USD/JPY: the growth continues

Current trend

The pair is showing gains amid negative news from Japan, trading at 106.00.

JPY continues to be under pressure from domestic fundamental factors. It became known recently that the two largest airlines, All Nippon Airways and Japan Airlines, will significantly reduce the number of domestic flights due to the introduction of additional quarantine measures in connection with the second wave of the COVID-19 pandemic. All Nippon Airways will cut up to 45% of all its flights, while Japan Airlines will cut its number of flights by 43%.

USD began to fall in price against the basket of major currencies again today dropping to the level of 93.150, but this had practically no effect on the pair's rate, as it continues to grow against the background of yesterday's active upward momentum.

Support and resistance

The global descending channel continues to form. At the local interval, the price has reached the resistance line of the inner channel and is ready to form a downward reversal. Technical indicators give a new sell signal. The fast EMAs of the Alligator indicator are below the signal line, and the histogram of the AO oscillator is in the negative zone.

Resistance levels: 106.50, 107.90.
Support levels: 105.40, 104.00.

AUD/USD: trading near record highs

Current trend

AUD maintains an uptrend against USD in the ultra-short term, again approaching record highs since August 19. The instrument is supported by the weak USD, which is retreating practically across the entire spectrum of the market in anticipation of today's publication of updated data on the dynamics of US GDP. In addition, investors are awaiting a speech by the Fed Chairman, Jerome Powell, who may announce changes in the vector of the regulator's monetary policy.

The macroeconomic statistics from Australia also provide moderate support to the instrument. Yesterday, investors drew attention to the data on the dynamics of Construction Work Done. In Q2 2020, the indicator decreased by 0.7% QoQ, after a 1% QoQ decline in the previous quarter. Analysts had expected a sharp 5.8% QoQ drop. Today's Private Capital Expenditure data showed a 5.9% QoQ decline despite forecasts of an 8.4% QoQ fall.

Support and resistance

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is slightly expanding from above, but is limiting the development of "bullish" trend in the ultra-short term. MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic rises more steadily but is rapidly approaching its highs, which reflects risks of the overbought AUD in the ultra-short term.

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

Resistance levels: 0.7249, 0.7274, 0.7300.
Support levels: 0.7226, 0.7200, 0.7150, 0.7130.

USD/JPY: the pair is trading in both directions

Current trend

The US dollar is actively growing against the Japanese yen today, compensating for the sharp drop at the end of last week. Then the yen showed active growth and retreated from two-week lows in response to the resignation of Japanese Prime Minister Shinzo Abe, who decided to leave the post due to deteriorating health. The demand for the Japanese currency rose markedly, as analysts suggested the beginning of a possible repatriation of capital due to the sharply increased political uncertainty.

This week, the yen is pressured by the ambiguous macroeconomic statistics. Retail sales in July decreased by 3.3% MoM and 2.8% YoY, which turned out to be significantly worse than the market forecasts of +8% MoM and +2.4% YoY. Industrial output contracted by 16.1% YoY in July after falling by 18.2% YoY last month. MoM, the indicator rose by 8%, sharply accelerating from the previous value of +1.9%.

Support and resistance

Bollinger Bands in the D1 chart demonstrate a gradual decrease. The price range is narrowing from above, reflecting a sharp change of trend in the short term. MACD is going down having formed a weak sell signal (histogram is located under the signal line). Stochastic is declining more actively and is currently rapidly approaching its minima.

The current showings of the indicators do not contradict the further development of the downtrend in the short and/or ultra-short term.

Resistance levels: 105.67, 106.00, 106.46, 106.79.
Support levels: 105.29, 105.00, 104.50, 104.17.

Morning Market Review

EUR/USD

EUR is trading in both directions against USD during today's Asian session, consolidating at 1.1900. EUR retreated from its record highs since May 2018 and the important psychological level of 1.2000, responding to the emergence of not the most confident macroeconomic statistics from Europe yesterday. Core Consumer Price Index in the euro zone slowed down in August from 1.2% YoY to 0.4% YoY, which turned out to be noticeably worse than market expectations at 0.9% YoY. Consumer Price Index for the same period fell by 0.2% YoY, while investors expected its growth by 0.2% YoY. Unemployment Rate in the euro area in July rose from 7.7% to 7.9%, which was only 0.1% better than the forecasts. In turn, USD received some support after the publication of statistics from the US on business activity from ISM. Today, traders are focused on the US ADP report on Employment Change in August, as well as the monthly economic review, the Fed's Beige Book.

