Forex News Analysis by LiteForex

Morning Market Review

EUR/USD

EUR is showing ambiguous trading dynamics during today's Asian session, consolidating at 1.1730. The day before, EUR showed a steady decline and retreated from its local highs since September 21, which was associated with a rather unexpected statement from Donald Trump, who suspended negotiations on a new program to support the US economy until the November elections. Interestingly, Trump made this statement just a few hours after the speech by the US Fed Chairman Jerome Powell, who reiterated the urgent need for new stimulus measures and pointed out the risks of a recession in the American economy. The President of the ECB Christine Lagarde also spoke about the need for new support measures on Tuesday, reminding the markets that the regulator is still able to reduce rates to negative values.

GBP/USD

GBP is trading with multidirectional dynamics during today's morning session, slightly recovering after the active decline the day before, which interrupted the uncertain "bullish" trend for the instrument since September 24. GBP reacted with a confident fall to the statements of Donald Trump, who decided to end the controversy over a new stimulus program for the US economy and postponed this process until after the November presidential elections. Investors were disappointed with these statements, as at the beginning of the week the market was dominated by direct opposite sentiments and traders were selling USD on growing expectations of a quick approval of a new package of measures. Today, traders are focused on the US Fed Meeting Minutes and the speech by the Fed representative John Williams.

AUD/USD

AUD shows a slight increase against USD during today's Asian session, correcting after an active decline yesterday, which was triggered by a new wave of growth in investor demand for safe assets. USD has significantly strengthened after Donald Trump's statement on the decision to postpone the discussion of a new package of measures to support the American economy until the November presidential elections. Some pressure on AUD on Tuesday was also exerted by the decision of the RBA to keep interest rate at 0.25%. However, despite extensive discussion of the possibility of further rate cuts, little was expected from the regulator at the current meeting. The dynamics of Exports was much more disappointing, as the figure fell by 4.2% MoM in August after falling by 3.4% MoM in the previous month. Against the background of a slowdown in Imports from +6.2% MoM to +2% MoM, this led to a sharp decrease in the Trade Surplus from AUD 4.652B to AUD 2.643B, which turned out to be significantly worse than market expectations at AUD 5.154B.

USD/JPY

USD has shown a slight increase during today's morning trading session, recovering from an uncertain decline the day before, which did not allow USD to consolidate at new local highs since September 15. The market has actively reacted to Donald Trump's intention to suspend the process of discussing new support measures for the American economy, but JPY is already in high demand as a safe haven currency today. The speech of the US Federal Reserve head Jerome Powell also contributed to the reduction of the demand for risk on Tuesday. The Chairman of the regulator noted that the process of recovery of the American economy is far from complete and there are still significant downside risks on the market, associated with the renewed increase in the incidence of coronavirus. Powell called for support for households, but now it seems that this will have to wait a while, unless party representatives are able to take the initiative and make significant concessions.

XAU/USD

Gold prices are showing ambiguous dynamics during today's Asian session, staying below 1900.00, the breakdown of which was recorded the day before. The strengthening of the "bearish" dynamics on Tuesday was associated with a rather unexpected statement by Donald Trump, who decided to suspend the negotiations on a new fiscal stimulus package until the end of the presidential elections in November. The President's statement came against the backdrop of numerous calls for further support for the American economy, as well as against the backdrop of outlined progress in the discussions (at the beginning of the week, regular talks were held between House Speaker Nancy Pelosi and US Treasury Secretary Steven Mnuchin).

USD/CAD: the instrument consolidates

Current trend

Today during the Asian session, the USD/CAD pair shows ambiguous dynamics, trading near the local lows of September 21. Yesterday, USD fell after a corrective growth on Tuesday, when markets reacted violently to Trump's sudden announcement of a freeze on negotiations under a new program to support the American economy. Canadian Wednesday’s macroeconomic statistics was rather poor. Thus, the index of business activity from Ivey for September fell from 67.8 to 54.3 points, which was worse than the market average forecasts.

