EURUSD faces further upside pressure as we look for more gain. Resistance comes in at the 1.1850 with a break of that area turning risk towards the 1.1900 level. A move above here will target the 1.1950 level. Further up, resistance stands at the 1.2000. On the down, support comes in at 1.1700 levels with a violation opening the door for a run at the 1.1700 level. Further down, support is seen at the 1.1650 level. A cut through that level will clear the way for a move towards the 1.1600 level. All in all, EURUSD looks for more upside pressure in the new week.
GBP/USD’s break of 1.3007 resistance last week suggests that correction from 1.3482 has completed at 1.2675. That came after drawing support from 38.2% retracement of 1.1409 to 1.3482 at 1.2690. Initial bias is now back on the upside this week for retesting 1.3482/3514 resistance zone next. Decisive break there will carry larger bullish implications and target 61.8% projection of 1.1409 to 1.3482 from 1.2675 at 1.3956 next. On the downside, break of 1.2845 support will dampen this view and turn focus back to 1.2675 support instead.
Technically, USD/JPY is an interesting one to watch today as it’s getting more likely that rebound from 104.00 has completed, with break of a near term trend line. Further rise will remain in favor as long as 104.94 support holds. But a firm break there would bring retest of 104.00. In that case, we’d have to see if that triggers selloff its Dollar itself, or more general decline in Yen crosses.
EUR/JPY continues to lose upside momentum as seen in 4 hour MACD. But with 123.84 minor support intact, further rise is still in favor to retest 127.07 high. Decisive break there will resume larger rally from 114.42. On the downside, however, break of 123.84 will turn bias back to the downside for 38.2% retracement of 114.42 to 127.07 at 122.23 instead.
It struggled near $0.7210 at the start of the week, the (50%) retracement objective of the decline from the September 1 high a little above $0.7400. However, after it backed off and found support around $0.7100, it had a running start to approach $0.7245 ahead of the weekend. The next retracement objective (61.8%) is nearer $0.7260. The MACD has turned up from the oversold territory. The Slow Stochastic appears to be turning up after moving sideways a little. We anticipate a retest on the $0.7400 before the end of the month.
The Canadian dollar rose about 1.5% against the US dollar last week, the most in three months. The greenback's break and close below CAD1.3155, the (61.8%) retracement of the rally from the September 1 low suggests a resumption of its downtrend. The momentum indicators are trending lower, and a return to CAD1.30 looks likely. The CAD1.3245 area now may offer resistance. The median forecast in the Bloomberg survey sees the US dollar at CAD1.32 at year-end. Look lower.
The precious metal became about $30 an ounce (1.6%) more precious last week. It might be a safe haven, but now it is moving with the risk. Specifically, the 30-day correlation between (the percentage change of) gold and the S&P 500 is near a five-month high near 0.45%. While gold is likely headed back to the record high set in August (~$2075), a few weeks before stocks sold-off and the dollar bounced, there is more wood to chop first. A move above $1935 would target the $1960-$1990 band. The momentum indicators are favorably positioned.
A shutdown of almost all the oil platforms in the Gulf of Mexico helped lift the price of the November WTI futures contract last week by over 10.5%, the most in five months, but the sell-off right before the weekend on news that Norwegian oil workers’ strike was called off. Prices fall by around 1.2%, and the November contract finished up 9.3%. It had flirted with the 200-day moving average found a little above $41 a barrel. The momentum indicators are mildly constructive and the high from the second half of September, around $41.70, is the next important chart point. The weak close, however, warns of the risk that support near $39.00 may be tested first.
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