AUD/USD: LT falling trendline break remains elusive, copper slips and China data disappoints

  • The AUD failed to take out the trendline connecting the January high and July high yesterday as the Fed hiked rates and signaled further tightening.
  • The AUD may remain under pressure today as copper is reporting losses for the fourth straight day.
  • China industrial profit growth slowed for a fourth straight month in August.

The AUD/USD carved a bottom around 0.71 earlier this month, but a bearish-to-bullish trend change still remains elusive.

The pair picked up a strong bid yesterday after the Fed hiked rates and said that policy is no longer “accommodative.” However, a break above the trendline connecting January highs was short-lived as markets soon realized that while the policy is nearer to neutral, the Fed is still not done raising rates.

At press time, the AUD/USD is trading at 0.7255, having closed at 0.7256 yesterday. The trendline hurdle is located at 0.7282.

The pair could remain under pressure today, as copper, one of Australia’s top exports, is reporting losses for the fourth straight day. Further, China’s industrial profits growth slowed to a five-month low of 9.2 percent year-on-year in August, official data released a few minutes before press time showed.

AUD/USD Technical Levels

Resistance: 0.7282 (trendline hurdle), 0.7315 (previous day’s high), 0.7382 (Aug. 21 high)

Support: 0.7236 (Sept. 25 low), 0.7202 (Aug. 15 low), 0.7142 (Sept. 17 low)

TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bullish Neutral High
1H Bearish Neutral Expanding
4H Bearish Neutral Shrinking
1D Bearish Neutral Low
1W Bullish Neutral High

EUR/USD: Focus on today’s close, vulnerable to hawkish interpretation of Fed policy

  • The EUR/USD pair charted a bearish outside day candle yesterday.
  • A close below the previous day’s low of 1.1726 would confirm a bearish reversal.
  • The pair risks a bearish close on a hawkish interpretation of the Fed policy.

The EUR/USD pair created a bearish outside day candle yesterday and could suffer a negative close today on a hawkish interpretation of the Fed policy.

The US central bank raised rates by 25 basis point (bps) yesterday. More importantly, it removed the word “accommodative”  and kept the interest rate dot plot unchanged, triggering speculation that the tightening cycle is nearing an end. As a result, the EUR/USD jumped to a high of 1.1798.

However, the spike was short lived and the pair fell back to 1.1726, as the markets quickly realized that removal of the word accommodative does not necessarily mean the Fed is done with the rate hikes and could push rates above the neutral level if the economy shows signs of overheating. This hawkish interpretation may keep the pair under pressure today.

Further, the greenback could pick up a strong bid if the US Q2 GDP and August durable goods figure, scheduled for release today, paints a positive picture of the US economy. Also, a below-forecast German CPI reading, due for release at 12:00 GMT, could hurt the EUR.

Notably, a short-term bullish-to-bearish trend change would be confirmed if the spot closes below 1.1726 (previous day’s low), validating yesterday’s bearish outside day candle.

EUR/USD Technical Levels

Resistance: 1.1791 (July 9 high), 1.1815 (Sept. 24 high), 1.1852 (June 14 high)

Support: 1.1716 (10-day moving average), 1.1656 (100-day moving average), 1.1615 (50-day moving average)

GBP/USD back into familiar levels as Brexit hangs over the Sterling

The Pound continues to trade sideways against the Greenback as Brexit headlines continue to deflate bulls’ attempts.
A speech from the BoE’s Carney is expected to get exclipsed by US economic figures due later today.
The GBP/USD is trading roughly near 1.3150 after slipping further away from Wednesday’s highs just above the 1.3200 technical level; A US Federal Reserve rate hike helped to shock the US Dollar temporarily and push the Cable pairing into a fresh high for the week, but broader sentiment continues to lean into the Greenback’s favour, and the Pound remains trapped near levels that have populated its chart for nearly two weeks.

Thursday brings a speech by the Bank of England’s (BoE) Governor Mark Carney, who is expected around 14:00 GMT, but after the US Fed’s as-expected showing in the markets on Wednesday, today is similarly all about the USD, with final annualized US GDP at 12:30 GMT (forecast 4.2%, last 4.2%) as well as Core Personal Consumption Expenditure (forecast 2%, last 2%), and Carney’s speech finds itself bookended by US data, with Fed President Jerome Powell expected to begin speaking at 20:30 GMT.

Brexit headlines continue to run their course through the week, with Prime Minister Theresa May trying to find room to stand between hard-line Eurosceptics threatening to sabotage any agreements she manages to pen with EU leaders, and the EU leaders themselves giving little to no quarter to the beleaguered PM in trade negotiations.