On Thursday, Canadian investors are awaiting the publication of information on the dynamics of construction started in September. By the opening of the American session, the focus will shift to the speech of the head of the Bank of Canada, Tiff Macklem, who only recently took office (June 3, 2020). On Friday, the September report on the Canadian labor market will be released, as the corresponding from the US released last week.

Support and resistance

On the daily chart, Bollinger bands grow uncertainly. The price range changes insignificantly but remains wide enough for the current level of market activity. MACD falls, maintaining a poor sell signal (the histogram is below the signal line). Stochastic reversed upwards at the lows, reflecting that the dollar is oversold in the super short term.

To open new trading positions, it is better to wait until the signals from technical indicators are clarified.

Resistance levels: 1.3300, 1.3350, 1.3400, 1.3440.
Support levels: 1.3241, 1.3200, 1.3160, 1.3132.

Morning Market Review

EUR/USD

EUR is showing moderate gains against USD during today's Asian session, recovering to previous local highs, updated on October 6. Market sentiment is gradually improving after the softening of the position of Donald Trump, who earlier announced the suspension of negotiations on a financial assistance program for the American economy. The US President said that he would consider the possibility of direct support of the labor market through an increase in unemployment benefits, if such a bill is formed. As for the full-scale package of measures, Trump plans to return to its consideration after the presidential elections, of course, if he manages to win them. Some support for EUR on Thursday was provided by the ECB September meeting minutes, which again reflected the readiness of the regulator to go for additional easing of the monetary policy if necessary.

GBP/USD

GBP is trading positively against USD during today's morning session, developing ultra-short-term "bullish" momentum and returning to local highs of last Tuesday. Risk demand is gradually recovering towards the end of the week, as investors react to Donald Trump's adjustment on stimulus measures for the economy. Earlier Trump suspended negotiations on a new program to support the American economy until the end of the presidential elections, but then announced his readiness to consider certain direct initiatives aimed at supporting the labor market, the aviation sector, and a number of other problematic areas. On Friday, investors are focused on macroeconomic statistics from the UK on the dynamics of GDP and industrial production for August. The published data will later be commented on by the representative of the Bank of England Andrew Haldane.

AUD/USD

AUD is strengthening against USD in trading this morning session, developing an ultra-short-term uptrend and again approaching 0.7200. In addition to the improvement in market sentiment associated with the softening of Donald Trump's stance on stimulating the US economy, the instrument is supported by good macroeconomic statistics from Australia and China on Friday. Home Loans issued in Australia in August rose by 13.6% YoY after increasing by 10.7% YoY last month. Investment Lending for Homes also increased markedly by 9.3% YoY in the same period after increasing by 3.5% YoY in the previous month. The Chinese data was encouraging by further gains in the Caixin PMI. In the services sector, the September indicator rose from 54 to 54.8 points, which turned out to be much better than the forecasts for a decrease to 50.7 points.

USD/JPY

USD is falling against JPY during today's Asian session, retreating from local highs since September 14, updated last Wednesday. The emergence of negative dynamics for the instrument is due to technical factors, as well as a restrained increase in optimism in the market after new statements by Donald Trump regarding certain measures to support households and companies. JPY is also slightly supported by today's macroeconomic data from Japan. Labor Cash Earnings in August fell by 1.3% YoY instead of the expected decline by 1.5% YoY. Overall Household Spending in Japan also slightly improved in August: from –7.6% YoY to –6.9% YoY, which coincided with the estimates.

XAU/USD

Gold prices are significantly strengthening during today's Asian session, responding to corrective sentiment for USD, which is declining amid hopes for partial support of the American economy. Donald Trump urged to support airlines, which are preparing mass layoffs of employees due to the crisis. Direct assistance is also possible for individual small businesses that have found themselves in a difficult situation. Macroeconomic statistics from the US released on Thursday also exerted some pressure on USD. Initial Jobless Claims for the week ending October 2 declined from 849K to 840K, which was worse than projected decline to 820K.

