Sample Category Title

EUR/USD - 1.1741

Original strategy  :

Buy at 1.1690, Target: 1.1790, Stop: 1.1655

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1690, Target: 1.1790, Stop: 1.1655

Position : -

Target :  -

Stop : -

Although the single currency extended recent fall to 1.1669, the subsequent rebound late Friday suggests a temporary low has possibly been formed there, hence consolidation with upside bias is seen for gain to 1.1750 and then towards resistance at 1.1788, however, break there is needed to add credence to this view, bring retracement of recent decline to 1.1800 and later towards resistance at 1.1832 which is likely to hold from here.

In view of this, we are looking to turn long on dips as 1.1690-00 should limit downside and bring another rebound. Only break of strong support at 1.1662-69 would signal recent decline is still in progress and may extend weakness towards 1.1625-30 but reckon 1.1600 would hold.

USD/JPY - 112.71

Original strategy  :

Sell at 113.10, Target: 112.10, Stop: 113.45

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 113.10, Target: 112.10, Stop: 113.45

Position :  -

Target :  -

Stop : -

Although the greenback jumped to 113.44 on Friday, the subsequent reversal from there to 112.32 suggests top has possibly been formed there and consolidation with downside bias is seen for test of support at 112.21, however, break there is needed to add credence to this view, bring retracement of early upmove to 112.00, then 111.75-80 but previous support at 111.47 should remain intact.

In view of this, we are looking to sell dollar on recovery as resistance area at 113.20-26 should cap upside and bring another decline to aforesaid downside targets. Only break of said resistance at 113.44 would abort and signal recent upmove is still in progress for further gain to 113.75-80 and possibly towards 114.00-10 which is likely to hold from here, bring correction later. 

The DAX is showing little movement in the Monday session. Currently, the index is at 12,965.50, up 0.07% since Friday's close. On the release front, German Industrial Production jumped 3.6%, crushing the estimate of 0.7%. Eurozone Sentix Investor Confidence improved to 29.7, above the estimate of 28.6 points. On Tuesday, Germany releases Trade Balance, with the trade surplus expected to climb to EUR 20.1 billion.

Germany's industrial data for August continues to impress. Industrial Production surged 2.7%, the second-highest gain in 2017. Last week, Factory Orders gained 3.6%, its best performance since December 2016. Strong global demand for German goods, in particular automobiles, has been a boon for German industrial and manufacturing orders. September PMIs were also solid, as the services and manufacturing sectors continue to show expansion. These figures could point to stronger third quarter for the German economy, which has led the way for a strong rebound for the eurozone economy.

All eyes are on Spain, as the Catalan Crisis over the independence could go down to the wire. Catalan's parliament meets on Tuesday, and Catalan leader Carles Puigdemont has said that it is up to the Catalan parliament to approve independence, but it's unclear what path lawmakers will take. Puigdemont has not had any talks with Spanish Prime Minister Mariano Rajoy, as the constitutional crisis continues this week. On Sunday, a demonstration against the referendum attracted some 350,000 people, in a show of support for Catalonia remaining in Spain. Which side will blink first? Madrid could literally shut down the Catalan parliament under Spain's constitution, but has hesitated to take such drastic action. However, if the Catalan parliament declares independence, Rajoy could respond forcefully. The euro was down only marginally last week, but the crisis could hurt the Spanish economy. Last week, two major banks, Caixabank and Sabadell, said they would relocate their corporate headquarters out of Catalonia, and other large companies could follow suit.

The USDJPY pair is currently consolidating around the key 112.60 level, as the U.S dollar index pulls back and investors remain cautious that Pyongyang may launch another missile test this week.

Going forward, the intraday trading sentiment surrounding the USDJPY pair is neutral, with a lack of market-moving data on the U.S economic docket and Japanese financial markets away for Health-Sports Day bank holiday.

The USDJPY pair rose to 113.44 on Friday, as the United States unemployment rate hit a sixteen-year low, while annual and monthly U.S wages grew strongly.

Going forward, the U.S dollar is likely to drive the pair this week, with the U.S economy releasing key inflation data and the Meeting Minutes from the Federal Reserve's September meeting.

Key intraday technical resistance is found at the USDJPY daily pivot point, at 112.70 and the former swing high, at 112.90. Once above 112.90, further resistance is found at 113.25 and 113.44.

To the downside, key USDJPY intraday technical support is found at the pairs weekly pivot point, at 112.40 and the Friday swing low, at 112.33. Once below 112.33, further support is seen at 112.02 and 111.86.

The British pound has moved sharply higher against the U.S dollar during the European trading session, hitting 1.3185, after the ONS upwardly revised UK Second Quarter Labor Costs to 2.4 percent from 1.6 percent, furthering expectations of a November 2nd UK rate hike from the BOE.

Intraday trading sentiment surrounding the British pound has improved after the ONS revision, while British Prime Minister Theresa May appears to have survived a leadership challenge from within the Conservative party.

The GBPUSD pair has now broken above its key 50-day moving average, at 1.3150, with price-action finding interim resistance from the 1.3185 level.

Going forward, sterling faces strong resistance from the 1.3222 level, which is last week's break-out support, now turned resistance.

Key intraday support is currently located at the GBPUSD pairs weekly pivot point at 1.3166, and key 50-day moving average, at 1.3150. Support below 1.3150 is found at 1.3123 and the key 1.3090 level.

To the upside, intraday GBPUSD resistance is found at 1.3200, 1.3222 and 1.3257. The pairs key 200-hour moving average is currently located at 1.3271.

