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During yesterday's trading session, the US dollar weakened slightly against a basket of major currencies. The US dollar index (#DX) closed in the negative zone (-0.15%). Investors' sentiment worsened after the collapse of the US stock market and the escalation of the trade war. The US dollar was under pressure due to weak economic data published yesterday. The core retail sales index fell to -0.1% in September, while experts expected 0.4%. The volume of retail sales rose by 0.1% and was worse than the expected value of +0.7%.

The British pound was under pressure after it became known that the UK and the EU could not reach an agreement on Brexit. Ireland-UK border is still an open issue. On Thursday, an important Brexit summit of EU leaders will begin, which is likely to give a solution on controversial issues.

Oil quotes are moderately declining. At the moment, futures for the WTI crude oil are testing a mark of $71.60 per barrel.

Market Indicators

Major US stock indices continue to show negative dynamics: #SPY (-0.56%), #DIA (-0.38%), #QQQ (-1.21%).

The 10-year US government bonds yield moved away from seven-year highs. At the moment, the indicator is at the level of 3.16-3.17%.

Economic calendar on 16.10.2018:

Report on the labor market in the UK at 11:30 (GMT+3:00);

German ZEW economic sentiment index at 12:00 (GMT+3:00);

JOLTS job openings in the United States at 17:00 (GMT+3:00).

The pair bounces from one-month low on Tuesday, as selloff in global stock markets eased, reducing safe-haven demand. Japanese yen advanced in past two weeks on strong fall in stock markets as well as uncertainty over US/China trade war, which boosted its safe-haven appeal. Bounce comes after larger bears were contained by rising 55SMA and strongly oversold daily studies warned of correction. Reversing slow stochastic and momentum support the action, but overall structure remains firmly bearish and favors further weakness after correction. Repeated close below Fibo support at 111.97 (61.8% of 110.38/114.54) and final break below 55SMA are needed to signal bearish continuation towards 111.32/00 (100SMA/round-figure). Monday's high at 112.23 marks initial resistance with extended upticks to be ideally capped by 30SMA (112.45). Lift above 20SMA (112.95) would neutralize bears and signal reversal.

Res: 112.23, 112.45, 112.95, 113.08
Sup: 111.82, 111.62, 111.32, 111.00

EUR/USD

Current level - 1.1574

There is still a chance for one more dip towards 1.1530-10 before renewal of the upmove towards 1.1720 area. An eventual break through 1.1610 peak will signal a direct rise towards 1.1720.

USD/JPY

Current level - 112.03

The support area at 111.65 managed to hold yesterday and my outlook remains positive, for a climb towards 112.50, en route to 113.50 zone.

GBP/USD

Current level - 1.3165

The intraday bias is slightly positive above 1.3140, but my outlook is counter-trend, for a reversal below 1.3260 and drowning towards 1.3030 area. Crucial on the upside is 1.3260 peak.

Pivot (invalidation): 71.30

Our preference Long positions above 71.30 with targets at 72.70 & 73.20 in extension.

Alternative scenario Below 71.30 look for further downside with 70.85 & 70.50 as targets.

Comment The RSI shows upside momentum.

Pivot (invalidation): 14.6200

Our preference Long positions above 14.6200 with targets at 14.7700 & 14.8500 in extension.

Alternative scenario Below 14.6200 look for further downside with 14.5500 & 14.4900 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 1222.50

Our preference Long positions above 1222.50 with targets at 1230.50 & 1233.50 in extension.

Alternative scenario Below 1222.50 look for further downside with 1219.00 & 1215.50 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Pivot (invalidation): 2731.00

Our preference Long positions above 2731.00 with targets at 2776.00 & 2810.00 in extension.

Alternative scenario Below 2731.00 look for further downside with 2710.00 & 2692.00 as targets.

Comment A support base at 2731.00 has formed and has allowed for a temporary stabilisation.

Pivot (invalidation): 11525.00

Our preference Long positions above 11525.00 with targets at 11700.00 & 11810.00 in extension.

Alternative scenario Below 11525.00 look for further downside with 11465.00 & 11400.00 as targets.

Comment The RSI calls for a rebound.

Pivot (invalidation): 5.8200

Our preference Short positions below 5.8200 with targets at 5.7470 & 5.7000 in extension.

Alternative scenario Above 5.8200 look for further upside with 5.8730 & 5.9380 as targets.

Comment Intraday technical indicators are mixed and call for caution.

Pivot (invalidation): 0.7120

Our preference Long positions above 0.7120 with targets at 0.7150 & 0.7165 in extension.

Alternative scenario Below 0.7120 look for further downside with 0.7105 & 0.7095 as targets.

Comment The RSI lacks downward momentum.