Forex Market Analysis

Sep 24 – 28: EUR/USD, USD/JPY & Gold – Week Ahead


EUR/USD – ECB Mario Draghi Speech Remains In Focus

The US declared new taxes on China on $200 billion value of products, as exacted. Markets appeared to take it with a pace. Nevertheless, the greenback had the rise in 10-year yields. ECB President Mario Draghi did not rock the boat. August’s inflation numbers were confirmed at 2% on the headline and 1% on the core, just before September’s preliminary numbers.


Fundamentally, the Eurozone banks agreed to repay 3.6 billion euros ($4.2 billion) of ultra-cheap funding to the European Central Bank, returning only a fraction of their borrowings two years ahead of schedule.


EUR/USD – Technical Analysis 

Euro/dollar climbed up but was slightly stuck when testing the 1.1720 level. It then rose to 1.1800, the steepest since July before settling a bit lower.

  • 1.1915 was the lowest level in January and remains relevant. 1.1850 was the peak on June 14th, before Draghi sent the euro down. 1.1800 capped the pair in mid-September.
  • 1.1750 held the pair no less than four times in July and remains a powerful level.
  • 1.1720 is a veteran line that worked in both directions and it capped the pair in mid-September. 1.1650 was a swing low in late August and is very closely followed by 1.1630 which held the price down in mid-August.
  • 1.1580 worked as support in late August. 1.1530 supported the pair twice in August, making it an important line. 1.1435 held the EUR/USD down when it was trading around the yearly lows.
  • 1.1300 is a round number that held the pair in mid-August and also held the pair down in June 2017.

USD/JPY – Bank of Japan Leaves The Rate Unchanged

USD/JPY advanced nicely as trade wars took a step back, US yields climbed and the Fed remained hawkish. But not everything is going in favor of the pair.

The deadline came and went and the US did not impose new tariffs on China. On one hand, Trump threatened to add additional ones. On the other hand, Treasury Secretary Steven Mnuchin initiated talks with China. Does he have the backing of Trump? Probably not, but Trump is busy with Florence, the hurricane pounding the Eastern seaboard.


USD/JPY Technical Analysis

  • 113.15 is the high point seen in July. 112.45 was a stepping stone for the pair when it traded on such high ground. 112.15 was a swing high early in the month.
  • 111.80 was a peak in the dying days of August and serves as resistance. Close by, 111.50 capped the pair beforehand and is another barrier.
  • 110.60 was a swing low in late July and then again in late August. 109.70 was a swing low in late August and provides extra support below the round 110 level.
  • Close by, 109.35 was a cushion in mid-July. 108.70 was a cushion early in the summer and 108.10 a swing low in late May.
  • Lower, we find 107.50 capped the pair in early April and is a strong line.

Gold – Breakouts Out of Ascending Triangle Pattern Ahead of FOMC

On Friday, Gold prices sank more than 1 percent as the dollar firmed upon the British Pound and the Euro after British Prime Minister Theresa May said the European Union must supply an alternative Brexit proposal.

China’s progress to expand domestic consumption also helped support the dollar rally prompted by investor risks that the latest U.S.-China trade war was unlikely to dent global growth.

The dollar’s status as the chief reserve currency makes it the prime beneficiary of U.S.-China trade conflict, with the United States seen as having less to lose.

Gold – Technical Analysis

The gold bear trend is on hold for the fifth week in a row as the market is grinding higher. The 50, 100 and 200-period simple moving averages are coiled together while Gold is in consolidation mode. The RSI, MACD, and Stochastics indicators are bullish as buyers consider the consolidation phase as a bull flag while the market holds above 1,189.49 (September 4 low). Nothing indicates that the bullish momentum should abate anytime soon. Bulls target might be located near 1,225.90 (July 17 low). A break below 1,189.49 (September 4 low) should invalidate the bullish bias.


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