Top Trade Setups in Forex - Choppy Trading in Dollar

The U.S. dollar held steady on Friday, as the non-farm payrolls report painted a mixed picture of the labor market. The ICE Dollar Index was broadly flat on the day at 98.84. Over the weekend, the media reported that Chinese officials are seemingly more reluctant to agree to a broad trade deal pursued by U.S. President Donald Trump. Moreover, Chinese Vice Premier Liu He was reported to propose an offer that will not include commitments on reforming Chinese industrial policy or government subsidies.

The euro edged up 0.1% to $1.0984. Later today, German factory orders for August will be reported (vs. -0.8% on month expected). The U.S. Labor Department said that the economy added 136,000 non-farm payrolls in September (vs. +145,000 expected, +168,000 in August), while the jobless rate fell to 3.5% from 3.7%, the lowest level in five decades.

USD/JPY - Safe Haven Demand In-Play 

The USD/JPY was closed at 106.900 after placing a high of 107.132 and a low of 106.562. After decent Job reports from the US on Friday, USD/JPY moved higher that day. On 4th Oct, 17:30 GMT, the Non-Farm Employment change was recorded as 136000 against 145000 expected along with the Unemployment Rate as 3.5% against 3.7 expected%.

The fact that the Unemployment rate was dropped to a 50-years low point in the previous month despite the prevailing US-China Trade War faded away from the possibility of the USA falling into recession. The fear came earlier that week due to continuous disappointing macroeconomic releases from the US side. US Yields were also raised on Friday with 3.3 basis points in 2 Year Yield and 1.5 Basis Point rise in 10 years yield.

As for the Bank of Japan is concerned, it is not expecting to expand its monetary easing, and further cut its rate towards negative territory at the meeting due this month. The Cabinet Office will release a report on the composite index of leading economic indicators at 10:00 GMT on Monday, which will affect the USD/JPY prices. With US-China trade talks reopening on 7th Oct, anything could happen. Moreover, this uncertainty would also impact on the movement of USD/JPY. 

USD/JPY - Daily Technical Levels

Support Resistance 

106.62 107.17

106.33 107.43

105.78 107.98

Pivot Point 106.88

USD/JPY - Daily Trade Sentiment

The USD/JPY is consolidating in a narrow trading range of 107.00 to 106.500 area. On the technical side, the USD/JPY is holding below 20 and 50 periods moving averages, which is keeping the USD/JPY bearish below 107. 

As we can see, the MACD is crossing over 0 levels, signaling odds of a bullish reversal in the USD/JPY. The USD/JPY can stay bullish above 107 and bearish below this level to aim for 106.600 and 106.450 today. 

AUD/USD – Triple Top Resistance Eyed

On Friday, the pair AUD/USD was closed at 0.67644 after placing a high of 0.67737 and a low of 0.67384, the overall trend remained Bullish that day. 

Despite the Rate cuts from Reserve Bank of Australia by 25 Basis points last week, the pair AUD/USD still managed to maintain a Bullish trend throughout the week. The reason behind this is the same weak macroeconomic data from the United States and lack of economic release from the Australia side.

On Friday at 6:30 GMT, the Australian Retail sales were reported as 0.4% against 0.5% expected. The HIA New Home Sales at 6:13 came at 7.3% in comparison to the previous month’s -7.2%.

Next week there will be a focus on US-China trade talks, which will profoundly affect the movement of this pair AUD/USD.

AUD/USD - Technical Levels 

Support Resistance 

0.6752 0.6782

0.6733 0.6793

0.6704 0.6823

Pivot Point 0.6763

AUD/USD - Daily Trade Sentiment

The AUD/USD has tested and placed a high of around 0.6750 area. The AUD/USD pair faced a hard time violating this level since it was extended by a triple top technical pattern, which is known for driving bearish reversals in the market. 

At the moment, the AUD/USD is holding below the same triple top resistance level of 0.6750. Below this, the AUD/USD has the potential to fall further until 0.6700 and 0.6690. Let's look for bearish trade setups today. 

USD/CAD - Services PMI Plays 

On Friday, USD/CAD was closed at 1.33020 after placing a high of 1.33385 and low of 1.32988, the overall movement remained Bearish that day. At 17:30 GMT, the Trade Balance of Canada came as -1.0B against -1.1B. The Ivey PMI from Canada at 19: GMT, came as 48.7 against 62.6 weighed the Canadian Dollar.

On 4th Oct. 17:30 GMT, the US Non-Farm Employment change was recorded as 136000 against 145000 expected along with the US Unemployment Rate as 3.5% against 3.7 % expected.

Last week, the 2-Year Treasury Yield of Canada climbed above the U.S. Yields for the first time in two years. The Bank of Canada showed concerns over the escalating trade issues in the global economy but gave no clue for cutting interest rates despite the prevailing trend to reduce rates from even big economies, including the USA & EU.

The domestic economy of Canada is strengthening, and there is more potential in commodity-linked – Loonie, but it has been held back by the prevailing global trade tensions. The inflation rate of Canada is close to a 2% target set by its central bank; the number of jobs added this year is also satisfactory. The annualized rate of economic growth of Canada in the second quarter was recorded at 3.7%.

After the release of the unemployment rate from the United States, the Oil prices raised. The Unemployment rate fell to its 50- Year low that day and make a sharp increase in oil prices. This report eases some of the pressure from concerns over the US Recession.

The rise in oil prices gave strength to Commodity Linked currency – Loonie and made the movement of USD/CAD in Bearish Trend on the last day of the week. However, the pair USD/CAD happened to manage a Bullish trend throughout last week.

USD/CAD - Technical Levels

Support Resistance 

1.3291 1.3332

1.3275 1.3356

1.3234 1.3397

Pivot Point 1.3315

USD/CAD - Daily Trade Sentiment

Last week, the commodity currency pair USD/CAD surged from 1.3240 level to 1.3340 over a stronger dollar. At the moment, the pair is holding in the overbought zone, and the new candles are signaling that bulls are exhausted and sellers seem to loom around the corner. 

The MACD is trading below 0, along with RSI, which is holding above 50. Both of these are contradicting with each other, suggesting neutral bias among traders. The USD/CAD may continue trading bearish to complete 23.6% Fibonacci retracement at 1.3322, and 38.2% retracement at 1.3280, while resistance stays at 1.3350 today.

All the best for the U.S. session! 

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