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EUR/USD

The American dollar spent Thursday giving back part of the Fed's triggered gains, ending the day with uneven results, but down across the board, anyway. The common currency gained in spite of comments from ECB's Executive Board member Peter Praet, who said that the time has no yet come for the ECB to start winding down its massive monetary stimulus. ECB's head, Mario Draghi, was also on the wires, but said little over current monetary policy, beyond saying that monetary policy is not the right instrument to address financial imbalances in the euro zone. Backing the EUR was consumer confidence that improved from -1.5 to -1.2 in September, the highest level in about 16 years.

In the US, macroeconomic figures were mixed, as in the week ending September 16, initial jobless claims reached 259K, a decrease from the previous week's revised level of 282K. The 4-week moving average, however, was 268,750, the highest level for this average in over a year. Additionally, manufacturing firms reported an improvement in regional manufacturing conditions in September, according to the Philadelphia Fed monthly survey, with the index up for September to 23.8 from previous 18.9, also beating market's expectations of 17.9, but July's Housing Price Index came in below expected up on the month by 0.2%.

The EUR/USD pair peaked at 1.1953 to end the day in the 1.1930 region, pretty much flat for the week, midway between 1.18 and 1.21, the range established late August. Potential gains are being limited by speculation that the ECB will continue with some sort of verbal intervention on spikes through the 1.2000 level, but a dollar's steeper recovery is on doubt, weighed by political jitters and the lack of progress in the growth agenda. Technical readings in the 4 hours chart indicate that the upward potential is limited, as technical indicators have posted modest recoveries within negative territory, but remain in the red and with little directional strength, whilst the price is incapable to surpass its 20 and 100 SMAs, with the shortest providing an immediate resistance at 1.1965.

Support levels: 1.1900 1.1860 1.1820

Resistance levels: 1.1965 1.2000 1.2030

USD/JPY

The USD/JPY pair advanced for fifth consecutive day this Thursday, reaching a daily high at 112.71 during early trading hours, and after the BOJ stuck to its ultra-loose monetary policy. Following Fed's hawkish announce, including a third rate hike for this year and details on how the US Central Bank will unwind its balance sheet, the on-hold stance of Japanese policymakers highlighted the imbalances between both central banks, supportive of the pair's advance. The pair fell down to 112.13 early US session, but recovered to close near the mentioned high, following the behavior of US Treasury yields, which eased intraday, but managed to regain their post-Fed levels ahead of Wall Street's close. The pair remains biased higher according to technical readings, as in the 4 hours chart, the price continues developing well above its 100 and 200 SMAs, whilst the Momentum indicator is aiming to regain its bullish strength as the RSI indicator remains within overbought territory. The immediate resistance comes at 112.86, July 17th daily high, and an advance beyond it will open doors for a recovery up to the 114.40 price zone, where the pair topped out in May and July.

Support levels: 112.10 111.75 111.40

Resistance levels: 112.85 113.30 113.70

GBP/USD

Having spent most of the first half of the day confined to a tight range around the 1.3500 level, the GBP/USD pair broke higher in the US afternoon, ending the day some 20 pips below the 1.3600 level, following news indicating that UK's PM May is willing to pay the EU up to €20b, but only if the UK has granted access to the single market after the Brexit, alongside with some form of custom union. PM May is scheduled to speak in Florence, this Friday to finally present her Brexit strategy. So far, the UK and the EU have made little progress on Brexit negotiations, and May´s offer could be decisive when it comes to move forward. The pair gained a modest upward potential with the late intraday advance, but would need to break beyond the 1.3600 figure to be able to advance at a firmer pace. In the 4 hours chart, the price has recovered above a now flat 20 SMA, whilst technical indicators entered positive territory, maintaining their upward slopes, although with limited momentum, favoring the upside anyway.