GBP/USD levels to watch

Bullish attempts by Pound bidders are quickly running out of gas, and as FXStreet’s own Valeria Bednarik noted: “technically, the pair is stuck to the 50% retracement of the 2016/18 rally, and the 4 hours chart shows that it managed to hold above a now mild positive 20 SMA. Technical indicators in the mentioned chart, are losing upward momentum within positive territory, somehow suggesting that speculative interest is not ready to take over the 1.3200 figure. Nevertheless, the pair posted a higher high and a higher low for a third consecutive day, which means that sellers are not interested at the time being. Brexit headlines will likely continue to set the tone for Sterling over the upcoming days.”

Support levels: 1.3125 1.3090 1.3055

Resistance levels: 1.3215 1.3260 1.3300

AUD/JPY Technical Analysis: Pennant breakdown has exposed 200-hour MA support

  • The pennant breakdown seen in the AUD/JPY hourly chart validates yesterday’s big inverted hammer candle and indicates a bullish-to-bearish trend change, that is, the rally from the Sept. 7 low of 78.68 has ended.
  • The bearish setup has likely opened up downside toward the 200-hour moving average (MA) support of 81.47.
  • A convincing daily close above 82.00 would signal a revival of the rally from 78.68.

Hourly Chart

Spot Rate: 81.83

Daily High: 81.95

Daily Low: 81.72

Trend: Bearish

Resistance

R1: 81.91 (100-hour MA)

R2: 82.36 (Sept. 21 high)

R3: 82.51 (previous day’s high)

Support

S1: 81.72 (Asian session low)

S2: 81.47 (200-hour MA)

S3: 81.00 (psychological support)

USD/JPY Technical Analysis: Stalls the recent bullish momentum ahead of FOMC

•  The pair struggled to build on its positive momentum beyond the 113.00 handle and started retreating from a short-term ascending trend-line resistance.

   •  This along with another short-term ascending trend-line now seems to constitute towards a bearish rising wedge chart pattern formation on the 1-hourly chart.

   •  With technical indicators on the mentioned chart losing positive momentum, the pair seems more likely to break through the said support.

   •  A subsequent fall below 100-hour SMA, acting as an important support since early Sept., will confirm a bearish breakdown and open room for an additional near-term downfall.
USD/JPY 1-hourly chart

Spot Rate: 112.91
Daily High: 113.03
Daily Low: 112.75
Trend: Bearish only below 100-hour SMA

Resistance
R1: 113.03 (2-month top touched earlier today)
R2: 113.18 (July month swing high)
R3: 113.32 (R3 daily pivot-point/YTD tops)

Support
S1: 112.68 (100-period SMA H1)
S2: 112.55 (S3 daily pivot-point)
S3: 112.38 (200-period SMA H1)

GBP/USD rejected again near 1.3180, reverts to 1.3150

Bears continue to guard 1.3180/85 barrier amid Brexit jitters and fresh USD buying.
UK CBI September realized sales arrive at 23 vs 19 expected.
Attention turns towards FOMC interest rate decision for fresh trading impetus.
The buying interest around the US dollar appears to gather pace, now pushing the GBP/USD pair back to test the midpoint of the 1.3150 level.

Focus on FOMC verdict

The greenback picked up a bid against a basket of major currencies heading into the mid-European session, as markets prefer to hold the US currency amid a looming Fed rate hike decision and upcoming trade talks between the US President Trump and Japanese PM Abe.

Meanwhile, a mixed tone seen on the European equities combined with no fresh Brexit headlines leaves the Cable at the mercy of the USD dynamics and risk sentiment.

The GBP markets shrugged-off upbeat UK CBI realized sales data, as the focus now shifts towards the US new home sales and Fed decision due later in the NA session.

GBP/USD Technical Levels

FXStreet’s Analyst Yohay Elam, noted: “Support awaits at the round number of 1.3100 which supported the pair earlier in the week. 1.3055 was the low point on Friday and provides further support. 1.2980 was a trough in mid-September. It is followed by the gap line of 1.2940 recorded in early September. Resistance is at 1.3195 that held cable down on Tuesday. 1.3225 provided support to the GBP/USD when it traded on high ground. 1.3300 was the high point last week.”

GBP/USD: best performer, BoE back in the picture, but watching Brexit – Scotiabank

Analysts at Scotiabank explained that sterling is outperforming for a second consecutive session as it continues to retrace Friday’s Brexit-driven decline.

Key Quotes:

“Comments from BoE MPC Member Vlieghe have been supportive, highlighting the need for 1-2 hikes a year. On Brexit, the UK Labour party is said to plan on rejecting any deal between PM May and the EU while leaving the door open for a second referendum.”

