The Weekly Wrap – Economic Data, Monetary Policy, and Evergrande Delivered a Choppy Week

The Stats

It was a quieter week on the economic calendar, in the week ending 24th September.

A total of 39 stats were monitored, which was down from 61 stats in the week prior.

Of the 39 stats, 15 came in ahead forecasts, with 23 economic indicators coming up short of forecasts. There was just 1 stat that was in line with forecasts in the week.

Looking at the numbers, 10 of the stats reflected an upward trend from previous figures. Of the remaining 29 stats, 29 reflected a deterioration from previous.

For the Greenback, monetary policy divergence delivered support in the week. In the week ending 24th September, the Dollar Spot Index rose by 0.09% to 93.281. In the previous week, the Dollar had risen by 0.66% to 93.195.

Out of the U.S

A quiet start to the week left the markets on hold ahead of Wednesday’s FOMC policy decision and projections.

Stats were limited to housing sector numbers that had a muted impact on the Dollar and beyond.

On Wednesday, the FED left policy unchanged as anticipated. The markets had expected a firm timeline on tapering, which didn’t materialize, however. While there were no fixed timelines, the projections revealed a divided camp on the interest rate front, with some pointing to rate hikes from 2022.

It was good enough to deliver Dollar support as central banks elsewhere shifted back due to the Delta variant.

On Thursday, economic data pegged back the Greenback, with the stats skewed to the negative.

In the week ending 17th September, initial jobless claims climbed from 335k to 351k.

Prelim private sector PMIs pointed to softer growth, albeit marginally.

In September, the Manufacturing PMI fell from 61.1 to 60.5, with the Services PMI declining from 55.1 to 54.4.

FED Chair Powell wrapped things up at the end of the week, with the FED Chair looking to soften market expectation of rate hikes near-term.

Out of the UK

It was a busy week.

On the economic data front, CBI Industrial Trend Orders rose from 18 to 22 in September.

The numbers had a muted impact on the Pound, however, with the BoE policy decision in focus.

Private sector PMIs came in softer in September, according to prelim figures, which pegged the Pound back.

The Manufacturing PMI fell from 60.3 to 56.3, with the Services PMI declining from 55.0 to 54.6.

In spite of weak numbers, the BoE was in action later in the day, delivering strong Pound support.

While leaving policy unchanged, the MPC noted that there was a stronger case for a rise in interest rates.

In the week, the Pound fell by 0.45% to end the week at $1.3679. In the week prior, the Pound had fallen by 0.71% to $1.3741.

The FTSE100 ended the week up by 1.26%, reversing a 0.93% loss from the previous week.

Out of the Eurozone

Private sector PMIs and German business sentiment were in focus, with the stats skewed to the negative.

In September, the French Manufacturing PMI fell from 57.5 to 55.2, with the Services PMI down from 56.3 to 56.0.

Germany’s Manufacturing PMI declined from 62.6 to 58.5, with the Services PMI falling from 60.8 to 56.0.

As a result, the Eurozone’s Manufacturing PMI fell from 61.4 to 58.7, and the Services PMI down from 59.0 to 56.3.

Germany’s IFO Business Climate Index fell from 99.6 to 98.8, with the Current Assessment sub-index down from 101.4 to 100.4. The Business Expectations sub-index declined from 97.5 to 97.3.

For the week, the EUR slipped by 0.04% to $1.1720. In the week prior, the EUR had fallen by 0.75% to $1.1725.

The CAC40 rallied by 1.04%, with the DAX30 and the EuroStoxx600 ending the week with up by 0.27% and 0.31% respectively.

For the Loonie

Retail sales were in focus in the 2nd half of the week.

In July, core retail sales fell by 1.0%, with retail sales down 0.6%. Core retail sales had risen by 4.7% in June, with retail sales having increased by 4.2%.

While the stats were Loonie negative, rising oil prices delivered support.

In the week ending 24th September, the Loonie rose by 0.88% to C$1.2752. In the week prior, the Loonie had fallen by 0.57% to C$1.2764.

Elsewhere

It was yet another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar fell by 0.45% to $0.7262, with the Kiwi Dollar ending the week down by 0.36% to $0.7015.

For the Aussie Dollar

There were no material stats to provide direction, leaving the RBA meeting minutes in focus.

Renewed lockdown measures supported the RBA’s view that there would be no rate hike until 2024.

