Forex News Analysis by LiteForex

XAU/USD: gold on the cusp of new lows

Current trend

Gold prices are slightly declining today, developing a "bearish" signal, formed at the end of last week, but staying within the local lows, updated on September 21. Gold is depreciating amid a growing USD, which has received support from the difficult situation with COVID-19 in Europe, where some countries are considering returning some of the quarantine restrictions. American investors are also worried about the prospect of new stimulus measures in the USA, which have been the subject of the most heated debate for a long time.

This week, Fed Chairman Jerome Powell and US Treasury Secretary Steven Mnuchin will hold a series of speeches in Congress, where they will talk about their vision of the current economic situation. Mnuchin's speech attracts the most attention, since Powell's position is well known to the markets and he is unlikely to say anything new.

Support and resistance

Bollinger Bands in D1 chart demonstrate a slight decrease. The price range is widening actively but does not conform to the development of the downtrend yet. MACD is going down keeping a fairly stable sell signal (located below the signal line). Stochastic demonstrates a similar dynamics, but is approaching its lows, signaling future risks of the oversold instrument in the nearest future.

The current showings of the indicators do not contradict the further development of the downtrend.

Resistance levels: 1895.06, 1910.00, 1935.00, 1955.00.
Support levels: 1876.23, 1850.00, 1830.00.

Morning Market Review

EUR/USD

EUR is relatively stable against USD during today's Asian session, consolidating near the local lows updated the day before. EUR is under pressure from a growing USD, as well as from information about a slowdown in the recovery of the European economy, as the risks of further spread of the COVID-19 epidemic remain and support measures expire. Macroeconomic statistics from Europe on business activity released on Wednesday reflected a marked decline in the services sector again, while manufacturing sector remains positive so far. Markit Services PMI in the euro area in September fell from 50.5 to 47.6 points, while analysts did not expect any changes at all. Markit Manufacturing PMI for the same period increased from 51.7 to 53.7 points with the forecast of growth only up to 51.9 points.

GBP/USD

GBP is once again showing ambiguous performance against USD during today's morning session, trading near 1.2700. The pair updated local lows since July 22; however, the "bears" remained rather weak against the background of fixing short profits on the instrument. The macroeconomic background on Wednesday also contributed to the development of multidirectional dynamics. Markit Services PMI in the UK in September fell from 58.8 to 55.1 points, which was worse than the forecasts of 56 points. Manufacturing PMI for the same period corrected from 55.2 to 54.3 points, which coincided with forecasts. Statistics from the US were slightly better. Services PMI also declined from 55 to 54.6 points, while Manufacturing PMI rose from 53.1 points to 53.5 points.

NZD/USD

NZD declines against USD during today's Asian session, updating local lows of August 25. The descending movement of the instrument has been observed for the fourth trading session in a row, which is associated with an attempt at corrective growth of USD. The pressure on NZD was exerted yesterday by the results of the RBNZ meeting on the interest rate. As expected, the regulator did not change the parameters of monetary policy, maintaining the rate at 0.25%. At the same time, the RBNZ noted that in conditions of continuing risks for the economy, additional incentives may be needed in the future. The difficult situation on the labor market was also mentioned, where the risks of increased unemployment persist. Today, investors are focused on statistics on Trade Balance dynamics in New Zealand for August. Amid a slowdown in Exports from 5.036B dollars to 4.411B dollars in August, the Trade Balance showed a deficit of 353M dollars, which was worse than average market expectations.

USD/JPY

USD continues to strengthen against JPY and during today's Asian session is trading near the local highs since September 15, updated the day before. USD maintains a corrective upward momentum; however, the activity of the "bulls" is gradually slowing down. Pressure on the yen was exerted yesterday by Japanese macroeconomic statistics, as well as the results of the speech of the head of the Bank of Japan Haruhiko Kuroda, who promised that the regulator will continue to support the economy and enterprises. All Industry Activity Index in July slowed down from +6.8% MoM to +1.3% MoM against the forecast of +3.3% MoM. Today traders are awaiting speeches by Fed Chairman Jerome Powell and US Treasury Secretary Steven Mnuchin. In addition, the US will present updated statistics on the dynamics of Jobless Claims.

