It has been another choppy, sideways session in the FX markets, while stocks are higher on the back of the latest positive trade-news headlines. More of the same looks likely today as further headlines are released, and a rather cautious stance is going to be required. The outcome of the US/China trade talks will be pivotal for all asset classes and at this stage it looks as though stocks have some near term positive momentum, albeit that the longer term charts still look heavy.
The FX pairs look to be going nowhere fast, although note that the Euro daily charts do still point higher despite the recent consolidation. The persistent consolidation in EurUsd of gains from the Oct 1 low and rising RSIs suggest longs may yet be rewarded, with the Fed outlook potentially validating the technical signals. Chicago Fed President Evans said yesterday that the downside risks to the economy were more likely and that he wouldn’t mind another rate cut, which could yet undermine the dollar.
Elsewhere, there is little to go on, although note that the Kiwi has again tried to make a run above 0.6325, and has again failed at the end of the session, once again ending back below 0.6300. Maybe it is time for a test of the downside?
*Trade of the day: October 10, 2019; 6:50 AM(AET)
*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.
All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.
Sell EurUsd @ 1.1010. SL @ 1.1030, TP @ 1.0920
Buy EurUsd @ 1.0930. SL @ 1.0890, TP @ 1.0990
Sell AudUsd @ 0.6755. SL @ 0.6785, TP @ 0.6690
Buy AudUsd @ 0.6685. SL @ 0.6650, TP @ 0.6745
Sell NzdUsd @ 0.6320. SL @ 0.6350, TP @ 0.6240
EurUsd: There is little change for the Euro today, which has had another choppy day confined within the recent tight range and leaves the outlook unchanged, with a neutral bias. The pair currently sits at 1.0970, 15 points higher than this time yesterday and well above the 2 ½ year low at 1.0879 but unable to overcome stiff resistance at 1.1000. While the short term momentum indicators look mixed/neutral, it would seem that 1.0920/1.1000 may again cover it on Wednesday although the dailies still look mildly positive and, on the topside, the 55h/100H moving averages are crossing right at current levels, at 1.0970, which is attracting some minor sellers. A break of the session high, at 1.0989, would see strong resistance at 1.1000/03 (7 Oct high/23.6% of 1.1411/1.0879). An upside break would then allow for a run towards 1.1040/50 and then possibly to the September 18/19 highs at 1.1072/75. On the downside, support will be seen at 1.9.45/50 and again at 1.0920/25. I don’t think we go under here today but, if wrong, a break 1.0900 would then open the way back to the 1.0879 low below which would allow a run towards the next target at 1.0860(76.4% of 1.0340/1.2555), Under here, the 23 April 2015 low is at 1.0820, a break of which will find a weekly chart gap that would take us to 1.0775.. As with yesterday, a range of 1.0925/1.1000 may be the idea today.
US$Jpy: did an about turn after the positive trade headline today and followed the US stock indices higher. Having based at 106.92, the dollar eventually took out the stiff resistance in the 107.45/50 area, in reaching a peak of 107.62, before settling aback at 107.50, where it currently sits, just above the 200 HMA (107.38). The medium term charts are showing little directional bias today, but if we do see further upside progress, as suggested by the positive look of the hourlies, we could see a return to the 107.62 session high, above which could open the way to 107.70 (61.8%/100 DMA), to 108.00(76.4%) and possibly back to the 108.46, 1 Oct high. On the downside, back below the 200 HMA, support will be seen at 107.00 (100 HMA), ahead of 106.80 (8 Oct low) and 107.60 (minor) and the 106.47 3 Oct low. Look for 107.00 /108.00 to cover it today, although any decisive trade headline could provide something more directional.
AudUsd: despite the appalling WBC Consumer Confidence data yesterday, the Aud$ did try the topside once again on Wednesday , squeezing up to 0.6749 before giving up some ground in the US session, to currently sit back at 0.0.6725. Although the momentum indicators look pretty much neutral right now, a break of minor support, right here at 0.6720, could see a drift back towards 0.6700, below which would allow for a run back towards the 0.6670 lows. A break of this would find minor Fibo extension support at 0.6660 (50% of 0.6894/0.6670 from 0.6773) and then again at 0.6635 (61.8%) and again at 0.6600 (76.4%). Under here would allow for a move to 0.6550 (100%) and eventually to 0.6500 although that remains some way off. Further out, the next major Fibo support level is not seen until 0.6250 (76.4% of 0.4773 (April 2001)/1.1082 (July 2011). On the topside, resistance will once again be seen at 0.6750/55 ahead of 0.6770/75 although that looks safe today. Further offers would arrive at 0.6795/0.6805 ahead of the Fibo level at 0.6828(38.2% of 0.7081/0.6770) 0.6850 (minor) and 0.6876 (50%). It may be a quiet session but I prefer the downside today, although any positive trade headlines could send the Aud$ back to the topside In the meantime, I am while looking to sell rallies although 0.6700/50 may cover it.
NzdUsd: The Kiwi again squeezed up to 0.6325 on Wednesday, but is now trading back below 0.6300 and is looking heavy on the short term chart time-frames. Further losses would open the way for a drop back towards 0.6280 and then towards 0.6255/60, 0.6220 and possible back to the 0.6203, 4 year low. On a break of 0.6200, there is little to hold the Kiwi up , but more distant bids would arrive at the August 2015 low at 0.6125, which could be where we are headed if/when the RBNZ cut rates again, which seems highly likely. If we get back above 0.6326 (Session/9 Oct highs), look for further sellers to arrive at 0.6337 (4 Oct high) and then at 0.6348 (25 Sept high) ahead of 0.6355 (61.8% of 0.6449/0.6203). Use 0.6265/0.6320 as a guide today, with the preference to sell rallies for the 24 hour trade.