Turkey's currency takes a hit after US suspends visa services

Tensions are growing between the United States and Turkey. Last night, both countries have suspended part of their visa services. Indeed, an employee of the US embassy has been arrested on charges of espionage at Istanbul. As a result, US and Turkey have decided stop issuing non-immigrant visas for Turkish travellers.

The USDTRY pair strongly surged (more than 6%) out of those decisions probably on escalation fears and has reached its highest level since April (3.80 TRY for one single dollar note). The Turkey-US relations are turning to a worse situation. Geopolitical tensions are strongly growing. Actually in the background, tensions are escalating because of the US support to Syrian Kurdish rebels which Turkey considers as a terrorist group.

We definitely believe this can reveal more underlying tensions as Turkey is getting closer and closer of Russia and Iran. In the short-term, the USDTRY may nonetheless bounce back lower as the situation unravels. Yet, we believe that global tensions are overall on the rise and should weigh on the TRY.

AUD's stabilisation may be temporary

The Australian dollar held steady on Monday morning after tumbling more than 1% against the US dollar last week. The release of disappointing local economic data together with improving US ones, encouraged investors to unwind long AUD position.

Firstly, the Reserve Bank of Australia send mixed last week. Although Governor Lowe reiterated that economic growth continued to gradually pick up, he also mentioned that the recent strength of the Aussie could dampen economic growth as well as inflation. This was the first blow for the Aussie. Secondly, September's retail sales came in well under median forecast, contracting 0.6%m/m compared to +0.3% expected. This was the second blow.

Last Thursday, AUD/USD broke its monthly range to the downside as it moves below 0.7787 (low from July 18th) and is currently trading at around 0.7760. Traders will most likely continue to trim long AUD position as the Fed is expected finally resumed its tightening cycle and start balance sheet reduction. However, with the US closed for Columbus Day, today will be slow and volume are expected to be thin.

The euro is unchanged in the Monday session. Currently, EUR/USD is trading at 1.1738, up 0.04% on the day. On the release front, German Industrial Production jumped 3.6%, crushing the estimate of 0.7%. Eurozone Sentix Investor Confidence improved to 29.7, above the estimate of 28.6 points. In the US, banks are closed for Columbus Day, and there are no US events on the schedule.

All eyes are on the Catalan parliament, which will meet on Tuesday. Will Catalonia unilaterally declare independence? Catalan leader Carles Puigdemont has said that it is up to the Catalan parliament to approve independence, but it’s unclear what will happen when the regional lawmakers meet. Puigdemont has not had any talks with Spanish Prime Minister Mariano Rajoy as the crisis goes down to the wire. On Sunday, a demonstration against the referendum attracted some 350,000 people, in a show of support for the Spanish government. Which side will blink first? Madrid could literally shut down the Catalan parliament under Spain’s constitution, but has hesitated to take such drastic action. However, if the Catalan parliament declares independence, Rajoy could respond forcefully. The euro was down only marginally last week, but the crisis could hurt the Spanish economy. Last week, two major banks, Caixabank and Sabadell, said they would relocate their corporate headquarters out of Catalonia, and other large companies could follow suit.

US employment numbers were a mix on Friday. Non Farm Employment change shocked with a decline of 33 thousand, compared to the estimate of a gain of 85 thousand. The weak reading didn’t cause any alarm in the markets, but rather underscored the severe impact of Hurricanes Harvey and Irma, which hit the US in late August and early September. The two storms caused $150-200 billion in damage and also took a toll on the employment market, although the labor market is expected to rebound as the recovery effort intensifies. On a brighter note, wage growth accelerated to 0.5%, above the estimate of 0.3%. This reading is pointing to stronger inflationary pressure, which is good news for proponents of a rate hike. The odds of a December hike have climbed to 91%, which is remarkable, considering that only a month ago, the odds of a December increase were just 31 percent. The markets were also pleased that the unemployment rate fell from to 4.2% in September, down from 4.4% a month earlier.

Gold prices are testing the key 1280 level but it appears unlikely that gains can be sustained above it. The recent bounce higher may be short-lived as the RSI on the 4-hour chart is turning back down, indicating a loss of upside momentum.

Gold's rise above the 50-period moving average helped ease downside pressure. But it remains to be seen whether the current move is merely a pause in the downtrend that has been taking place since the September 8 high of 1357.47.

Gains have stalled at 1285.42, suggesting a short-term top here, with increased odds for a drop towards the October 6 low of 1260.59. From here, support is expected at 1251.49 (August 8 low). A break below this level would increase weakness in the market that would bring the 1200 area into sight.

If prices can remain above 1280 there could be a push higher towards the key psychological level at 1300. A move above 1315 resistance would improve the chance for another leg higher to the September 15 high of 1334.26. A break of this resistance sees the potential for further gains towards the 1357.47 peak and then a likely resumption of the uptrend that started from the July low of 1204.79.

The bearish phase from 1357.47 is still in progress unless prices rise above 1300. The negative alignment and downward-sloping 20 and 50-period moving averages point to a bearish bias. Consolidation around 1280 is expected in the near-term.

EUR/GBP dropped in the first part of the day and could start another bearish movement on the short term. Price opened with a gap down, signaling that the bears could take the lead again. A false breakout above the median line (ML) of the ascending pitchfork could send the rate tumbling towards the LML.

The EUR/JPY posted humble gains in the morning and tries to recover after the minor correction. Price developed a Rising Wedge pattern, but this is far from being confirmed, only a valid breakdown will announce a further drop. We have a major support area between the UML and the inside sliding parallel line (SL), a major drop will appear only after a valid breakdown below this area.