XAU/USD

Gold prices are slightly declining during today's Asian trading session, updating local lows since July 22. The day before, the instrument showed a steady decline, responding to another attempt by USD to strengthen. In addition, negative sentiments on stock markets exert pressure on gold, while the continuing risks of complicating the epidemiological situation in the world faded into the background for some time. USD, in turn, was supported by positive data on the dynamics of Markit Manufacturing PMI. In September, the index rose from 53.1 to 53.5 points, which was better than market expectations of 53.2 points.

XAU/USD: weak upward correction

Current trend

Gold prices are trading near zero during today's Asian session, developing a weak upward correction, the momentum for which was formed the day before, after the instrument renewed local lows since July 22. The emergence of corrective dynamics in favor of gold is facilitated by the weakening of USD, which has shown moderate growth all week amid fears of a slowdown in the global economic recovery.

The pressure on USD on Thursday came from uncertain data on the dynamics of Initial Jobless Claims in the US, which increased market fears about the urgent need for new measures to stimulate the American economy. In turn, statistics on the dynamics of New Home Sales in the USA provided moderate support to USD. In August, sales increased by 4.8% MoM after a sharp 14.7% MoM growth last month. Analysts had expected a decline by 1% MoM.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is actively widening from below but does not conform to the surge of the "bearish" sentiment yet. MACD is going down preserving a moderate sell signal (located below the signal line). Stochastic, having dropped below the level of "20", reversed into a horizontal plane, reacting to an attempt at corrective growth at the end of the week.

To open new positions, it is necessary to wait for the trade signals to become clear.

Resistance levels: 1876.94, 1895.06, 1910.00, 1935.00.
Support levels: 1850.00, 1830.00, 1808.71.

EUR/USD: the decline slowed down

Current trend

Since the opening of trading, the EUR/USD pair has been trying to recover, trading at 1.1635.

Amid growing concerns about the growing number of COVID-19 cases in Europe, the instrument is declining. Yesterday, French Prime Minister Jean Castex warned that the government could re-introduce quarantine measures in several regions of the country if the number of cases continues to rise. Macroeconomic data is also deteriorating. Thus, the German IFO business climate index for September amounted to 93.4 points, down from the forecast by 93.8 points.

The US dollar index is retreating from its local highs after the publication of reports that the US court did not allow the US government to block the TikTok application. On November 12, the ban on downloading the application in the United States was supposed to come into force but Judge Carl Nichols sided with the owner of the application and rejected its entry into force. Macroeconomic statistics from the United States is not positive either. Core orders for durable goods for August fell to 0.4% from 3.2% for July.

Support and resistance

The price is in the global ascending channel, moving down within the next downward wave. Fast EMAs on the Alligator indicator crossed the signal one downwards, and the AO oscillator histogram moved into the sell zone, which indicates a strong downward signal.

Resistance levels: 1.1700, 1.2000.
Support levels: 1.1600, 1.1270.

EUR/USD: waiting for new drivers

Current trend

EUR has shown slight gains against USD during today's Asian session, building on a weak "bullish" momentum formed yesterday as EUR retreated from its two-month lows. The macroeconomic background for EUR remains neutral, and the main driver of the instrument's growth is technical factors. Investors are alarmed by the rising incidence of COVID-19 in Europe. France and the UK have already returned a number of restrictive measures, and traders fear the return of a full-fledged lockdown, which will jeopardize all plans and hopes for a gradual recovery of the region's economy.

Today, investors are focused on economic sentiment statistics in the euro area for September. In addition, the markets are awaiting September statistics on the dynamics of consumer inflation in Germany. The forecasts do not expect significant changes in the indicator. In the US, Redbook Retail Sales data are to be released, and several speeches by representatives of the Fed are expected.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is almost unchanged, but it remains rather spacious for the current level of activity in the market. MACD is reversing upwards preserving a sell signal (located below the signal line). Stochastic is showing similar dynamics, retreating from its lows and signaling in favor of growth in the ultra-short term.

It is worth looking into the possibility of full-fledged growth in the short and/or ultra-short term.

Resistance levels: 1.1700, 1.1751, 1.1780, 1.1808.
Support levels: 1.1657, 1.1625, 1.1600.

AUD/USD: the pair retains an upward momentum

Current trend

AUD shows correctional decline against USD during today's Asian session, retreating from the local highs since September 23, updated at the opening. The decline in the pair is largely facilitated by technical factors, while the macroeconomic background of the first hours of trading on Wednesday remains quite favorable for AUD.