USD/JPY: USD remains under pressure

Current trend

USD is actively declining against JPY during today's Asian trading session, developing last Friday's "bearish" signal, which was formed against the backdrop of a sharp rise in risk demand. Traders reacted to renewed talks on a new stimulus package for the American economy, despite Donald Trump's decision to suspend them last week until the presidential election in November.

The Japanese macroeconomic statistics released today had an ambiguous impact on the instrument dynamics. Bank Lending in September slowed down from +6.7% YoY to +6.4% YoY with the forecast of growth to +7.5% YoY. Machinery Orders in August sharply slowed down from +6.3% MoM to +0.2% MoM, which, however, turned out to be better than the expected –1.0% MoM.

Support and resistance

On the D1 chart Bollinger Bands are sharply reversing horizontally. The price range is narrowing from below, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down having formed new sell signal (located below the signal line). Stochastic demonstrates a more confident decline and is currently located approximately in the center of its area, signaling the prospects for the development of an ultra-short-term downward correction.

Current showings of the indicators do not contradict the further development of the downtrend in the short term.

Resistance levels: 105.60, 105.79, 106.00, 106.20.
Support levels: 105.43, 105.19, 105.00, 104.75.

WTI Crude Oil: prices are falling

Current trend

Today during the Asian session, oil prices are consolidating near $39.50 per barrel after a two-day “bearish” rally. At the start of the week, quotes were under pressure by increased market supply as US oil producers resumed their work in the Gulf of Mexico as Hurricane Delta moved inland. Also, production is increasing in Libya, where the largest field, El Sharara, has resumed its work. Finally, Norwegian oil workers have ended their strike, which should also help boost oil production.

On Tuesday, investors are focused on the statistics from the US on consumer inflation and the API report on oil reserves for October 9. The previous publication reflected a slight increase of 0.951 million barrels.

Support and resistance

On the daily chart, Bollinger bands are moving flat. The price range remains virtually unchanged, remaining spacious enough for the current level of market activity. The MACD indicator is stretching into the line near the zero line. At the moment, the indicator readings are not informative enough. Stochastic, on the other hand, maintains a confident downward trend, which hardly correlates with the real dynamics in the market.

It is better to wait until the market situation becomes clear to open new trading positions for the instrument.

Resistance levels: 39.57, 40.00, 40.60, 41.43.
Support levels: 38.97, 38.62, 38.00, 36.75.

XAU/USD: gold prices are going down

Current trend

Gold prices are relatively stable during today's Asian trading session and are consolidating at 1900.00. The day before, the instrument showed a confident decline, which was caused by the growth of USD in response to the general deterioration in market sentiment.

Investors are still discussing the topic of stimulus measures for the US economy, but more and more analysts are in favor of the fact that the new package of measures will be adopted after the US presidential elections on November 3. Additional support for gold is also provided by the fact that Joe Biden is leading in the presidential race, since if he wins the election, the presidential administration may increase spending at first. Finally, the difficult situation with the coronavirus in the world contributes to the growth in demand for safe assets. WHO records the strongest increase in daily incidence since spring, while no state has completed clinical trials of the vaccine yet. Johnson & Johnson is suspending trials of its vaccine because one of the volunteers had adverse reactions.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the multidirectional dynamics appearance in the short term. MACD reversed downwards having formed a new weak sell signal (located below the signal line). Stochastic is showing slightly more stable decline and is located in the middle of its area.

Resistance levels: 1900.00, 1920.82, 1935.00, 1955.00.
Support levels: 1885.00, 1872.80, 1850.00.

EUR/USD: waiting for new drivers

Current trend

EUR is trading in different directions against USD during today's morning session, waiting for new drivers. The trading on Wednesday was also mixed, which was facilitated by the low demand for risk, as well as the weak position of USD against the background of vague prospects for new stimuli in the US.

The statistics from the eurozone released on Monday put additional pressure on EUR. Industrial Production in August fell sharply from 5% MoM to 0.7% MoM, which turned out to be slightly worse than market expectations at +0.8% MoM. In annual terms, the decline in production accelerated from –7.1% YoY to –7.2% YoY, which, however, coincided with the forecasts. European investors are focused on the speech of ECB President Christine Lagarde before the start of the IMF and European Council meetings at the end of the week.