The minutes did note, however, that the Delta variant impact was likely to be temporary, however.

For the Kiwi Dollar

Consumer sentiment and trade data were in focus, with the stats Kiwi Dollar negative.

In the 3rd quarter, the Westpac Consumer Sentiment Index fell from 107.1 to 102.7. While down, the decline was modest when compared with the impact of the first lockdown on sentiment.

A surge in imports led to a record trade deficit in August.

Month-on-month, the trade deficit widened from NZ$397m to NZ$2,144m. Compared with August 2020, the deficit widened from NZ$1,100m to $2,940m.

For the Japanese Yen

In August, core consumer prices were unchanged, year-on-year, after having fallen by 0.2% in July.

Service sector activity saw a softer contraction in September, which was also good news. The Services PMI rose from 43.5 to 47.4. Manufacturing sector activity did see slower growth, however, with the PMI falling from 52.7 to 51.2.

On the monetary policy front, the BoJ went largely unnoticed, with the September hold on monetary policy.

The Japanese Yen fell by 0.73% to ¥110.73 against the U.S Dollar. In the week prior, the Yen had risen by 0.01% to ¥109.93.

Out of China

There were no major stats in a shortened week.

On the policy front, the PBoC left loan prime rates unchanged, which was in line with expectations.

In the week ending 24th September, the Chinese Yuan was unchanged at CNY6.4662. In the week prior, the Yuan had ended the week down by 0.34% to CNY6.4661.

The CSI300 and the Hang Seng ended the week down by 0.13% and by 2.92% respectively.

Dollar Climbs as Evergrande Uncertainty Percolates

China Evergrande Group owes $305 billion and has run short on cash, missing a Thursday deadline for paying $83.5 million and leaving investors questioning whether it will make the payment before a 30-day grace period expires. A collapse of the company could create systemic risks to China’s financial system.

The safe-haven dollar had its biggest one-day percentage drop in about a month on Thursday after Beijing injected new cash into the financial system and Evergrande announced it would make interest payments on an onshore bond, boosting risk sentiment.

The offshore Chinese yuan weakened versus the greenback at 6.4641 per dollar.

The decline came a day after the greenback was lifted by Wednesday’s announcement from the U.S. Federal Reserve that it will likely begin to trim its monthly bond purchases as soon as November and flagged interest rate increases may follow suit sooner than expected as the central bank moves away from its pandemic crisis policies.

“We are in one of the situations, and this doesn’t always happen, where the dollar is the beneficiary of multiple ideas,” said Joseph Trevisani, senior analyst at FXStreet.com.

“The U.S. economy does look better than most of its competitors, there is lingering fear out there over Evergrande and what else is out there in the rather untransparent Chinese economy and political system, plus the Fed appears finally ready.”

The dollar index rose 0.237%, with the euro down 0.2% to $1.1713.

Kansas City Fed President Esther George said the U.S. labor market has already met the central bank’s test to pare its monthly bond purchases, and the discussion should now turn to how its massive bondholding could complicate the decision on when to hike rates.

Cleveland Fed President Loretta Mester echoed the sentiment for a tapering this year, and said the central bank could start raising rates by the end of next year should the job market continue to improve as expected.

In prepared remarks in a listening session with a wide swath of economic players, Fed Chair Jerome Powell did not elaborate on his own economic or monetary policy outlook, which he had outlined at the close of the two-day Fed meeting on Wednesday.

Sterling weakened a day after hawkish comments from the Bank of England on Thursday pushed the pound to its biggest one-day percentage gain since Aug. 23.

The Japanese yen weakened 0.43% versus the greenback at 110.77 per dollar, while Sterling was last trading at $1.3666, down 0.36% on the day.

Cryptocurrencies slumped after China’s most powerful regulators increased the country’s crackdown on the digital assets, with a blanket ban on all crypto transactions and crypto mining.

Bitcoin, the world’s largest cryptocurrency, last fell 5.89% to $42,256.47.

Smaller coins, which generally move in tandem with bitcoin, also dropped. Ether last fell 8.08% to $2,899.10 while XRP last fell 7.2889413% to $0.93.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Chuck Mikolajczak; Editing by Dan Grebler and Sonya Hepinstall)

EUR/USD Weekly Price Forecast – Euro Forms Choppy Candlestick

The Euro has gone back and forth during the course of the trading week to form a bit of a neutral candlestick, as we are sitting just above the crucial 1.17 handle. This area has been significant support, which is likely to be a major factor in the markets going forward. At this point, the 1.16 level would be a target if we break down, but at the same time if we break to the upside of the candlestick, we could go looking towards 1.1850 level.