The most support is provided by data from China. Non-Manufacturing PMI in September increased from 55.2 to 55.9 points with the forecast of the decline to 52.1 points. NBS Manufacturing PMI for the same period strengthened from 51 to 51.5 points, which also turned out to be better than market expectations of 51.2 points. Only the Caixin Manufacturing PMI was slightly disappointing. In September, the index fell from 53.1 to 53.0 points with a neutral forecast.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is changing slightly, but remains rather spacious for the current level of activity. MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic shows a similar dynamics, with the only difference that the indicator line is rapidly approaching the level of "80", which limits the potential of "bulls" in the ultra-short term.

Existing long positions should be kept in the short and/or ultra-short term until the signals from technical indicators clear up.

Resistance levels: 0.7150, 0.7200, 0.7247, 0.7274.
Support levels: 0.7100, 0.7071, 0.7036, 0.7000.

Morning Market Review

EUR/USD

EUR is again trading with positive dynamics against USD during today's Asian session, recovering to previous local highs after an uncertain correction the day before. The positions of EUR were somewhat weakened by the rather optimistic macroeconomic statistics from the US, while the European data did not have a noticeable effect on the dynamics of the market. Instead, investors widely discussed the speech of the ECB President Christine Lagarde, who noted that the regulator could follow the path of the US Fed and allow a short-term excess of the inflation target in order to "catch up" with the previous rates of economic growth. In addition, traders are still seriously concerned about the coronavirus situation. The second wave is likely to make significant adjustments to the current forecasts from leading regulators. Today, investors are focused on the publication of data on the Unemployment Rate in the euro area for August. Markets will also be watching a special summit of the EU heads who will gather to discuss the situations in Belarus and Nagorno-Karabakh.

GBP/USD

GBP shows growth against USD during today's morning session, updating local highs of September 21. GBP is strengthening against the backdrop of weak USD positions, as well as hopes for a trade agreement between the UK and the EU by the end of the year. Meanwhile, the US macroeconomic statistics published on Wednesday provided significant support to the USD. ADP's Employment Change report indicated an increase of 749K jobs in September after rising by 481K in the previous period. Analysts had expected an increase of 650K. However, it should be noted that the positive statistics from ADP was partially offset by news of large-scale layoffs at Walt Disney and Shell. Disney Corporation announced 28K job cuts, while Shell intends to lay off almost 9K of its employees. Today, British investors are awaiting a speech by Andrew Haldane from the Bank of England's Monetary Policy Committee.

NZD/USD

NZD maintains its "bullish" momentum during today's Asian session and is updating local highs since September 23. Buyers' activity is gradually decreasing, as the positions of USD look more and more attractive against the background of the existing risks in the global economy. Investors are noticeably concerned about the epidemiological situation in the world, which provokes an increase in demand for safe assets. In addition, the USA is preparing for the presidential election, which can also make significant adjustments to the dynamics of the market. In turn, support for NZD is provided by strong statistics from China. Chinese Non-Manufacturing PMI in September increased from 55.2 to 55.9 points with the forecast of the decline to 52.1 points. NBS Manufacturing PMI for the same period strengthened from 51 to 51.5 points, which also turned out to be better than market expectations of 51.2 points. Today, traders are focused on the data from the US on the dynamics of personal income and spending, and on business activity in the manufacturing sector.

USD/JPY

USD shows the flat dynamics of trading against JPY during today's morning session, consolidating after another update of local highs the day before. On Wednesday, USD updated its highs since September 15; however, the "bulls" failed to consolidate at new levels, despite the publication of a strong report from ADP. Buying activity in USD is significantly limited ahead of the release of the final report on the US labor market this Friday. Japanese data released today were controversial and did not provide any support to JPY. Tankan Large Manufacturing Index in Q3 2020 increased from –34 to –27 points, which turned out to be worse than the market expectations of an increase to –23 points. Tankan Non-Manufacturing Index for the same period strengthened from –17 to –12 points, while analysts expected growth to –9 points.

XAU/USD

Gold prices have returned to growth during today's Asian trading session in an attempt to recover to the previous local highs, updated the day before. USD received not the most confident impetus for growth yesterday, responding to the first debate between Donald Trump and Joe Biden, as well as from the publication of a rather strong ADP Employment Change report, which somewhat softened the general negative sentiment. At the end of the week, the September labor market report will be published in the US. According to forecasts, Non-Farm Payrolls could be reduced from 1.371M to 850K. In turn, the instrument feels support from the previous factors including the difficult epidemiological situation in the world and the upcoming elections in the US, which will become another source of uncertainty.

