USD about to end the week in the greens

USD strengthening continues in the FX market

The strengthening of the USD remains the main characteristic move in the FX market allowing the greenback to end the week in the greens for a second time in a row. US treasury yields seem to continue their upward trajectory, while the market’s expectations for the Fed’s intentions continue to lean on the hawkish side, providing support for the USD. Given the low number of high-impact financial releases in today’s calendar, we expect fundamentals to continue to lead the FX market today. 

US equity bears seem to waver

US equities seem to be somewhat indecisive currently. The much awaited Trump Xi meeting ended with much fanfare but no major breakthroughs, disappointing somewhat the markets. US equity markets tend to be supported currently by some optimism about AI, yet a rise of oil prices, in combination with market expectations for the Fed to tighten its monetary policy tended to keep them under pressure.

Oil prices mixed

Despite oil prices rising yesterday, they corrected lower in today’s Asian session. On the one hand worries for the situation in the Middle East allow for a maintaining of the geopolitical premium on oil prices, while on the other hopes a possible US-Iran truce are still present and weighing on oil prices. 

Gold’s price action remains stable

Despite the bearish tendencies for the week, gold’s price tended to stabilise yesterday. On a fundamental level, we note that the market’s hawkish expectations for the Fed as well as the rise of US bond yields exercise bearish pressures on gold’s price at the current stage enhancing the bond market’s attractiveness. Yet gold’s price seems to be holding if compared with the strengthening of the USD in the FX market.  

Other highlights for today

In today’s American session, we get the US durable goods orders for August, the final UoM consumer Sentiment for September and Canada’s Budget balance for July. On a monetary level we note that the Fed’s Williams and Hammack, BoE Governor Bailey, ECB’s Buch and Vujcic are scheduled to speak. In tomorrow’s Asian session, we get from Japan, BoJ’s summary of opinions for the September meeting and China’s industrial profit for August.

Charts to keep an eye out

EUR/USD bears seem to hesitate as the pair’s price action reached the 1.1350 (S1) support line. We maintain a bearish outlook for the pair and intend to keep it as long as the downward trendline guiding it remains intact. The RSI indicator has dropped below the reading of 30, signalling an intense bearish market sentiment for EUR/USD, yet at the same time imply that the pair may have reached oversold levels and may be ripe for a correction lower. Similar signals come form the price action flirting with the lower Bollinger band. Should the bears remain in charge over the pair, we may see EUR/USD breaking the 1.1350 (S1) support line and start aiming for the 1.1210 (S2) support level. Should the bulls take over, we may see AUD/USD breaking the 1.1470 (R1) resistance level and start aiming for the 1.1575 (R2) resistance level.

Dow Jones continued to edge lower after breaking the 51700 (R1) support line, now turned to support. We maintain a bearish outlook for the index as long as the downward trendline guiding it remains intact. We set as the next possible target for the bears the 50500 (S1) support line. Should the bulls take over, we may see Dow Jones breaking the prementioned downward trendline, signalling an interruption of the index downward motion, and continue to break also the 51700 (R1) resistance line clearly, opening the way for the 526685 (R2) resistance level.

EUR/USD daily chart

• Support: 1.1350 (S1), 1.1210 (S2), 1.1065 (S3).
• Resistance: 1.1470 (R1), 1.1575 (R2), 1.1685 (R3). 

US 30 cash daily chart

• Support: 50500 (S1), 49600 (S2), 48350 (S3).
• Resistance: 51700 (R1), 52685 (R2), 53500 (R3).