EUR/USD Video 27.09.21

The market is going back and forth, showing signs of hesitation. At this point in time, the market is likely to see a lot of attempts to find clarity, but at the end of the week we have seen very little in the way of decision. Ultimately, this is a market that continues to see a lot of choppy and hesitation when it comes to making a bigger move, but that is not a huge surprise when it comes to the market, as it tends to be very choppy in general. If we break down below the 200 week EMA, then it is likely that we go much lower.

To the upside, the 1.1850 level has been resistance, and if we can break above that level, then the market could go looking towards 1.20 handle. This is all about the US dollar, so you need to pay close attention to how is behaving against other currencies get an idea as to where we are going next in this pair. Quite frankly, this is a difficult paired to trade from the longer-term standpoint, but when you look at the chart, you can make an argument for a bit of a topping pattern.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Price Forecast – Euro Gives Up Gains Heading Into the Weekend

The Euro initially tried to rally during the trading session on Friday but then broke down from here to show signs of weakness again. That being said, the market looks as if the 1.17 level is going to be targeted, and if we break down through their it is likely that we could go looking towards 1.16 level. The market has been in a downtrend for a while, and therefore it is likely that we will continue to go to the downside.

EUR/USD Video 27.09.21

To the upside, the market breaking above the 1.175 level would open up the market for a move towards the 50 day EMA. The 50 day EMA of course is sloping lower and showing signs of negativity. At this point, it is very likely that the market will continue to see this as a negative area of resistance, so keep that in mind. If we break above it, that could be a huge difference, but at this point we are starting to ask questions of the US dollar strength around the world, and this will be a great indicator as to where the dollar is going against multiple other currencies.

If we turn around a break above the highs of the last couple of days, the then I think the short term downward pressure could in for a short-term move, but all things been equal, this is a market that is going to be asking questions as to whether or not we had just formed a double bottom, or are we going to continue to grind lower?

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Mid-Session Technical Analysis for September 24, 2021

The Euro is hovering slightly below a one-week high on Friday as investors moved back into the U.S. Dollar amid renewed concerns over the finances of property developer China Evergrande Group.

Today’s move follows a strong rebound rally by the common currency on Thursday that was fueled as the safe-haven dollar fell after Beijing injected new cash into the financial system, when Evergrande announced it would make interest payments on an onshore bond.

However, investors initiated a new round of safe-haven buying after some holders of its offshore bonds said they had not received coupon payments by a Thursday deadline. Traders also expressed concerns over additional dollar bond interest payments due next week.

At 11:09 GMT, the EUR/USD is trading 1.1734, down 0.0006 or -0.05%.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1755 will change the main trend to up. A move through 1.1683 will signal a resumption of the downtrend.

The minor range is 1.1755 to 1.1683. The EUR/USD is currently holding slightly above it pivot at 1.1719, making it new support.

The short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1758 to 1.1787 is potential resistance.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the pivot at 1.1719.

Bullish Scenario

A sustained move over 1.1719 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 1.1755 – 1.1758. Overtaking this area could extend the rally into 1.1787.

Bearish Scenario

A sustained move under 1.1719 will signal the presence of sellers. This could trigger an acceleration to the downside with 1.1683 a potential target, followed by the August 20 main bottom at 1.1664.

For a look at all of today’s economic events, check out our economic calendar.

Take Five: “Auf Wiedersehen Merkel, hallo…?”

1/GERMANY’S ‘MUTTI’ BOWS OUT

Sunday’s German election is a close call and stakes for Europe’s biggest economy couldn’t be higher. After 16 years of steady, centre-right leadership, Chancellor Angela Merkel will be stepping down.

Polls suggest the centre-left Social Democrats (SPD) will form a coalition with the Greens and the liberal FDP, dubbed the traffic light alliance because of the parties’ red, green and yellow colours.

But the number of undecided voters is at its highest in recent memory, so other outcomes are possible. The SPD’s Olaf Scholz is the voters’ choice to succeed Merkel, but coalition talks could take weeks, even months. Initial market reactions to the election outcome could prove premature.

