Daily FX Brief, October 08 – Major Trade Setups – U.S. China Trade Talks In Focus! 

On Tuesday, the U.S. dollar trades to trade choppy to slightly bullish on the back of no significant economic figures. The range of light United States numbers during the past week increased uncertainties on the assumption that the United States economy will be further elastic as compared to the other economies and pushed investors to start pricing in another rate cut by the Federal Reserve.

Powell Stressed that an Independent Central Bank could make decisions in the long-term best interests of the economy without regard to the political pressure. He also quoted that “the management of Central Bank must be free from the dangers of control by politics and by private interests, singly or combined.”

In previous days, President Trump has criticized the Federal Reserve for not Lowering its Interest Rates enough. In reply to that criticism, Jerome Powell’s statement about central bank independency has raised the possibility that the Fed might not cut its rate further in the next policy meeting.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

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EUR/USD – Daily Analysis

The EUR/USD currency pair consolidating in a narrow range near 1.0975, as we know, the pair were representing 0.06% losses on Monday. It should be noted that the EUR/USD currency pair hit the rejection at the 21-day moving average for the 3rd straight day yesterday. Therefore the figures are presently found at 1.0992. 

On the economic data front, all eyes stay on the German industrial production data, which is scheduled to release at 06:00 GMT, and expectations are high that the German Industrial Production data dropped 0.3% month on month during August, having fallen 0.6% in the previous month. The final number is anticipated to release at -2.7% versus -4.2% in July.

German Factory Orders declined by 0.6% month-on-month in August – the 2nd-straight monthly decline, due to weaker demand from domestic consumers, the official data showed on Monday. 

Additionally, the headline IHS Markit and BME Germany Manufacturing PMI for February, a single-figure picture of the performance of the manufacturing economy, had marked well below 50, indicating contraction.

The statement came that the German recession is generally accepted at this time and price. Therefore, the EUR/USD currency pair will likely remain resilient if the Geman Industrial Production fell according to expectations. The pair may take hints from the United States Producer Price index and comments by the Feral Reserves President Powell.

Daily Support and Resistance

S3 1.0901

S2 1.0939

S1 1.0956

Pivot Point 1.0978

R1 1.0994

R2 1.1017

R3 1.1056

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EUR/USD – Trading Tips

On the technical aspect, the EUR/USD may gain support at the critical trading point of 1.0960 level. The MACD and RSI are staying in the bullish territory, implying probabilities of a bullish reversal. 

A bearish breach of the 1.0967 level can spread selling until 1.0885. While buying can be seen above 1.0960 till 1.1035 levels. 

USD/JPY – Daily Analysis

The USD/JPY currency pair found on the recovery track and traded well in the striking distance of the overnight swing high.

After a bearish break opening at the begin of a new trading week, the USD/JPY currency pair has managed to recover positive traction and returned near 80-pips from an intraday low level of 106.65. Positive figures in the United States treasury bond yields propped the greenback demand and turned out to be one of the critical factors that started the initial support of the uptick.

The momentum gained another boost from some positive comments by the White House economic adviser Larry Kudlow, who said that the U.S. was available for China plans and proposals, but the Chinese companies were not there. Meanwhile, Kudlow noted further that the United States trade officials could make progress between the Sino-US trade war.

The USD/JPY currency pair is trading steady ahead of Fed Chair Speech and PPI figures today as investors seem hesitant to enter the market ahead of the news release. Besides, the highly-expected United States and China trade negotiations in Washington are also keeping the USD/JPY in check ahead of Top-level negotiations scheduled on Thursday.

Meanwhile, Tuesday’s U.S. economic docket, highlighting the release of Producer Price Index (PPI), is under focus, and all eyes will keep on it for fresh impetus. Moreover, the market risk-sentiment and the greenback prices progress could further produce some meaningful trading opportunities together.

Daily Support and Resistance    

S3 105.78

S2 106.47

S1 106.85

Pivot Point 107.16

R1 107.54

R2 107.85

R3 108.54

USD/JPY – Trading Tips

On Monday, the USD/JPY opened with a bearish gap, which is already covered by the end of the day. The USD/JPY pair soared to complete a 50% Fibonacci retracement level at 107.450.  

The USD/JPY is now trading above 50 periods EMA, which is placing a bullish pressure on the USD/JPY at 106.900. The MACD is looming in the buying zone. However, the live histogram is smaller than the previous one, which shows the odds of a bearish reversal. Consider trading bearish below 107.450 to target 106.900. 

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GBP/USD – Daily Analysis

The GBP/USD currency pair flashing red and still consolidating in the narrow range just below the 1,2300 handles due to renewed Brexit pessimism. 

The cable found exhibited some intraday bounce during the start of a week. In contrast, a shortage of any substantial progress leads the pair to quickly hit the fresh low level near the 1.2335 level, which is also marked as an important level by 200-period EMA on the 4-hourly chart. 

Considering that the bloc’s leaders observe the United Kingdom Prime Minister Boris Johosn’s new Brexit plan is not enough, uncertainties related to Briaitan exits from the Europan Union, leaving some pressure on the GBP.

The modest pickup in the greenback demand, benefited by the positive rebound in the United States Treasury bond yields and positive trade-related headlines, further helped to the pairs downtick. While, the White House economic adviser Larry Kudlow, who said that the U.S. was available for China plans and proposals, but the Chinese companies were not there, drove some haven appeal in the market.


Daily Support and Resistance    

S3 1.2205

S2 1.2253

S1 1.2271

Pivot Point 1.2302

R1 1.2319

R2 1.2351

R3 1.24

GBP/USD – Trading Tips

On Tuesday, the trading in GBP/USD has changed much as the cable continues to trade bearish. On the upper side, 1.2340 level is extending it a substantial resistance now. The 50 EMA is expected to maintain support at 1.2275, but the new bearish movement in the GBP/USD is likely to challenge the support zone. Consider opening a sell position only below 1.2275 level today. 

All the best!