Top Trade Setups in Forex - Brace for FOMC Minutes!
|The Dollar Index regained the 99.00 level on Tuesday, edging up 0.1% to 99.09, ahead of the release of the latest Fed's FOMC meeting minutes later today. Media reported that the U.S. government is pursuing discussions over possible restrictions on portfolio flows into China, particularly investments made by government pension funds.
The euro slipped 0.1% to $1.0960. Official data showed that German industrial production rose 0.3% on month in August (vs. 0.0% expected).
The U.S. government expanded its trade blacklist to include some of China's top artificial intelligence firms on Monday, citing their role in Beijing's repression of Muslim minorities in northwest China. China's foreign ministry hinted that retaliation would follow.
At the same time, a tweet by Daryl Morey, general manager of Houston Rockets with the U.S. National Basketball Association (NBA), voicing support for Hong Kong's pro-democracy protestors stirred uproar in China. China's national broadcaster CCTV announced it would no longer air the two NBA preseason games set to take place in China this week. Meanwhile, NBA boss Adam Silver said the league would support freedom of expression.
Official data showed that U.S. producer prices dropped 0.3% on month in September (vs. +0.1% expected).
USD/JPY - 61.8% Fibonacci Extends Resistance
The USD/JPY was closed at 107.072 after placing a high of 107.443 and a low of 106.801. At 4:30 GMT, the Average Cash Earnings from the Ministry of Health, Labor, and Welfare of Japan came as expected -0.2%. The household spending of Japan came 1.0% greater than expected 0.9%. The Current Account from the Ministry of Finance of Japan showed growth of 1.72T for September in comparison to 1.65 of August's.
The robust economic data from Japan moved USD/JPY in a downward direction on Tuesday's starting session. The downward trend was escalated when Inflation data from American session came on board. The US inflation data showed a drop in September to -0.3% at 17:30 GMT. This release made the fears of US Recession to re-emerge in the market. Increased the chances of further rate cuts by Federal Reserve in the next meeting.
Apart from macroeconomic data, the pair was moved in a downward trend also because of the trade tensions ahead of trade talks between US-China are escalating. Trump's administration blacklisted 28 Chinese organizations from American Market on Monday in response to the human rights violation of Muslim minorities in the west region of Xinjiang. Chinese officials have stated that the United States should stay away from Chinese internal affairs and denied that the government abused or violated any human rights in that region.
USD/JPY - Daily Technical Levels
Support Resistance
106.77 107.41
106.47 107.75
105.83 108.39
Pivot Point 107.11
USD/JPY - Daily Trade Sentiment
Taking a look at the 4-hour chart, the USD/JPY pair is trading slightly bullish after violating the 50% Fibonacci retracement level of 107.200. The USD/JPY is now heading towards 107.400, which marks a 61.8% Fibonacci level.
The bullish engulfing candle on the USD/JPY's 4-hour chart is signaling odds of bullish trend continuation. A bullish breakout of 107.400 level can lead the USD/JPY towards 107.650.
The MACD continues to hold above 0, suggesting bullish bias in the USD/JPY currency pair today. The safe-haven pair may trade bullish above 107 today to target 107.400 and 107.700.
AUD/USD – Bearish Trendline Push Aussie Lower
The AUD/USD was closed at 0.67267 after placing a high of 0.67569 and a low of 0.67229. Aussie showed mixed movement on Tuesday; the pair AUD/USD moved up and down throughout that day.
On Tuesday, at 5:30 GMT, Australia and New Zealand Banking Group published a report of Job advertisements that showed growth by 0.3% in comparison to previous month’s -2.6%.
The National Australia Bank (NAB) Business confidence fell to 5 months’ low of 0 in the month of September. The gauge fell from +1 pint of the previous month. This drop did not weigh on Aussie but showed a weakness in the business sector of Australia. The recent rate cuts by Reserve Bank of Australia have yet to translate into stronger consumer spending, and the business sector has not shown confidence in the economy.
The release of Chinese Services PMI at 6:45 GMT declined to 51.3 in September against 52.9 expectations. The data has, however, slightly affected the China-proxy Australian Dollar.
AUD/USD moved in a downward trend after these releases and placed a low of 0.67229.
However, when US Inflation data came as -0.3%, it made the pair movement in an upward direction due to the possibility of US Recession re-appeared on board. Tensions arose ahead of US-China trade talks also affected the pair movement on Tuesday.
AUD/USD - Technical Levels
Support Resistance
0.6715 0.675
0.6702 0.6771
0.6668 0.6805
Pivot Point 0.6736
AUD/USD - Daily Trade Sentiment
The technical side of the AUD/USD pair has remained mostly unchanged as the pair continues to trade beneath 0.6770 resistance points. The AUD/USD is still trading bearish below the bearish trendline and triple top area, which is pushing the AUD/USD lower below the solid resistance area of 0.6770.
The AUD/USD may continue trading bearish below 0.6765 area to target 0.6720. A breakout of 0.6770 can drive buying until 0.6800.
USD/CAD - 38.2% Retracement Continues to Play
The USD/CAD was closed at 1.33235 after placing a high of 1.33367 and a low of 1.32877. At 17:13 GMT, the Housing Starts from Canada Mortgage and Housing Corporation (CMHC) showed growth to 221K against 217K expectations. At 17:30, the Building Permits from Canada also showed growth in the month of September of 6.1% against 2.3% expected.
The reliable data from Canada made Loonie strong and put pressure on the movement of USD/CAD to place a low of 1.32877. However, the pair regained its upward trend after the monthly report issued by U.S Energy Information Administration. The EIA cut its expectations for global oil demand growth and lowered the price forecast of crude oil.
This weighed on the prices of Crude oil and commodity-linked – Loonie and made USD/CAD to start moving in an upward direction.
However, the upward trend got stronger on the tensions arose from US decision to blacklist Chinese organizations in response to what Chinese officials gave signals to retaliate ahead of upcoming Trade Talks on Thursday. This news also affected the oil prices hence the Canadian Dollar prices as well. On Wednesday, the oil market and Canadian Dollar will be affected by the US Crude Oil Inventories release.
USD/CAD - Technical Levels
Support Resistance
1.3296 1.3345
1.3268 1.3365
1.3219 1.3414
Pivot Point 1.3316
USD/CAD - Daily Trade Sentiment
Just like the AUD/USD, the USD/CAD has also not changed much since yesterday. The USD/CAD is consolidating in a wide range of 1.3340 - 1.3290. Where 1.3290 marks a 38.2% retracement level.
The 50 periods EMA is likely to extend support at 1.3300. Beneath that level, the USD/CAD can show a more bearish trend until 50% and 61.8% retracement points of 1.3270 and 1.3255, respectively. The commodity currency may trade bullish above 1.3316 level today.
All the best for the U.S. session!
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