-German candidates clash in last TV debate before vote as SPD lead narrows

2/DATA DIVE

The Federal Reserve has cut its 2021 U.S. growth forecasts and projects a 5.9% rate, versus 7% previously. Upcoming data will show if the coronavirus continues to undermine the recovery.

Consumer confidence in September is on tap, after August readings came in well short of estimates, dropping to a six-month low.

Markets will get a fresh view on the housing market in the form of data on home prices and home sales, while the personal consumption expenditures (PCE) index will offer a glimpse of inflation. A Reuters poll forecasts a 3.7% annual rise in the Fed’s favourite inflation gauge, a touch above 3.6% in July.

-Fed signals bond-buying taper coming ‘soon,’ rate hike next year

3/CAUTION! FRAGILE CHINA

The woes of debt-saddled Chinese developer Evergrande are gnawing at global markets. Unsurprising because the property sector has a bearing, direct or indirect, on a quarter of the country’s huge economy.

The developer has more payment deadlines next week, but the bigger picture, the sheer size of the Chinese economy, implies the risk is high of a global growth hit — commodity prices, emerging market currencies and even European elevator-makers have all felt the heat.

BIS data shows Chinese banks had around $1.6 trillion of cross-border liabilities as of early 2021. Given their exposure to real estate, through mortgage loans and lending to property companies, any implosion could send ripples worldwide.

-China’s Evergrande problem today may dent global growth tomorrow

4/HIGH HICP

The ECB reportedly expects inflation to hit 2% by 2025. Despite analysts’ scepticism, surging power prices and the seep-through elsewhere, including into inflation expectations, could mean it may not be too far off that mark.

In that light, advance readings of German and euro zone HICP — the harmonised index of consumer prices used by the ECB — due Thursday and Friday respectively — are of interest. German HICP hit a 13-year high of 3.4% in August, while consumer inflation at 3.9% was the highest since 1993.

Euro area consumer inflation expectations have doubled this year, surveys suggest, while bloc-wide HICP hit 3% in August, the highest since 2012. Power price rises have already impacted headline readings and September may show another increase.

– ECB braces for sticky inflation; eyes end of emergency stimulus, sources say

5/PICKING A PREMIER

Japan’s ruling party votes for its new leader on Wednesday, with the victor set to be the next prime minister. And it’s a tight race.

Of the four candidates, vaccine minister Taro Kono is the ostensible frontrunner, while former foreign minister Fumio Kishida is the challenger. Sanae Takaichi and Seiko Noda, also former ministers, are each vying to be the first woman in the top job but are considered long shots.

Kono is favoured by the Liberal Democratic Party’s rank-and-file, but his reputation as a maverick makes party veterans wary. Kishida is more traditional, but is hobbled by a bland image.

Should Kono not win an outright majority, the top two will contest a run-off, where Kishida is expected to have an edge.

Investors seem to be betting on Kono. Renewable energy and office tech shares that could benefit from his policies have outperformed shares in medical services, where Kishida advocates higher spending.

-Economic policy stances of candidates to be Japan’s next PM

-Investors raise bets on Kono in Japan leadership race

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao, Dhara Ranasinghe and Marc Jones in London; Lewis Krauskopf in New York and Kevin Buckland in Tokyo; Compiled by Sujata Rao; Editing by Hugh Lawson)

EUR/USD Daily Forecast – Resistance At 1.1750 Stays Strong

U.S. Dollar Tries To Rebound Against Euro

EUR/USD faced resistance at 1.1750 and pulled back while the U.S. dollar gained some ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get back above the resistance at 93.10 and is trying to develop additional upside momentum. In case this attempt is successful, it will head towards the next resistance at 93.40 which will be bearish for EUR/USD.

Today, foreign exchange market traders will focus on Ifo Business Climate report from Germany. The report is expected to show that Business Climate declined from 99.4 in August to 98.9 in September. In the U.S., New Home Sales are projected to increase by 0.5% month-over-month in August.

It should be noted that Treasury yields have moved to multi-week highs, which may provide additional support to the U.S. dollar, although it remains to be seen whether traders are ready for big moves ahead of the weekend.

Technical Analysis

eur usd september 24 2021

EUR/USD has recently made another attempt to settle above the resistance level at 1.1750 but failed to develop sufficient upside momentum and pulled back. This resistance level has already been tested many times in recent trading sessions and proved its strength.