GBP/USD

GBP is trading near zero against USD during today's morning session, retreating from its highs since the end of last year. The instrument was supported moderately by data from the UK yesterday, but later, with the publication of statistics on business activity from the US, the "bulls" began to rapidly lose their positions. The UK data was encouraging showing growth in Consumer Credit. In July, the indicator rose by GBP 1.2 billion after falling by GBP 0.382 billion in the previous month. Analysts had expected positive dynamics at GBP 0.678 billion to appear. At the same time, Markit Manufacturing PMI in the UK in August fell from 55.3 to 55.2 points. Today analysts expect the speeches of the representatives of the Bank of England, Andrew Haldane and Ben Broadbent, who may concretize the prospects of the monetary policy of the regulator for the near future.

AUD/USD

AUD is trading down against USD during today's Asian session, interrupting yesterday's "bullish" rally when it hit record highs since August 2018. In addition to the correctional growth of USD, AUD is under pressure from the macroeconomic statistics from Australia published on Wednesday. Australian GDP for Q2 2020 collapsed by 7% QoQ after falling by 0.3% QoQ in the prior period. The forecasts suggested a 6% QoQ decline. In annual terms, the Australian economy declined by 6.3% YoY, which also turned out to be significantly worse than market expectations at the level of –5.3% YoY. In Q1 2020 the Australian economy showed growth by 1.4% YoY.

USD/JPY

USD is trading marginally higher against JPY, testing 106.00 for a breakout. The instrument received support the day before after the publication of upbeat statistics from the US on business activity; however, the positions of USD remain extremely vulnerable ahead of the publication of the labor market report at the end of the week. ISM Manufacturing PMI in the USA in August rose from 54.2 to 56 points, which significantly exceeded the projected 54.5 points. ISM Manufacturing New Orders Index for the same period jumped from 61.5 to 67.6 points, while analysts expected it to decline to 53.5 points.

XAU/USD

Gold prices are slightly declining during today's Asian session, developing weak corrective dynamics after updating local highs since August 19. The instrument is still supported by the prospect of maintaining low interest rates in the US for a long period of time. Earlier, the Fed changed its approach to its inflation target and allowed prices to rise above 2% to offset the negative effect of a prolonged period of low inflation. In addition, the previous epidemiological risks remain in force, posing a threat of re-closure of economies and the return of part of quarantine restrictions. Finally, USD remains under pressure ahead of the US presidential elections this fall.

XAU/USD: general review

Current trend

During today's Asian session, the price of gold futures contracts rose to the level of 1942.38 after Thursday's correction. Major US indices fell by 3-5% after the publication of weak macroeconomic statistics the day before. The US Trade Deficit in July rose to USD 63.6B from USD 53.5B a month earlier, which turned out to be much worse than the projected growth to USD 58B. The US Services PMI fell from 58.1 to 56.9 points in August, the first decline since April, when the coronavirus pandemic began to affect the market. The publication of disappointing statistics has raised concerns among investors about the recovery of the American economy, causing a cooling of risk sentiment, and increasing their interest in safe-haven assets.

Today, market participants are focusing on macroeconomic statistics on the US labor market. According to analysts, the US Unemployment Rate in August could fall to 9.8% from 10.2% in July, and Nonfarm Payrolls could rise by 1.400M after increasing by 1.763M in the previous month. If the forecast proves right, gold may fall under pressure.

Support and resistance

Bollinger Bands are directed downwards on the 4-hour chart. The MACD indicator is in the negative zone. Stochastic is showing a steady rise, being halfway to the overbought level.

Resistance levels: 1942.38, 1951.50, 1972.02, 1992.54.
Support levels: 1922.08, 1903.11, 1862.12.

GBP/USD: decline in instrument

Current trend

The GBP/USD pair is in a downtrend due to USD Index strengthening and is trading around 1.3130.

Discussions on a package of agreements on Britain's exit from the EU continue. Yesterday, it became known that the Parliament intends to approve a bill according to which the clause of the Brexit agreement, in which Northern Ireland will be assigned the status of an official subject of the UK customs space, will be canceled. It caused serious discontent from the EU, as it actually violates the terms of the entire agreement. Thus, the already half-forgotten GBP driver is relevant again.

Locally, the instrument is under pressure from the growing US dollar. The quotes of the index, which shows the ratio of the US dollar to a basket of world currencies, exceeded 93 points and are at 93.177.

Support and resistance

The price moves is within the boundaries of the global Expanding formation pattern, approaching the support line within the fifth wave. The likelihood of a further decline is quite high, as indicated by technical indicators: Alligator indicator’s EMA fluctuations range is expanded, and the AO oscillator histogram is below the zero line with a downward trend. Considering the statistics of this pattern, the probability of the formation of the sixth upward wave is more than 70%.

Resistance levels: 1.3170, 1.3260.
Support levels: 1.3090, 1.2970.