Morning Market Review

EUR/USD

EUR is declining against USD during today's Asian session, consolidating near 1.1700 and local highs since September 22, updated the day before. Another decline in EUR is due to technical factors, as investors fix their long positions ahead of the publication of the September report on the US labor market. The previously strong ADP report on private sector employment provided significant support to market sentiment. It is likely that Friday's statistics will also be better than forecasts, which, however, will only provide USD with a short-term support. The market today reacts to any optimistic signals from the US with an increase in demand for risky assets. European investors today expect the publication of data on Consumer Prices in the euro area in September. In addition, ECB Vice President Luis de Guindos will speak during the day.

GBP/USD

GBP is declining during this morning session, developing the corrective impulse formed the day before, when the pair retreated from its highs since September 18. Market participants are closing part of their long positions on the instrument before the publication of the US labor market report for September. In addition, investors are concerned about the rapid increase in the number of new cases of coronavirus, which could significantly complicate the recovery of the British economy. Yesterday, the UK reported a decline in the Manufacturing PMI from 54.3 to 54.1 points, while analysts did not expect it to change at all. The US data was slightly better, but also reflected a slowdown in growth. The ISM Manufacturing PMI in September fell from 56 to 55.4 points against the forecast of growth to 56.3 points.

AUD/USD

AUD has declined against USD during today's Asian session, retreating from local highs since September 22, updated on Thursday. The instrument loses about 0.35%, testing the level of 0.7150 for a breakdown. Buying activity for the instrument is expected to decline at the end of the week, as investors are fixing long profits. In addition, traders are in no hurry to open new positions before the publication of the report on the US labor market, which, given the previously published strong report from ADP, may be positive. AUD was slightly supported on Friday by the Australian Retail Sales statistics. In August, sales were down by 4% MoM after falling by 4.2% MoM in the previous month.

USD/JPY

USD is growing during today's morning trading session, again approaching its local highs since September 15, which were updated at trading last Wednesday. USD is strengthening after yesterday's publication of rather optimistic macroeconomic statistics from the US. At the same time, it should be noted that strong data from the US is leading to an increase in demand for risky assets; however, paired with the "safe" JPY, USD is expected to win. The number of Initial Jobless Claims in the US for the week ending September 25 fell from 873K to 837K, which was better than market expectations of 850K. Core Personal Consumption Expenditure Index was also positive, having increased by 1.6% YoY in August, accelerating from the previous value of +1.4% YoY. JPY was also under pressure from weak data from Japan. Japan's Unemployment Rate in August rose from 2.9% to 3.0%, and the Jobs/Applicants Ratio for the same period corrected from 1.08 to 1.04.

XAU/USD

Gold prices decline significantly during today's Asian session, retreating from local highs since September 22, updated the day before. Investors are fixing long positions ahead of the release of reports on the US labor market on Friday, as well as responding to some improvement in market sentiment. Strong data from the US supported the demand for risk, especially after the US Treasury officials said that the chances of early approval of the new economic aid package increased markedly. At the same time, gold continues to benefit from rising coronavirus incidence statistics in Europe. The trend has not yet been reversed, as many countries are reluctant to return quarantine restrictions, fearing to disrupt the fragile economic recovery. Today investors are focused on the publication of the US labor market report. Investors expect the emergence of 850K new jobs in Non-Farm Payrolls, which is significantly less than the previous growth of 1.371M. However, given the strong performance in private sector employment, it is possible that the real dynamics will be noticeably better.

Morning Market Review

EUR/USD

EUR is showing weak gains against USD during today's Asian session, recovering from last Friday's decline, which turned out to be quite rich in various news drivers. First of all, the markets discussed Donald Trump's sudden quarantine in connection with a positive test for COVID-19. Investors fear that Trump will not be able to continue the political race in such conditions, with only about a month left before the presidential elections. Some pressure on the positions of EUR on Friday was exerted by the data from the eurozone. Consumer Price Index in September fell by 0.3% YoY, accelerating from the previous decrease by 0.2% YoY. Core Consumer Price Index for the same period decelerated from +0.4% YoY to +0.2% YoY, while forecasts assumed its growth to +0.5% YoY. On Monday, investors are focused on the European statistics on Markit Services PMI, as well as the August data on the dynamics of Retail Sales in the euro area.

