Top Trade Setups in Forex - Buckle Up for U.S. Inflation!

The U.S. Dollar Index slipped 0.1% on the day to 99.00 on Wednesday, as the Fed minutes showed that officials were divided on monetary policy path. The euro rose 0.3% to $1.0985.

The British pound saw volatile trading, as it marked a day-high of $1.2292 before retreating to close at 1.2212, down 0.1%. U.K. Prime Minister Boris Johnson is set to meet with Irish leader Leo Varadkar today, in a last-ditch attempt to come to a Brexit compromise over Northern Ireland, following stalled talks with the European Union. On the other hand, the U.K. August GDP growth (vs. flat on month expected) and industrial production (vs. +0.1% on month expected) will be released.

Minutes of the U.S. Federal Reserve's monetary policy meeting showed that officials worried about slowing global growth and rising trade tensions could put a drag on the economy.

Later today, U.S. consumer prices are expected to grow at 0.1% on-month in September, and initial jobless claims in the U.S. are expected to rise to 220,000 for the week ended October 5 from 219,000 in the prior week.

USD/JPY - 61.8% Violated, What's Next?

USD/JPY was closed at 107.472 after placing a high of 107.625 and a low of 106.932. The overall movement remained Bullish that day.

Japan Machine Tool Business Association (JMTBA) at 10:58 GMT released the Prelim Machine Tools Order, which came as -35.5% as compare to -37.0% of previous months.

From the American Side, the Final Wholesale Inventories at 19:00 GMT, came in favor of Dollar as 0.2% against expected 0.4%. But the JOLTS Job Openings with 7.05M against 7.35M expectations weighed US Dollar. 

Chinese Vice Premier Liu He will meet US Trade Representative, Robert Lighthizer, and US Treasury Secretary Steven Mnuchin on Thursday for trade negotiations. On Wednesday, reports from China stated that they were willing to open a partial trade deal despite the blacklisting of Chinese firms by the United States. China has even offered to increase the purchase of Soybeans from American farmers as a measure of goodwill before trade talks.

This news re-created the hope for an end to prevailing US-China Trade War and made the Safe-Haven appeal disappear from the market and rise in the prices of USD/JPY.

Federal Reserve published its September meeting minutes on Wednesday in which it was mentioned that market participants might be anticipating more rate cuts than Federal Reserve thought necessary to stimulate the economy. This report undermines the hopes of further rate cuts by the Fed, which were originated from Jerome Powell’s speech on Tuesday when he signaled another move from Fed this year.

The publication of minutes added to the upward trend of USD/JPY on Wednesday.

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

The USD/JPY currency pair has finally violated a long-held 61.8% Fibonacci retracement level of 107.350. However, the new candles are pretty confusing, exhibiting indecision among traders. 

Since there's a bullish breakout, the USD/JPY pair may extend buying until 107.650. The MACD continues to hold over zero-mark, implying a bullish bias in the USD/JPY currency pair today. The USD/JPY can continue to trade bullish above 107.11 today to target 107.450 and 107.700.

AUD/USD – 0.6760 Level Remains Intact 

The AUD/USD was closed at 0.67224 after placing a high of 0.67496 and a low of 0.67224. The overall movement remained Bearish that day.

In the early session, AUD/USD showed an upward trend while in the late session on Wednesday, and the pair started to move in a downward direction.

At 4:30 GMT, the Westpac Consumer sentiment from Australia fell to its lowest since July 2015. The consumer confidence in Australia for the month of September fell to -5.5%. It was reported that the Westpac index had dropped 8.4% since the RBA began to cut its rates in June.

As for the Sino-Australian Relations are concerned, the china50 Index showed a substantial gain of 1.13% helped in the early session’s trend of AUD/USD.

The downward trend of AUD/USD was, however, caused when the uncertainty among US-China trade talks to secure a deal faded away because of good gesture given by China to announce more future purchases of Soybean from American farmers. This gave hope towards the agreement to an end of the prevailing Trade war.

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 AUD/USD proceeds to trade under a 0.6770 resistance area. The AUD/USD is consolidating in a mixed tone under the bearish trendline resistance of 0.6758. While the triple top area remains intact. 

We may have two trade ideas; firstly, the AUD/USD may continue to trade bullish above 0.6736 to target 0.6765. Secondly, the selling may be seen below 0.6765 area to target 0.6720. A breakout of 0.6770 can encourage buying until 0.6800.

 

USD/CAD - Ascending Triangle Pattern In Play

USD/CAD was closed at 1.33316 after placing a high of 1.33385 and a low of 1.32950. The overall movement remained Bullish that day.

In early trade session, USD/CAD showed a falling trend due to weak US Dollar and geopolitical tensions. 

The speech by Fed Chairman Jerome Powell on Tuesday gave signals towards 3rd Interest rate cuts this year. This made US Dollar weak on Wednesday and weighed on USD/CAD in the early session.

The news of the attack on Kurdish from Turkish air crafts, released on Wednesday, raised the prices of Crude Oil, which supported commodity-linked, Loonie and made USD/CAD to drop further.

Turkey originated a military action in Northern Syria after US forces pulled back from the area. The invasion began with a series of airstrikes to hit Kurdish-controlled border towns to create a “safe zone” to house Syrian refugees after clearing the area from Kurdish militias.

But after the release of US Crude Oil Inventories at 19:30 GMT, USD/CAD gained its strength and started to move in Bullish trend. Crude oil inventories showed a growth of 2.9M against 1.8M expected.

The rise in stocks indicated the weakened demand for crude oil and made prices of crude oil to fall again on Wednesday. The fall in crude oil caused the same effect on the Canadian Dollar and reversed the impact on USD/CAD. The USD/CAD rose and placed a high of 1.33385 on Wednesday amid a fall in crude oil prices.

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

The USD/CAD is trading sideways in a long-held trading range of 1.3340 - 1.3290. The USD/CAD has failed to violate the 1.3290 level, which marks a 38.2% retracement level. 

For now, the USD/CAD is trading within an ascending triangle pattern, which is extending substantial resistance at 1.3350 along with support at 1.3300 area. 

On the lower side, the USD/CAD got 50 periods EMA which is keeping the USD/CAD supported above 1.3300. The USD/CAD can show a more bearish trend on bearish breakout of 1.3300 level. Where, the USD/CAD may head for completing 50% and 61.8% retracement points of 1.3270 and 1.3255, respectively. Today 1.3316 is a basic level to stay bearish and bullish above the same level.

 

All the best for the U.S. session! 

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