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The bearish sentiment which began mid-August has guided the AUD/NZD currency pair lower. This downside momentum marks a 3.20% decrease in price during this long period of time.

The exchange rate was trading near the lower boundary of a triangle-like formation at 1.0830 during the morning hours of Wednesday 's session. Furthermore, technical sentiment indicates that the Australian Dollar is located in the oversold zone.

Everything being equal, it is likely that the currency exchange rate makes a brief retracement north toward the weekly pivot point at 1.0892 during the following trading sessions.

WTI oil is holding around $72 per barrel in European morning trading and keeps overall positive near-term tone, underpinned by surprise draw in US inventories and political crisis over missing Saudi journalist.

Oil price holds in recovery phase off 0.7049 (11 Oct low) supported by supply concerns over possible reaction of Saudi Arabia on accusations over missing journalist as oil supply could be used as a weapon in retaliation to growing critics.

API report released on Tuesday showed surprise draw in oil inventories (2.1 million barrels vs previous week’s build of 9.75 million barrels), with focus turning to EIA reports, due later today, which shows forecast for 2.16 million barrels build vs previous week’s 5.98 million barrels build.

Another surprise today would further boost oil prices for recovery extension towards pivotal barriers at $72.85/93 (converged 10/20SMA’s / Fibo 38.2% of $76.88/$70.49 bear-leg).

Mixed daily techs lack clearer direction signals, with focus turning towards economic indicators and news, which could act as catalysts.

Bullish scenario includes sustained break above $72.85/93 pivots to spark recovery extension towards Fibo barriers at $73.69 and $74.44 (50% and 61.8% retracement of $76.88/$70.49 respectively).

Rising 30SMA tracks recovery and marks support at $71.61, with close below to weaken near-term structure and make the downside more vulnerable.

Res: 72.42, 72.93, 73.69, 74.44
Sup: 71.61, 71.01, 70.49, 70.00

In the oil market, the recent events have shown one thing to Saudis that they have to bow to the US. Trump was serious when he said that the kingdom may not survive if the U.S. doesn’t provide its security. How big the bill will be for this service? This will be something which will always remain a secret, but one thing is for sure, if MBS wants to come out the current mess, he would have to foot the bill. But one thing which will not remain secret and Trump will publicly be able to take credit will be the increase in the oil supply by Saudis- just what he wanted. For the time being, the oil prices are supported by the fact that the supply is no longer the issue. This is because the demand equation is much more stronger now. The EIA data released last night showed that the crude stockpiles have dropped unexpectedly, this has provided more support for the price.

The below chat shows that the price of Brent is trading within the Bollinger band on a 4-hour time frame.This shows that the volatility is at its normal level and it is likely that we may break out of this band soon. The price is trading below the 50 and 100- day moving averages (50-day in yellow and 100-day in green). Given that the 50-day moving average has dropped below the 100-day moving average, this triggers a negative signal for the price and it is highly likely that we may see the price moving lower unless the 50-day moves above the 100-day moving average.

DAX index could be moving higher becuase there are more bull signals

Markets Focus On Earning

Earnings are the main focus for the markets and the positive optimism is boosting the confidence amidst traders today. The geopolitical tensions have taken the backseat once again as traders have gathered that the situation between Saudi Arabia and the U.S. isn’t going to escalate. The evidence of this is in a much softer stance of President Trump. The Crown Prince is still denying that he knew anything about Khasoggi’s death. The world may not believe this but President Trump is certainly happy to chew this. Although the president has issued another statement to full fill the formality in which he has said that it will be bad if Saudi Price knew of Khasoggi’s fate. The reality is that Trump is facing internal pressure because Saudi Arabia is clearly the beneficiary of his administration's plan to tighten sanctions on Iran. Mid-term elections are here and Trump cannot afford the stock market to be in turmoil or escalate the geopolitical tensions.