Support and resistance

Bollinger Bands in D1 chart show unsteady growth. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD reversed downwards having formed a new sell signal (located below the signal line). In addition, the indicator tests the zero mark for the breakdown. Stochastic keeps a confident downward direction but is already approaching its lows, which indicates the risks of oversold euro in the ultra-short term.

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

Resistance levels: 1.1780, 1.1806, 1.1850, 1.1881.
Support levels: 1.1732, 1.1700, 1.1657, 1.1625.

Brent Crude Oil: prices stabilized

Current trend

Against the backdrop of global tensions on world markets, oil prices are trading within a narrow range, currently being around $42.70 per barrel.

This week, the instrument has practically not changed against the previous week. The oil market is under pressure from low demand for energy, the forecast of which looks unfavorable against the background of the introduction of additional quarantine measures in the EU countries, which are the main importers. Moreover, the volume of oil exports from the United States fell to the year’s lows at 2.135 million barrels per day.

According to the Commodity Futures Trading Commission, the demand for oil contracts has been staying at roughly the same levels for over a month. The number of pure speculative positions showed a slight weekly increase to 472.8K against 471.5K a week earlier.

Support and resistance

Locally, the price moves within a wide sideways channel, and, trading near the resistance line, forms the first signs of a possible reversal. Technical indicators are in the state of a buy signal but the readings are not so obvious anymore. Alligator indicator’s EMA fluctuations range began to narrow, and the AO oscillator histogram is in the buy zone very close to the transition level.

Resistance levels: 43.20, 46.00.
Support levels: 42.35, 39.10.

WTI Crude Oil: oil prices are consolidating

Current trend

At the beginning of the week, oil prices show flat dynamics, holding near the level of $40.50 per barrel. Yesterday, the instrument was slightly supported by renewed hopes that a new stimulus package in the United States will be adopted before the presidential elections in November. However, by the close of the daytime session, optimism in the sentiment declined, and investors returned to discussing other problems.

A new growth factor may be the upcoming OPEC+ meeting in Vienna, where the cartel and its allies are expected to adjust the current program to reduce the supply of "black gold" to the market, as well as clarify the prospects for a gradual recovery in oil production next year.

On Tuesday, investors are focused on the American Petroleum Institute's report on oil reserves for the week of October 16. The previous publication reflected a sharp decline of 5.42 million barrels.

Support and resistance

On the daily chart, Bollinger bands move flat. The price range narrows slightly from below, remaining spacious enough for the current level of market activity. The MACD indicator slightly decreases, maintaining a poor sell signal (the histogram is below the signal line). Stochastic reversed at 80 and signals in favor of developing a corrective decline in the ultra-short term.

It is better to wait for the clarification of signals from technical indicators for opening new trading positions.

Resistance levels: 41.00, 41.43, 42.00.
Support levels: 40.00, 39.57, 38.97, 38.62.

XAU/USD: gold is strengthening

Current trend

Gold prices are rising during today's Asian session, taking advantage of the weakness of USD and updating local highs since October 13. The instrument is still supported by a high level of uncertainty in the market, which is associated with many factors. One of them is a new program of financial assistance for the American economy, around which real political battles unfolded. Investors are also noticeably concerned about the leadership of Democrat Joe Biden in the election race, which, if elected president, could dramatically increase budget spending, including supporting the economy amid the ongoing pandemic. The final debate of the presidential candidates will take place this Thursday, October 22.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is slightly narrowing from below, reflecting the ambiguous dynamics of trading in the short term. MACD indicator is growing preserving a weak buy signal (located above the signal line). The indicator is about to test the zero level for a breakout. Stochastic is showing similar dynamics, approaching the level of "80", which indicates that the instrument is overbought in the ultra-short term.

Existing long positions should be kept until the situation clears up.

Resistance levels: 1920.82, 1935.00, 1955.00, 1966.25.
Support levels: 1910.00, 1900.00, 1885.00, 1872.80.