace in six months in October. But the GBP/USD's gains were capped as traders sat on their hand ahead of the key jobs report from the US.
AUD/USD is ready to bounce back but downside pressures are still lively. Hourly resistance is given at a distance at 0.7897 (13/10/2017 high). Expected to show renewed pressures towards key support at 0.7571 (05/07/2017 low).
USD/CAD is still holding above former resistance at 1.2778 (15/08/2017 high). This suggests an extension of bullish momentum. Hourly support lies at 1.2331 (26/09/2017 high). Expected to show continued short-term bullish pressures.
USD/CHF is consolidating. Yet, the technical structure is clearly bullish. The technical structure suggests an improving short-term buying interest. Expected to show continued bullish momentum. Hourly support stands at 0.9951 (01/11/2017 low).
None of the yesterday's events created an impulse strong enough to force the pair to make a breakout from the rectangle pattern. Moreover, expectations of the upcoming release of information about the state of the American labour market led to formation of a minor symmetrical triangle pattern. A sharp plunge looks unlikely, as the southern side is reliably protected by a combination of the 100- and 200-hour SMAs together with the weekly PP at 113.79. On the other hand, a resistance area between the 114.25 and 114.35 levels managed to neutralize surge of the rate more than once in the past. Nevertheless, if the employment change appears to be really positive, traders with bullish outlook are likely to use this occasion to try to elevate the pair to the July 2017 maximum at 114.50.
A decision to raise the interest rate led to 110 points fall of the rate. Initially, the bottom line of a dominant ascending channel managed to halt the pair near 1.3120. However, the subsequent Governor Carney press conference boosted this process and bears managed to push the pair to the weekly S1. On daily chart it seems that yesterday's downfall confirmed existence of a new medium-term descending channel. However, even in that case it looks like the Pound has to restore some lost positions before making a decisive breakout from the dominant ascending channel. An upcoming release of the British Services PMI might provide some small impulse for the upward movement. On the other hand, the two resistance levels near 1.3085 and 1.3107 most likely will manage to constrain the pair.
The US President Donald Trump named Governor Powell as the new Fed Chair yesterday. However, markets showed little response to this decision, as it was widely expected. The news that actually moved the currency rate was disclosure of some details of the new tax reform. From technical point of view, the weakening of the buck resulted in formation of a junior ascending channel. However, the exchange rate is likely to fail to surge to its upper boundary, as that path is blocked by a combination of the weekly PP at 1.1674 and the falling 200-hour SMA near 1.1682. The likelihood of a rebound is also supported on daily chart where the pair additionally faces the 23.6% Fibonacci retracement level at 1.1679. Plus the average market sentiment remains 59% bearish.
USDCAD is neutral in the short term after a recent rally lost steam at a high of 1.2916. The underlying downtrend from 1.3793 is weaker after the strong rebound but the pair still remains under the 200-day moving average, keeping the bearish market structure still in place.
USDJPY (114.00): The USDJPY continues to trade near the major resistance level of 114.31 - 114.00 region. The sideways price action could signal a major breakout in the near term. On the 4-hour chart, we notice the inverse head and shoulders continuation pattern taking shape. Neckline resistance is formed at 114.24 which could be breached in the short term. This could put the upside bias in USDJPY towards 115.00 in the near term. However, failure to breakout above 114.24 resistance could mean that USDJPY will maintain the sideways range in the near term.
EURUSD (1.1657): The consolidation in the EURUSD continues as price action remains trading flat below 1.1672. The euro was seen posting modest gains, but did not manage to make any significant progress. With price trading below the main resistance level of 1.1704 and 1.1672 we expect the bias to remain to the downside. On the 4-hour chart, the bearish flag pattern remains the main point of focus. Price action is expected to break down to the downside and will be validated on a close below the previous low of 1.1573. This will open the downside target in EURUSD towards 1.1411 eventually marking the completion of the bearish flag pattern. To the upside, a breakout above 1.1704 - 1.1672 could however signal a shift in the short-term direction.
The U.S dollar continues to ease around the 114 level against the Japanese yen, after the announcement of the new FED Chair Jerome Powell had been in-line with what market participants had been expecting. The USDJPY pair showed a muted reaction after the news, with price-action continuing to trade just below the three and a half month high, at 114.44. Traders now await the release of the U.S Non-farm payrolls job report, with 300,000 new U.S jobs expected to be created in October.
The British pound continues to fall sharply against the U.S dollar, with price-action hitting 1.3040, during late Thursday trading. The GBPUSD pair currently trades around the 1.3060 level, with the U.S dollar index remaining well supported after the announcement of the new FED Chair Jerome Powell and the Trump administration tax plan. Traders now await the release of the U.S Nonfarm payrolls job report.
The US Dollar remains in a solid uptrend and recently moved above the 113.60 resistance against the Japanese Yen. However, the USD/JPY pair is facing many hurdles near 114.30, 114.50 and 115.00. The 4-hours chart of USD/JPY suggests that the pair is struggling to break the 114.30-114.50 resistance zone. There were at least five failures near the mentioned levels. Above 114.50, there is another crucial barrier for buyers near 115.00.
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