The DAX index struggles to break above the downward trend (shown in orange) on a 4-hour time frame. This shows that the bears are still in control of the price. However, it is important to keep in mind that bulls are picking up momentum because the RSI is moving higher and as long as this doesn't start to tilt lower, the momentum to the upside would continue. The Balance of Power is still with the bulls but it is fading and this isn't that positive. We need to see this improving not improving. There is a possibility that the price may close to its 20-day moving average (shown in blue) before it pops back up again. The 50-day moving average is below the 100-day moving average (50-day shown in yellow and 100-day shown in green). This is another bear signal, however, if the price breaks above the 50-day moving average, that would send a powerful bull signal

The support is shown by the green horizontal line
The resistance is shown by the red horizontal line

Yesterday, the US dollar strengthened slightly against a basket of major currencies. The dollar index (#DX) keeps the current levels (+0.03%). In August, job openings exceeded again the number of unemployed in the United States, which signals the stability of the labor market. The indicator counted to 7.136M compared to market expectations of 6.945M. Today, investors have taken a wait-and-see attitude before publication of the FOMC meeting minutes. We recommend paying attention to the comments by the Fed representatives.

The British pound moved in different directions due to the publication of ambiguous reports on the UK labor market. Thus, average earnings taking into account bonuses increased by 2.7% in August instead of 2.6%. However, the number of jobless claims rose to 18.5K in August, while experts expected 4.5K. Investors expect the current information regarding the Brexit process. The euro weakened against the US dollar after the publication of the ZEW economic sentiment index in Germany, which counted to -24.7 in October instead of -12.3.

Oil quotes show positive dynamics. At the moment, futures for the WTI crude oil are testing a mark of $72.15 per barrel. At 17:30 (GMT+3:00) the US crude oil inventories will be published.

Market Indicators

Major US stock indices have recovered some losses: #SPY (+2.19%), #DIA (+2.21%), #QQQ (+2.91%).

At the moment, the 10-year US government bonds yield is at the level of 3.16-3.17%.

Economic calendar on 17.10.2018:

Consumer price index in the UK at 11:30 (GMT+3:00);

Consumer price index in the Eurozone at 12:00 (GMT+3:00);

Statistics on the real estate market in the United States at 15:30 (GMT+3:00);

Publication of the FOMC meeting minutes at 21:00 (GMT+3:00).

The Aussie dollar holds positive tone and extends recovery above pivotal barrier at 0.7146 (Fibo 38.2% of 0.7314/0.7041) on Wednesday.

Positive tone in Asian stock markets supported Aussie’s recovery which eyes next strong barrier at 0.7165 (falling 20SMA which created bear-cross with 30SMA), break of which would provide fresh bullish signal and expose 0.7177 (Fibo 50% / daily Kijun-sen).

Strengthening momentum studies are supportive, but overbought conditions warn of recovery stall.

Bulls need firm break above 0.7164/77 to signal further recovery, otherwise, the downside would remain vulnerable as overall picture is bearish.

North-turning 10SMA marks pivotal support at 0.7101, loss of which would re-expose base at 0.7040 zone.

Res: 0.7164, 0.7177, 0.7210, 0.7229
Sup: 0.7130, 0.7101, 0.7085, 0.7042

The dollar holds firm tone on Wednesday and extends strong recovery of the previous day. Strong Wall St earnings and industrial production boosted dollar, pressuring yen on reduced safe-haven demand. Tuesday's bullish Outside Day is initial reversal signal, but recovery needs to break above 30SMA (112.51) which so far stays intact and weighs. Recovery needs a catalyst to continue, with FOMC minutes of Sep meeting, due later today, expected to provide fresh signals. Expectations for Fed rate hike in Dec are high (77%) which could provide support to the greenback, with minutes to provide more clues about central bank's near-future action. On the other side, conflicting daily indicators are lacking firmer direction signals, as slow stochastic is heading north after reversal from oversold zone, while bearish momentum is strengthening. Overall structure is bearish and sees risk of further weakness after limited correction. Negative outlook is expected while 30SMA caps, with stronger bullish signal expected on sustained break above 112.74 (Fibo 38.2% of 114.54/111.62 bear-leg).

