On the markets there has been observed the tendency of US dollar strengthening. As a result, the quotes of the most liquid pairs reached significant levels of support (resistance), depending on the base currency paired with the presence of the dollar. At the same time, the technical picture indicates the formation of local signals about the probability for the slowing the rate of US dollar strengthening. Based on this, it is predicted that some pairs will show sideways dynamics of prices, while in others it will be possible to see not only the stabilization of quotations, but also the local weakening of the US dollar. However, in the medium term, the market picture is still the same. Fundamental factors continue to play on the side of the American currency.
The economic calendar today is not as saturated as in previous days. From the published statistics, the attention of stock exchange operator will be drawn to the following data:
– At 07:30 Moscow time, the decision of the Reserve Bank of Australia on the interest rate became known. The regulator did not change the value of the indicator, leaving it at 1.5%, which coincided with market expectations. The reaction of the AUD/USD pair to this was a slight decrease in quotations from 0.7235 to 0.7185. Since the beginning of February this year, the pair has been trading in a downward channel. At the same time, the quotes reached a significant support area in the region of 0.7160-0.7200, which indicates the probability of price stabilization.
– At 11:30 Moscow time the data on the index of business activity in the construction sector in the UK is published. The value of the indicator is projected at 52.8 points. Yesterday’s strong statistics on PMI in the country’s manufacturing sector allows us to suggest a similar scenario for today. In this case, it is not excluded the local strengthening of the British pound, which in pair with the US dollar in the morning hours of Tuesday is in the area just above the 1.3000 mark,.
– At 12:00 Moscow time, a block of data on producer price indices in the Eurozone is published for August. However, the influence of these indicators will not have a significant impact on the market.
Today, the stabilization of the EUR/USD quotes is predicted near the upper limit of the medium-term declining channel, currently passing through the area of 1.1525-1.1535. In addition, the support level passes through the mark of 1.1515, from which prices have repeatedly rebounded upwards in the period starting with the last trading sessions in May of the current year. Based on this, an assumption is made about the local intermittence of negative dynamics. This can be facilitated by the lack of significant economic statistics today.
The support area is still the area of 1.1500-1.1520.
Resistance remained in the range of 1.1635-1.1650.
The suggestion made yesterday about the likelihood of a local outburst of quotations to the level of 1.3100 was confirmed after the announcement of a new proposal by British Prime Minister Theresa May on the controversial issue of the Irish border as part of the Brexit talks. As it became known, the UK is ready to abandon the inspection of goods when crossing this border in exchange for the preservation of the entire UK and Northern Ireland in the EU Customs Union. At the moment, the response from the European Union is unknown. In addition, the results of the conservative party’s conference, which ends tomorrow, October 3, are crucial for the further dynamics of the pair. Teresa May will either stand, or her government will resign and early elections will be held. In the second case, a significant decrease in the pair is not excluded.
Today, a gradual decline in quotations is predicted in order to reach the level of 1.2900. At the same time, the movement will not be linear. In the first half of trading, the main struggle will unfold around the psychologically important 1.3000 mark. As noted in yesterday’s review, on the H1 time frame, there is a convergence between the local minima of the quotes on September 21 and 28 and the current prices with the corresponding values of the MACD indicator, which indicates the probability of side movements of the quotes. However, these price changes will only slow down the decline in the pair.
The support zone is in the area of 1.2890-1.2920 (green oval).
The resistance zone is in the range 1.3035-1.3050 (red oval).
On Monday, USD/JPY quotes were briefly above 114.0, however, by Tuesday morning they are present in the area of 113.90-113.95. I am still on the point of view that over the next few days quotes can significantly adjust downwards, up to the level of 111.00, which is almost 300 points. The probability of such a movement is indicated by the divergence between the local price maxima and the corresponding MACD indicator values on the D1 time frame, which was mentioned in the yesterday’s overview. For the final formation of the correction signal, it is necessary to wait until the end of today. At the same time, the closing price should be below 113.72.
Support and resistance zones are located in the ranges 112.55-112.65, 111.35-111.50 (green ovals) and 114.05-114.35 (red oval), respectively.
Yesterday, the USD/CHF pair stabilized just below the resistance zone near the 0.9855 mark. Today, local downward price correction is predicted with the goal of achieving a 200-period MA on the H4 time frame. This curve is currently passing through the mark of 0.9755 (the blue line on the chart). In the future, the continuation of the strengthening of the US dollar and the growth of quotations to the area above 0.9925 are predicted.
The support zone today is in the area of 0.9755-0.9770 (green oval on the chart).
Resistance is in the range of 0.9840-0.9855 (red oval).