Support levels: 1.3535 1.3490 1.3450

Resistance levels: 1.3615 1.3650 1.3690

GOLD

Spot gold posted its lowest settlement since August 25th, ending the day at $1,291.30 a troy ounce, weighed by US Federal Reserve latest announcement. The central bank revived hopes for a third rate hike this year, with odds of such move now at 72% from 51% before the event. Risk-related headlines coming from US President Donald Trump weren't enough to boost demand for the metal, as he said that "North Korea's nuclear weapons and missile development is a grave threat to peace and security in our world and it is unacceptable that others financially support this criminal, rogue regime," when signing an executive order to further isolate the country. In the daily chart the bearish momentum remains strong, as technical indicators keep heading sharply lower within bearish territory, whilst the price moved further below its 20 SMA, which gains bearish traction far above the current level. Shorter term, and according to the 4 hours chart, the risk is also steady towards the downside, with the 20 SMA crossing below the 200 SMA, both around 1,305.00, and technical indicators holding flat well into bearish territory, with no signs of changing course.

Support levels: 1,288.10 1,280.45 1,273.45

Resistance levels: 1,296.00 1,304.00 1,311.60

WTI CRUDE OIL

West Texas Intermediate crude futures closed Thursday little changed at $50.64 a barrel, reverting an early slide down to 50.06. The OPEC and non-OPEC producers who agreed an output cut late last year, are scheduled to meet this Friday in Vienna to discuss the market impact of their agreement, and the progress achieved so far. Any mention on an extension of their deal beyond its current end, at March 2018, may boost the black gold. In the meantime, the daily chart shows that the price holds near its recent highs, well above still directionless 100 and 200 SMAs, and that technical indicators keep turning lower, but well into positive territory, rather reflecting the ongoing consolidation than suggesting an upcoming decline. In the 4 hours chart and for the short term the commodity retains a positive stance as the price holds within a consolidative range well above a bullish 100 SMA, whilst technical indicators have managed to regain the upside after approaching their mid-lines, still poised to test the 52.00 critical level.

Support levels: 50.20 49.60 49.10

Resistance levels: 51.10 51.55 52.00

DJIA

The Dow Jones Industrial Average put an end to its bullish run, closing the day in the red after nine consecutive advances. The index lost 53 points, or 0.24%, to end at 22,359.23. The S&P shed 7 points and closed at 2,500.60, while the Nasdaq Composite also closed in the red, at 6,422.69 after losing 33 points. Banks remained on the winning side, with Goldman Sachs up 0.81% and JP Morgan gaining 0.53%, both among the best performers. Tech shares led the way lower, with Apple down 1.72%. The daily chart shows that the index held anyway above Wednesday's opening, and far above bullish moving averages, whist the upward Momentum remains strong. The RSI indicator in the mentioned chart has barely retraced, still within overbought readings, all of which limits chances of a steeper decline. Shorter term, and according to the 4 hours chart, the index presents a neutral stance, stuck around a bullish 20 SMA, and with technical indicators have pared their declines before turning flat within positive territory.

Support levels: 22,356 22,321 22,288

Resistance levels: 22,424 22,475 22,500

FTSE100

The FTSE 100 lost 8 points or 0.11% to end the day at 7,263.90, with little to motivate investors and ahead of PM May's Brexit plan announcement this Friday. Most members were down, with Kingfisher being the worst performer, shedding 4.09%, followed by J Sainsbury that lost 4.05%. Only 30 members closed higher, with Johnson Matthey adding 14.6%, after the company revealed a plan for a £200m investment in battery technology as it aims to become a key player in the coming electric car revolution. The index, however, fell in after-hours trading, as the Pound broke higher against its major rivals, heading into the Asian opening some 50 points below the mentioned close. Daily basis, the technical bias remains towards the downside, as indicators resumed their declines within bearish territory and with the Momentum at fresh multi-month lows, whilst the index keeps developing below a bearish 20 DMA. In the 4 hours chart, the index settled around a sharply bearish 20 SMA, whilst the RSI indicator heads lower around 39, also supporting a bearish extension for this Friday.