Res: 112.42, 112.50, 112.74, 112.95
Sup: 112.15, 111.83, 111.62, 111.36

The Euro stands at the back foot in early Wednesday's trading and holds within daily cloud after spike to 1.1547 (Asian session low) already tested cloud base. Tuesday's daily candle with long upper shadow showed strong upside rejection and could signal top formation as upside attempts on last Fri/Mon were also rejected. Mixed daily techs provide no clear direction signals, but near-term bias is turning negative. Bearish signal could be expected on close below daily cloud base (1.1545) which would confirm top and turn focus lower. On the other side, bullish signal could be expected on sustained break through a cluster of daily MA's and close above 1.1624 (50% of 1.1815/1.1432/100SMA). Weak German ZEW data on Tuesday added to negative tone, with EU CPI data (Sep m/m 0.5% f/c vs 0.2% prev) and FOMC minutes expected to provide fresh signals.

Res: 1.1569, 1.1580, 1.1600, 1.1624
Sup: 1.1545, 1.1539, 1.1518, 1.1480

Stocks in Asia were broadly higher today after upbeat U.S. corporate earnings and encouraging economic data elevated Wall Street overnight.

Some semblance of stability is likely to return to financial markets this week as earnings season offers investors a short-term distraction away from trade tensions and global growth fears. Although robust earnings are poised to instil equity bulls with a renewed sense of confidence, the underlying factors weighing on stock markets remain present. With U.S.-China trade disputes, concerns over plateauingglobal growth, Brexit-related uncertainty, geopolitical tensions and prospects of higher U.S. interest rates still in the mix, equity bears have plenty of ammunition.

European Union summit in focus

With just over five months left until the official Brexit deadline, markets and investors are still scrambling for clarity with many questions still unanswered.

Over the next few days investors will be keeping a very close eye on the EU summit which could provide some direction on Brexit. With a deadlock on the Northern Irish border issue seen as a major obstacle in Brexit talks, there is little hope for a breakthrough at the EU summit. If the summit concludes with no real progress made on negations, this simply raises the risk of a no-deal Brexit outcome. Given the Pound is extremely sensitive to Brexit headlines, such a scenario could send the currency collapsing like a house of cards.

Dollar gains ahead of Fed minutes

Buying sentiment towards the Dollar took a slight hit on Tuesday after Donald Trump once again criticisedthe Federal Reserve, stating that it was his ‘biggest threat’ because it is raising rates too fast. However, the Dollar’s downside was limited by positive U.S. industrial production figures which boosted sentiment towards the U.S. economy. Although Trump’s repeated criticism of the Fed is unlikely to impact the central bank’s interest rate hiking path, it could continue weighing on the Dollar.

Today’s main event risk for the Dollar will be the Federal Open Market Committeemeeting minutes which investors will closely comb through for clues on rate hike timings beyond December. The Dollar could be given an opportunity to rebound if the minutes come across as more hawkish than expected.

The Dollar Index has staged an impressive rebound from the 94.80 level with prices trading towards 95.20 as of writing. Bears need to break below the 95.00 support level for prices to sink towards 94.60. Alternatively, an intraday breakout above 95.30 could trigger a move higher to 95.44.

Commodity spotlight – Oil

Oil prices seem to be witnessing some stability as U.S.-Saudi tensions ease with investors redirecting their focus towards looming sanctions against Iran and a surprise decline in U.S. Crude inventories.

U.S. sanctions against Iran’s oil exports and falling production from Venezuela are two likely factors to push oil prices higher this quarter. Geopolitical risk factors may spark uncertainty over the global supply outlook – ultimately fanning fears of possible supply shocks. Although the current market conditions favour higher oil prices, global trade tensions still remain a threat to oil bulls down the road. Heightened trade disputes between the world’s two largest economies represent a threat to global growth. Slowing global growth in the event of a full-blown trade war will most likely dent demand for crude.

EUR/USD

Current level - 1.1557

Allow an intraday dip to 1.1510-30 area, followed by a renewal of the senior uptrend, towards 1.1720 area.

USD/JPY

Current level - 112.21

My outlook is bullish, for a break through 112.50, en route to 113.50 zone.

GBP/USD

Current level - 1.3174

Yesterday's peak at 1.3235 has finalized the upmove since 1.3080 low and the intraday bias is bearish, for a slide towards 1.3070. The pullback after 1.3235 should be the final leg of the consolidation pattern and is expected to precede a rise towards 1.3440.