EUR/USD: the pair is correcting upward

Current trend

The EUR/USD pair is correcting upwards due to the decline in the US dollar against the basket of world currencies and is trading around 1.1825.

Today, the ECB meeting should be held, at which a decision on monetary policy for the next quarter will be made. Although most analysts do not expect the current rate to be changed, there are concerns about further easing. In August, floating inflation reached the level of –0.2%, which is a critical value requiring immediate measures, the most effective of which will be to reduce the interest rate to the negative zone.

The American currency, which showed strength at the beginning of the week, began to decline again, and the reasons are again not economic. The air temperature in the state of California continues to break records and is approaching 50 degrees Celsius, which has already provoked the strongest forest fires that are approaching large cities. In this regard, grid operators are warning of possible power outages in Los Angeles.

Support and resistance

Yesterday, the asset quotes left the ascending channel, breaking the support line, and tries to consolidate below it. Technical indicators point downwards. Alligator indicator’s EMA fluctuations range narrows but the fast EMAs have not yet crossed. AO histogram is below the zero line.

Resistance levels: 1.1850, 1.2000.
Support levels: 1.1750, 1.1580.

Morning Market Review

EUR/USD

EUR shows insignificant growth against USD during today's Asian session, continuing the development of the moderate "bullish" impulse formed at the end of previous week. EUR is testing 1.1850, waiting for new drivers to appear on the market. Today, European investors are awaiting the publication of July data on the dynamics of industrial production in the eurozone. Forecasts assume that on a monthly basis, Production will accelerate from +9.1% MoM to +10% MoM, while the annual rate is likely to indicate a deterioration in dynamics from –12.3% YoY to –18.3% YoY. In addition, the market continues to analyze the results of the last week's speech by the ECB President Christine Lagarde. The regulator did not change the parameters of monetary policy, and Lagarde took a wait and see attitude, not responding to a noticeable increase in the EUR/USD rate which started in March.

GBP/USD

GBP is marginally strengthening against USD in the trading of today's morning session, retreating from the local lows since July 24, updated at the end of last week. The growth of GBP is technical in nature, while the pair continues to remain under the pressure of sharply increased risks associated with the hard Brexit. Markets are still trying to figure out what Boris Johnson is trying to achieve, having stepped up criticism of the EU recently. Last week the British government passed a bill that could allow the UK to actually violate international law on the issue of trade with Northern Ireland. It is possible that these are only political machinations, which are designed to bargain with the EU for the best terms of the deal, but so far Johnson's position looks quite plausible.

AUD/USD

AUD is trading near zero against USD during today's Asian session, developing mostly flat dynamics at the end of the last trading week. Last Friday's macroeconomic statistics from the US was again ambiguous. In August, the Consumer Price Index in the USA slowed down from +0.6% MoM to +0.4% MoM, which was slightly better than market expectations at +0.3% MoM. In annual terms, inflation accelerated from +1% YoY to +1.3% YoY with the forecast of growth by 1.2% YoY. Excluding food and energy, prices increased by 0.4% MoM and 1.7% YoY, which was also slightly better than the forecasts of +0.2% MoM and +1.6% YoY. Interesting statistics from the US and Australia are not expected today, but on Tuesday Australia will publish the minutes of the last RBA meeting and will release a quarterly survey of consumer sentiment from Westpac.

USD/JPY

USD is trading in different directions against JPY in today's Asian session, developing a flat channel that formed at the beginning of the month. The ambiguous macroeconomic statistics from the US on the dynamics of consumer inflation, published at the end of last week, did not provide significant support to USD, while JPY was expecting the publication of new drivers. Today's macroeconomic statistics from Japan provide moderate support to JPY, as a result of which the pair is actively testing the level of 106.00 for a breakdown. Industrial production in July increased by 8.7% MoM, accelerating from the previous value of +8% MoM. In annual terms, the pace of production decreased by 15.5% YoY, also slightly better than forecasts at the level of –16.1% YoY. Capacity Utilization rose by 9.6% in July, after rising by 6.2% in June.

XAU/USD

Gold prices are slightly strengthening during today's morning trading, testing 1950.00 for a breakout. Quotes are recovering, offsetting the decline at the end of the last trading week, when the ECB representatives reaffirmed their commitment to a wait and see attitude. The President of the European regulator Christine Lagarde did not react to the high rate of EUR, and also disappointed those investors who were counting on additional measures to stimulate the economy. At the same time, the demand for gold remained high amid persisting epidemiological risks. In addition, traders are actively discussing the upcoming US presidential elections and the inability of US lawmakers to approve new measures to support the economy. Last week, the US Senate again blocked a proposal from the Republican Party to allocate USD 300 billion to combat the consequences of the epidemic.

