USD loses ground as a busy week begins

Peter Iosif, ACA, MBA IronFX

USD continues to weakens the week begins

The USD is losing ground in the FX market, as a packed week begins. The US midterm elections tomorrow and the release of the employment report for October on Friday, are considered the main issues for traders and could shake the markets. Today we expect USD traders to keep a close eye on the release of the US ISM manufacturing PMI figure for October and a wider rise than expected could provide some support for the USD, while a drop of the indicator’s reading could weigh.

In Australia, RBA prepares for a rate hike

In tomorrow’s Asian session we get from Australia RBA’s interest rate decision. The bank is expected to hike rates by 25 basis point while the market expects the bank to remain on hold in the coming months. Should the bank deliver the expected rate hike and accompany it with a dovish forward guidance we may see the Aussie losing some ground, yet should the bank opt for a more hawkish tone, it may take the markets by surprise, force them to reposition their expectations and thus lift the Aussie.

Bearish tendencies for US tech shares

US tech shares continued to experience bearish tendencies as market worries for the CapEx required for the expansion of AI technology continued to weigh on market sentiment. Yet the bearish market sentiment may ease as oil prices retreat. In today’s after-market hours we get Apple’s earnings report, the start of another high-impact week for the USD tech sector. Possibly better-than-expected EPS and revenue figures accompanied by a robust forward guidance could lift its share price and vice versa.

Other highlights for today

In today’s American session, we note that Chicago Fed President Goolsbee speaks. In tomorrow’s European session, we note the release of the October CPI rates for Turkey and Switzerland.

As for the rest of the week

On Tuesday we note the US mid term elections and later from New Zealand Q3s’ employment data. On Wednesday we get Euro Zone’s preliminary HICP Rate for October, the US ADP national employment figure and ISM non manufacturing PMI figure also for October. On Thursday we get Australia’s trade data for September while in the UK BoE is expected to hike rates. On Friday we highlight the release of the US employment report for October and simultaneously Canada’s employment data also for October.

Charts to keep an eye out

Nasdaq continued to drop, breaking the 28750 (R1) support line, now turned to resistance. As Friday’s warnings materialised, we switch our sideways motion bias for a bearish outlook, and note that the RSI indicator has reached the reading of 30, implying a strong bearish market sentiment that could drag the index’s price action lower. Should the bears maintain control over the index, we may see it nearing if not breaking the notably lower 27050 (S1) support line. Should the bulls take over, we may see the index breaking the 28570 (R1) resistance level opening the gates for the 29735 (R2) resistance hurdle.

AUD/USD’s price action seems to stabilise between the 0.7085 (R1) and the 0.6995 (S1) support line. As the pair’s price action has breached the upward trendline guiding it we maintain a sideways motion bias between the prementioned levels, for now. The RSI indicator has reached the reading of 50 and flattened out implying a neutral stance of the market for the pair which tend to enhance our sideways motion bias. Should the bulls take control, we may see AUD/USD breaking the 0.7085 (R1) resistance line and aim for the 0.7185 (R2) resistance level. Should the bears take over, we may see AUD/USD breaking the 0.6995 (S1) line and start aiming for the 0.6905 (S2) support level.

AUD/USD daily chart

Support: 0.6995 (S1), 0.6905 (S2), 0.6830 (S3).
Resistance: 0.7085 (R1), 0.7185 (R2), 0.7280 (R3).

US 100 cash daily chart

Support: 27050 (S1), 25375 (S2), 23965 (S3).
Resistance: 28570 (R1), 29375 (R2), 30770 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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