Support levels: 7,236 7,195 7,150

Resistance levels: 7,271 7,317 7,344

DAX

The German DAX closed at 12,600.03, up 30 points, as persistent strength in back-related equities lifted European equities benchmarks. Local indexes followed the lead of Wall Street, after the US Federal Reserve hawkish stance on tightening for the foreseeable future. Banks could make more money on charging interest when rates rose. Commerzbank led advancers, surging by 2.95%, followed by Deutsche Bank that added 1.78%. ThyssenKrupp, on the other hand, was the worst performer, down 3.49%. The index holds on to gains ahead of Friday's opening, although the daily chart shows that technical indicators are beginning to ease from near overbought readings, indicating that a downward correction is possible, although not yet confirmed. In the shorter term, and according to the 4 hours chart, the index turned neutral-to-bullish, as the Momentum indicator stands flat around its 100 level, whilst the price holds above an also horizontal 100 20 SMA. The RSI indicator in this last time frame, retreats from overbought levels, heading modestly lower around 62.

Support levels: 12,581 12,537 12,489

Resistance levels: 12,630 12,677 12,720

Daily Pivots: (S1) 151.75; (P) 152.30; (R1) 153.30; More

Intraday bias in GBP/JPY remains on the upside with 150.12 minor support intact. Current medium term rise from 122.36 should target 61.8% projection of 122.36 to 148.42 from 139.29 at 155.39 next. On the downside, below 150.12 minor support will turn intraday bias neutral and bring consolidation before staging another rally.

In the bigger picture, the consolidation from 148.42 should have completed and medium term rebound from 122.36 is resuming. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. For now, the bullish scenario is preferred as long as 139.29 support holds.

USDJPY (111. 76): Following a string of consecutive gains, USDJPY was seen easing back earlier today. This comes after the US dollar posted a two-month high yesterday. In the short term, support at 111.00 remains a key level that will be tested. This lever previously served as resistance and an unfilled gap from last Friday's close at 110.87 will most likely be filled. Further declines are unlikely unless USDJPY slips below this support level. To the upside, the next target is likely to be 113.00.

GBPUSD (1.3580): The British pound extended gains once again yesterday breaking past the bullish flag pattern. Price action is critically trading below the resistance level of 1.3589. A breakout above this level is needed for the GBPUSD to continue to extend the gains. However, a reversal near the resistance level could send the cable lower as the bullish flag pattern becomes invalidated. The price action in GBPUSD will most likely be determined by the PM May's speech today.

EURUSD (1.1953): Following a sharp decline of the 1.1950 level, the EURUSD managed to recover. Price action remains firmly range bound within the 1.2058 and 1.1822 levels of resistance and support. On the daily chart, the rising wedge pattern remains in play with the current level of 1.1950 proving to be a key level for the euro. A breakout above this level could signal a continuation to the upside, in which case we can expect gains towards 1.2090. To the downside, support at 1.1822 will be an important level as a breakdown below this level could signal a move to the lower support at 1.1672.

Daily Pivots: (S1) 133.68; (P) 134.03; (R1) 134.66; More...

Intraday bias in EUR/JPY remains on the upside for the moment. Firm break of 134.20 fibonacci level will pave the way to 141.04 resistance next. On the downside, below 133.26 minor support will turn intraday bias neutral and bring consolidations. But firm break of 131.39 resistance turned support is needed to be the first sign of near term reversal. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, current rise from 109.03 is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). as long as 124.08 resistance turned support holds, further rise is expected to 61.8% retracement of 149.76 to 109.03 at 134.20. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. On the downside, break of 127.55 support is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bullish.

The US dollar was seen giving back the gains a day after the FOMC meeting. EURUSD managed to recover as the currency pair regained the 1.19 handle.

On the economic front, the Bank of Japan left interest rates and QE unchanged signaling that it could still maintain its easy monetary policy. This led to some weakening in the Japanese yen across the board. The ECB President Mario Draghi gave a speech yesterday but refrained from making any references to monetary policy or the euro's exchange rate.

Looking ahead an important day for the British pound as the Prime Minister, Theresa May will be giving a speech on Brexit to the UK Parliament. Investors are expecting that the UK will be moving towards a softer Brexit. However, the risks are balanced, and the GBP could be seen trading volatile today. ECB President Mario Draghi is also expected to speak later in the day.