EUR/USD consolidating at key levels ahead of FOMC, bulls beware of spinning top/doji formations

EUR/USD is trading between 1.1730 and 1.1793, piercing the July highs of 1.1790 and up modestly from yesterday’s daily close of 1.1752 where the September high was made at 1.1815.
EUR/USD bulls face risk of setbacks below the daily doji following the prior day’s spinning top closing candle.
Momentum is wearing thin although the greenback remains heavy below the trendline resistance, holding onto the 94 handle by the skin of its teeth as the euro continues to pressure the channel’s resistance and basing on the July peaks.

US Consumer Confidence Surges

Analysts at Scotiabank noted that the comments from ECB Chief Economist Praet delivered modest, short-lived weakness in the EUR as they pushed back on the market’s hawkish interpretation of Draghi’s comments from Monday. “Record bearish yield spreads remain a significant headwind for EUR however risk reversals are showing a considerable moderation in the premium for protection against EUR weakness vs. the USD,” the analysts added.

FOMC is next key risk

Fed Preview: Near-Term Path Set in Stone, All Eyes on 2019 and Beyond

We are now entering the period before the FOMC showdown and profit taking should keep a lid on the pair following yesterday’s rally onto the 1.18 handle and the strong wage and jobs numbers from the Philly Fed non-manufacturing index (albeit low 37.4 vs 41.7 prior) should underpin the greenback in tot he Fed. Looking over to the yen and sterling flows, EUR/JPY is enabling support while Wall Street performs marginally better, (all benchmarks in the green, just), and cable is performing well, although Brexit developments could buck the market at any moment and May is sticking to her guns on the Irish border, recently saying that she prefers no deal to a Canadian style outcome.

EUR/USD levels

EUR/USD Analysis: recovering below 1.1800, waiting for the Fed

The pair is consolidating below the the first major retracement level (38.2% at 1.1780) of its February-August decline but above the support of between 1.1720 and 1.1700. The 1.1790/1.1803 resistance area is to cap again today but bulls can target a test of the 1.1853 midJune high ahead of the 1.1904 55 week ma.

“We continue to view the August low at 1.1301 as a significant turn for the market. Minor support comes in at the 1.1750/34 late July and August highs. The market stays bid above the 1.1637 near term support line. The cross will need to drop sub 1.1508 to alleviate immediate upside pressure,”

EUR/CHF breaks key resistance and jumps to 1.1380, 4-week high

  • EUR/CHF supported by a bullish Draghi, signals a potential bottom.
  • Price rose above key technical level suggestion more gains ahead.

The euro is rising for the second day in a row against the Swiss franc and reached the highest level since late August. After moving during days in a range, EUR/CHF broke today to the upside, extending the recovery from the lowest level in 13 months it reached September 10.

The pair rose on the back of yesterday’s comments from ECB President Draghi that he sees inflationary pressures rising alongside wages. He sounded bullish in the Eurozone inflation outlook and boosted the euro. In contrast, last week, the Swiss National Bank lowered its inflation forecast for 2019 and 2020. Also, some stability regarding the Turkish lira and optimism about the Italian budget added support to the euro versus the Swiss franc.

EUR/CHF Levels to watch

The pair today climbed from 1.1325 to 1.1381, breaking the key 1.1330/40 resistance that now could be seen as the immediate support. As of writing, EUR/CHF trades at 1.1355, off highs but still headed toward the highest close since August 28.

A consolidation around current levels would signal more gains ahead. To the upside, above 1.1380 the next resistance might be seen at 1.1405/10 and then at 1.1450. A slide back below 1.1300, would signal that bearish pressures still persist.

AUD/USD Technical Analysis: Aussie consolidating recent bullish advance above 0.7200 figure

  • AUD/USD main bear trend is getting challenged as the bulls want to break above the 0.7300 level, the 50-day simple moving average and the multi-month bear trendline.
  • AUD/USD is consolidating the recent bullish advance as it is trading above the 0.7200 figure. The RSI indicator is above 50 and the MACD remains supportive for more gains/
  • Bulls objective is to keep AUD/USD above 0.7200 and to break above the 0.7300 key level in order to create a bullish reversal of the main bear trend.

AUD/USD daily chart

Spot rate:                 0.7250
Relative change:     -0.02%
High:                        0.7265
Low:                         0.7235

Main trend:              Bearish

Resistance 1:          0.7294-0.7307 August 13 high, 50 DMA
Resistance 2:          0.7383 August 21 high
Resistance 3:          0.7485 July 10 high

Support 1:               0.7255 August 13 low
Support 2:               0.7236 August 24 low
Support 3:               0.7200 figure August 15 low
Support 4:               0.7144 September 5 low
Support 5:               0.7085, 2018 low
Support 6:               0.7000 figure
Support 7:               0.6830 January 15, 2016 low