Morning Market Review

EUR/USD

EUR is trading near zero against USD during today's Asian session, hovering at 1.1850. The day before, EUR managed to demonstrate moderate growth against USD and even updated local highs since September 10, but the "bulls" failed to consolidated at new levels (at 1.1900). The instrument was supported moderately by the data from Germany, released on Tuesday. ZEW Economic Sentiment in September rose from 71.5 to 77.4 points, which turned out to be better than the negative forecasts, which assumed a decrease in the indicator to 69.8 points. In the euro area, ZEW Survey showed a moderate increase in Economic Sentiment in September from 64 to 73.9 points, which also exceeded the projected 62.8 points. Today, investors are focused on the publication of the final minutes of the two-day Fed meeting on the interest rate. In addition, traders are awaiting the release of the August statistics on the dynamics of retail sales in the United States.

GBP/USD

GBP is marginally strengthening against USD during today's Asian trading session, building on the corrective momentum that formed earlier this week. The instrument is steadily retreating from its two-month lows, although the positions of GBP are still under pressure from the ambiguous prospects around the Brexit trade deal. The macroeconomic statistics from the UK published on Tuesday was contradictory. Claimant Count Change in August rose again by 73.7K after increasing by 69.9K in the previous period, which turned out to be much better than market expectations, which assumed a sharp increase in the figure by 100K. At the same time, the Unemployment Rate from ILO in July, as expected, increased from 3.9% to 4.1%. Claimant Count Rate in August increased from 7.4% to 7.6%.

AUD/USD

AUD is developing upward dynamics against USD and is growing again this morning session. The day before, the pair showed one of the strongest gains in recent years; however, it failed to consolidate at new levels, and by the end of the afternoon session the instrument had lost most of the positions it had won. AUD was strongly supported by the data from China. Industrial Production rose sharply in August by 5.6% YoY after increasing by 4.8% YoY in the previous month. Analysts were expecting strong data, but hoped for +5.1% YoY. Retail Sales for the same period increased by 0.5% YoY after rising by 1.1% YoY a month earlier. Additional support to AUD was provided by the neutral minutes of the RBA meeting, published on Tuesday. As expected, the regulator did not change the parameters of monetary policy, and the question of lowering the rate in the near future was not raised.

USD/JPY

USD declines against JPY during today's Asian trading session, developing an ultra-short term downtrend that formed earlier this week. The pair is losing about 0.1% and testing the level of 105.25, the lowest since August 28, for a breakdown. The positions of USD remain vulnerable before today's publication of the final minutes of the Fed meeting, while JPY is receiving timid support from macroeconomic publications from Japan. Today's data showed improved Exports in Japan. In August, export volumes fell by 14.8% YoY, recovering slightly from the previous decline of 19.2% YoY. Imports for the same period fell by 20.8% YoY after a decline of 22.3% YoY last month. Improved export dynamics led to an increase in Japan's Trade Balance in August from JPY 10.9B to JPY 248.3B.

XAU/USD

Gold prices are slightly strengthening during today's Asian session, offsetting the weak decline the day before and trying to recover to two-week local highs. The negative dynamics for the instrument on Tuesday was facilitated by the uncertain growth of USD, caused by a number of technical factors. In turn, expectations of new easing of monetary policy by the Fed kept the pair from a stronger correction. Support was also provided by weak data from the US. Industrial Production in the US in August grew by only 0.4% MoM after a sharp increase of 3.5% MoM in the previous month. Analysts had expected growth of 1% MoM.

USD/CAD: ambiguous trading

Current trend

Today during the Asian session, the USD/CAD pair is declining, balancing the moderate growth of the instrument at the end of last week. On Friday, the US dollar strengthened, responding to the appearance of poor macroeconomic statistics from Canada. Thus, the volume of retail sales for July fell from +22.7% MoM to +0.6% MoM, which was worse than analysts' average forecasts, which assumed a slowdown to +1% MoM. Retail sales excluding the automotive market declined by 0.4% MoM over the same period, despite expectations of 0.5% MoM growth.

On Monday, investors are focused on the speech of the head of the US Federal Reserve Bank Jerome Powell and the August data on the dynamics of the index of national activity of the Federal Reserve Bank of Chicago. In Canada, price indices for the primary housing market for August will be released.

Support and resistance

On the daily chart, Bollinger bands smoothly reverse into an upward plane. The price range narrows, reflecting the emergence of ambiguous trading dynamics in the short term. MACD grows, maintaining a poor buy signal (the histogram is above the signal line). Stochastic maintains a relatively strong downward signal, reacting poorly to the growth attempt of last Friday.

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

Resistance levels: 1.3200, 1.3250, 1.3300.
Support levels: 1.3160, 1.3132, 1.3100, 1.3043.

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.

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.