Top Trade Setups in Forex - Dollar Weakens Ahead of Philly Fed
|The U.S. dollar trades bearish after U.S. official data showed that retail sales slipped 0.3% on month in September (+0.3% expected, +0.6% in August) for the first time in seven months. Meanwhile, the Federal Reserve Beige Book stated that the U.S. economy experienced a slight expansion, with robust household spending and a modest increase in retail sales ex-auto.
Later today, economists expect U.S. housing starts to amount to 1.320 million units in September, down from 1.364 million in August. Industrial production is expected to decline by 0.2% on month in September, and initial jobless claims to rise to 215,000 for the week ended Oct. 12.
European stocks closed mixed, with the Stoxx Europe 600 easing 0.1%. Germany's DAX rose 0.3%, while France's CAC edged down 0.1%, and the U.K.'s FTSE 100 fell 0.6%.
U.S. government bond prices rebounded amid worse-than-expected economic data, pressing the benchmark 10-year Treasury yield down to 1.750% from 1.773% Tuesday.
USD/JPY - Double Top Pattern Keep USD/JPY Bearish
The USD/JPY was closed at 108.754 after placing a high of 108.864 and a low of 108.557. The overall trend for USD/JPY remained Bearish that day. At 17:30, the Core Retail Sales from the US came in negative as -0.1% against 0.2% expectations. The same went for Retail Sales, which came in as -0.3% against 0.3% expectations. At 19:00 GMT, the Business Inventories from the United States came as 0.0% against 0.3% expectations and supported US Dollar. The NAHB Housing Market Index of the United States also came in favor of the US Dollars for the month of September as 71 against 68 expected.
The closely watched and most important macroeconomic data on Wednesday was the release of Retail & Core Retail Sales, which came in negative and lower than expectations weighed the US Dollar on hopes of further rate cuts from Federal Reserve this year.
The weaker than expected sales data for the month of September indicates the weak economic growth and increased need for further rate cuts from Federal Reserve in the next meeting caused the USD/JPY to move in a downward trend.
The lack of any macroeconomic data release from Japan moved this pair solely dependent on the US Dollar. There was a drop seen in 2-Year US Treasury Bond Yield on Wednesday. The weak US Dollar gave the USD/JPY a Bearish Trend on Wednesday.
USD/JPY - Daily Technical Levels
| Support | Pivot Point | Resistance |
| 108 | 108.32 | 108.75 |
| 107.57 | 109.07 | |
| 106.81 | 109.82 |
USD/JPY - Daily Trade Sentiment
Taking a look at the 240 mins timeframe, the USD/JPY has broken the double top hurdle of 108.600, which is now extending support to the USD/JPY.
The MACD is indicating bullish sentiment, and we may have a possibility to detect bullish trades in USD/JPY above 108.500. The potential target can be 108.900 and 109.100 today.
AUD/USD – 0.6800 Psychological Level Violated
AUD/USD was closed at 0.67557 after placing a high of 0.67653 and a low of 0.67233. The overall trend for AUD/USD remained Slight Bullish that day.
At 4:30 GMT, the MI Leading Index for the month of September from Melbourne Institute came as -0.1% in comparison of -0.2% of August's. The Australian Dollar continued to go back and forth on Wednesday. This is the market that is profoundly affected by Sino-American Trade talks because Australia provides the most significant amount of raw material to the Chinese construction and manufacturing sector.
Trade negotiations between the United States and China are not moving fast or showing a clear path, so it is making AUD/USD to step back and forth these days.
The upward trend of AUD/USD on Wednesday was caused by the weak Retail Sales data from the United States. At 17:30, the Core Retail Sales from the US came in negative as -0.1% against 0.2% expectations. The same went for Retail Sales, which came in as -0.3% against 0.3% expectations. This weighed on US Dollar amid the increased hopes for the third rate cut by Fed this year.
The Job data from Australia on Thursday at 5:30 GMT would be on focus for the future movement of AUD/USD. And any progress in US-China trade talks could also affect its flow.
AUD/USD - Technical Levels
| Support | Pivot Point | Resistance |
| 0.6773 | 0.6792 | 0.6812 |
| 0.6752 | 0.6831 | |
| 0.6712 | 0.6871 |
AUD/USD - Daily Trade Sentiment
The AUD/USD has crossed over the psychological trading level of 0.6800, and this now opens chances of further buying until 0.68400 level. Consider trading bullish above 0.6800 today as the AUD/USD may come down for correction and bounce off on bullish pressure today.
USD/CAD - Descending Triangle Breakout
The USD/CAD was closed at 1.32003 after placing a high of 1.32338 and a low of 1.31842. The overall trend for USD/JPY remained unclear but gave a slight Bullish candle that day.
USD/CAD prices were seen to move in an upward direction in the starting session on Wednesday, but later they started to move in the opposite direction.
At 17:30 GMT, the Consumer Price Index from Canada for the month of September showed a decline to -0.4 against -0.3% expectations and weighed on Canadian Dollar. However, the Common CPI for the year came in favor of Loonie, showed growth to 1.9% against 1.8% expectations. The Median CPI also grew to 2.2% against expectations of 2.1%, and Trimmed CPI remained flat at 2.1%. The Foreign Security Purchases from Statistics of Canada showed growth to 4.99B against expectations of -1.80B and supported Canadian Dollar.
After the release of Consumer Price Index from Canada, initially the traders reacted on closely watched monthly CPI and gave an upward trend to USD/CAD but after that traders started to react on strong yearly CPI from Canada and supported Loonie against USD and started to sell the pair USD/CAD.
On the other hand, a 1% rise in Crude Oil Prices due to reports of extended supply cuts by OPEC on Wednesday also supported commodity-linked currency – Loonie to give a sharp decline in USD/CAD. The weak Retail Sales Data from the United States added in the downward movement of USD/CAD on Wednesday.
USD/CAD - Technical Levels
| Support | Pivot Point | Resistance |
| 1.3146 | 1.322 | 1.3269 |
| 1.3097 | 1.3344 | |
| 1.2974 | 1.3467 |
USD/CAD - Daily Trade Sentiment
After testing the 38.2% retracement at 1.3240 marks, the USD/CAD is heading lower towards 1.3160 support level. This level is also anticipated to violated and can open further room for selling until the 1.3140 area. Consider taking selling trades below 1.3160 with a goal of 1.3145.
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