GBP/USD

GBP is showing flat dynamics of trading during today's morning session, maintaining a weak "bullish" advantage, preserved from last week. GBP buying activity is noticeably weakening amid new statements by Boris Johnson, who reiterated that the UK will be able to do without a trade agreement with the EU after the Brexit transition period ends at the end of the year. However, the Prime Minister stressed that he would like a different outcome of the situation, but so far the parties are faced with insurmountable contradictions during the negotiations. The US macroeconomic statistics released on Friday had an ambiguous impact on the market dynamics. In September Non-Farm Payrolls showed growth only by 661K new jobs, while last month was marked by an increase of 1.489M. Experts expected the growth by 850K. At the same time, the Unemployment Rate in the USA in September has steadily decreased from 8.4% to 7.9% against the forecast of 8.2%.

AUD/USD

AUD is trading in both directions against USD in the ultra-short term, being located near its local highs and the level of 0.7200. Investors reacted rather restrainedly to Friday's data on the US labor market, because Donald Trump's positive test for COVID-19 became the main subject of speculation unexpectedly for everyone. The news of the US President's illness increased the uncertainty ahead of the upcoming November elections, and helped to reduce the demand for risky assets. Moderate support for AUD at the beginning of the week is provided by macroeconomic statistics from Australia. Commonwealth Bank Services PMI in September rose from 50 to 50.8 points, which was better than the neutral forecasts of analysts. Commonwealth Bank Composite PMI for the same period strengthened from 50.5 to 51.1 points. TD Securities Inflation data in September reflected growth by 0.1% MoM and 1.3% YoY, which was in line with previous estimates.

USD/JPY

USD is gaining strength against JPY during today's Asian session. The instrument adds about 0.23% and is testing the level of 105.60 for a breakout. USD again received an impulse to grow as a safe-haven currency after Donald Trump tested positive for coronavirus, which became the main topic of speculation at the end of last week. Japanese statistics, published on Friday, failed to provide significant support to JPY. The Unemployment Rate in August rose from 2.9% to 3.0%, which was expected. Jobs / Applicants Ratio in August decreased from 1.08 to 1.04 against the forecast of 1.05. At the same time, the Consumer Confidence Index in September rose from 29.3 to 32.7 points, which, however, did not meet investors' expectations at 33.8 points.

XAU/USD

Gold prices are declining during today's Asian session, developing a correctional decline since last Friday, when the instrument retreated from its local highs since September 22. The appearance of "bearish" trend was facilitated by the corrective sentiment in the market, which intensified at the end of last week with the unexpected message about Donald Trump's positive test for coronavirus. Now investors are trying to predict the possible consequences of the forced quarantine of the US President, which is especially important on the eve of the presidential election, which is only a month away. Trump's rival for the presidency, Joe Biden, has also drawn attention in this regard. Analysts do not exclude the possibility of postponing the elections in the event of a hypothetical infection of Biden.

EUR/USD: general review

Current trend

EUR shows insignificant growth against USD during today's Asian session, developing a strong "bullish" impulse formed yesterday. Market sentiment improved markedly yesterday after reports that President Donald Trump could be discharged from the hospital soon. In addition, traders again believed in the imminent approval of a new stimulus package for the US economy, which was probably also facilitated by Trump's diagnosis.

Macroeconomic statistics from the eurozone released on Monday provided additional support to EUR. Retail Sales in the euro area increased by 4.4% MoM in August after falling by 1.8% MoM a month earlier. Analysts had expected increase by 2.4% MoM only. On an annualized basis, sales increased by 3.7% YoY after falling by 0.1% YoY. The forecast assumed growth by 2.2% YoY.

Support and resistance

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD indicator is growing preserving a weak buy signal (located above the signal line). The indicator is also testing the zero level for a breakout. Stochastic, approaching the level of "80" shows multidirectional dynamics, signaling that EUR is overbought in the ultra-short term.

Existing long positions should be kept until technical indicators are clarified.

Resistance levels: 1.1808, 1.1860, 1.1881, 1.1916.
Support levels: 1.1780, 1.1751, 1.1700, 1.1657.