USDCAD maintains a bearish market structure on the daily chart. The pair is clearly in a downtrend and making lower peaks and lower lows since the high of 1.3793 on May 5. The market paused a corrective move from the more than 2-year low of 1.2061 and is putting in a top at 1.2390.

USDCAD will likely remain under pressure as long as it trades below key resistance at 1.2400. The recent upside momentum from the bounce off 1.2061 on September 8 has run out of steam, as indicated by the RSI oscillator which has stopped rising.

The near-term risk is to the downside, with scope for a re-test of the 1.2061 low. This level is expected to provide support but should it fail to hold, then USDCAD will resume its downtrend to target the next major low at 1.1919.

Should prices turn back up and rise above the 1.2390-1.2400 resistance zone, the downside pressure would ease and open the way for a move towards next resistance areas at the previous highs of 1.2662 and 1.2777. But only a move above 1.3000 is likely to indicate that the longer-term downtrend has ended.

The underlying bias suggests that the bearish move from May is still in progress. The negatively aligned moving averages are supporting this view, as the 50-day MA is below the 200-day MA following a bearish crossover on July 13. The near-term bias is also bearish.

Key Highlights

• The US Dollar traded higher this week and moved above 111.50 against the Japanese Yen.
• There is a crucial ascending channel forming with support at 111.70 on the 4-hours chart of USD/JPY.
• US Initial Jobless Claims for the week ending 16th Sep 2017 decreased from the last revised reading of 282K to 259K.
• The US Manufacturing PMI preliminary reading (Sep 2017) will be released today, which is forecasted to increase from 52.8 to 53.0.

USDJPY Technical Analysis

The US Dollar remains in an uptrend and is currently positioned well above the 111.00 support against the Japanese Yen. However, the USD/JPY pair recently struggled to settle above 112.70 and is correcting lower.

Looking at the 4-hours chart of USD/JPY, there is a crucial ascending channel forming with support at 111.70. During the recent drop, the pair broke the 50% Fib retracement level of the last wave from the 111.09 low to 112.71 high.

However, the decline was prevented by the 111.60 support. The pair is once again moving north, but lacking momentum to break 112.20.

To sum up, the pair must stay above 111.70-111.60 to remain in the bullish trend.

US Initial Jobless Claims

Recently in the US, the Initial Jobless Claims figure for the week ending 16th Sep 2017 was released by the US Department of Labor. The forecast was slated for a rise from the last reading of 284K to 300K.

However, the actual result was well above the forecast, as there was a decline in claims to 259K. The last reading was also revised down to 282K. The 4-week moving average now stands at 268,750, which is around 6,000 more than the previous week’s revised average from 263,250 to 262,750.

The report added that:

The advance number for seasonally adjusted insured unemployment during the week ending September 9 was 1,980,000, an increase of 44,000 from the previous week’s revised level.

The result was positive, and might continue to support USD/JPY above the 11.70-50 levels in the near term.

Economic Releases to Watch Today

US Manufacturing PMI for Sep 2017 (Preliminary) – Forecast 53.0, versus 52.8 previous.

US Services PMI for Sep 2017 (Preliminary) – Forecast 55.9, versus 56.0 previous.

Canadian Retail Sales July 2017 (MoM) – Forecast 0.1%, versus +0.1% previous.

Canadian Retail Sales ex Autos July 2017 (MoM) – Forecast +0.4%, versus +0.7% previous.

Canadian Consumer Price Index August 2017 (MoM) – Forecast +0.2%, versus 0% previous.

Canadian Consumer Price Index August 2017 (YoY) – Forecast +1.5%, versus +1.2% previous.

Daily Pivots: (S1) 1.4871; (P) 1.4967; (R1) 1.5145; More....

With break of 1.5031 resistance, intraday bias is turned to the upside for 1.5173/5226 resistance zone first. Break will resume medium term rally from 1.3624. On the downside, below 1.4791 will turn bias to the downside and extend the fall from 1.5173 to retest 1.4421 support.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.