In case EUR/USD manages to settle above 1.1750, it will gain additional upside momentum and get to the test of the next resistance level which is located at the 20 EMA at 1.1765. A successful test of the resistance at the 20 EMA at 1.1765 will open the way to the test of the next resistance level at 1.1775. If EUR/USD gets above this level, it will move towards the resistance at the 50 EMA at 1.1795.

On the support side, the nearest support level for EUR/USD is located at 1.1720. If EUR/USD declines below this level, it will move towards the support at 1.1690. A move below this level will push EUR/USD towards the support at 1.1660. In case EUR/USD manages to settle below the support at 1.1660, it will head towards 1.1630.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data and Central Bank Chatter Put the EUR and the Dollar in Focus

Earlier in the Day:

It was relatively busy start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in action this morning.

For the Kiwi Dollar

Trade figures were in focus in the early hours.

In August, New Zealand’s trade deficit widened from NZ$397m to NZ$2,144m. Year-on-year, the deficit widened from NZ$1,100m to NZ$2,940m.

According to NZ Stats,

  • Imports rose by NZ$1.08bn, compared with August 2020, leading to a record monthly trade deficit.
  • Exports were little changed, falling by NZ$42m.
  • Vehicles, parts, & accessories imports were up NZ$415m, with mechanical machinery & equipment up NZ$223m.
  • Petroleum & petrol product imports increased by NZ$207m.

The Kiwi Dollar moved from $0.70713 to $0.70704 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.11% to $0.7077.

For the Japanese Yen

In August, core consumer prices remained unchanged in August, year-on-year, which was in line with forecasts. Core consumer prices had fallen by 0.2%, year-on-year, in July.

Of greater significance were prelim private sector PMIs.

In September, the Services PMI rose from 43.5 to 47.4, while the Manufacturing PMI declined from 52.7 to 51.2.

The Japanese Yen moved from ¥110.402 to ¥110.408 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.05% to ¥109.380 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.23% to $0.7312.

The Day Ahead

For the EUR

It’s a quieter day ahead on the economic calendar. Business sentiment figures for Germany will be in focus in the early part of the European session.

Following the disappointing PMI numbers from Thursday, a larger than expected decline would test support for the EUR.

At the time of writing, the EUR was up by 0.07% to $1.1747.

For the Pound

It’s a particularly quiet day ahead on the economic calendar.

There are no material stats due out of the UK to provide the Pound with direction.

Following the BoE’s more hawkish stance on Thursday, risk sentiment would need to deteriorate to weaken the Pound.

At the time of writing, the Pound was up by 0.12% to $1.3736.

Across the Pond

It’s a relatively quiet day ahead. Key stats include new home sales figures, which should have a muted impact on the Dollar.

FED Chair Powell and other FOMC member are scheduled to speak later in the day, however, and could move the dial.

At the time of writing, the U.S Dollar Spot Index was down by 0.02% to $93.063.

For the Loonie

It’s a particularly quiet day ahead for the Loonie. There are no material stats due out of Canada later today.

The lack of stats will leave the Loonie in the hands of market risk sentiment and crude oil prices.

At the time of writing, the Loonie was up by 0.08% to C$1.2645 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

September 24th 2021: EUR/USD Prime Resistance Calling for Attention at $1.1767-1.1776

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Technical elements on the weekly timeframe reveal EUR/USD has been somewhat stationary since mid-June. Deserving attention, however, is prime support at $1.1473-1.1583, a long-term base sharing chart space with a 100% Fib projection at $1.1613 and 1.27% Fib extension at $1.1550. Note the 100% value represents a harmonic AB=CD bullish point, which brings a 1.13 BC Fibonacci extension also to table at $1.1623.

Also technically interesting on the weekly scale is the possibility of long-term sell-stops residing south of late September lows at $1.1612 (2020).

In addition, we see trend on the weekly chart has largely been bullish since early 2020.

Daily timeframe:

Quasimodo support at $1.1689 welcomed healthy buying on Thursday, clipping a portion of early-week losses.

Sustained interest to the upside on this timeframe seats $1.1900ish resistance in sight. The opening above $1.1900 shines light on prime resistance at $1.2115-1.1990 and the 200-day simple moving average at $1.1981.

Failure to command a bullish position above $1.1689 swings the technical pendulum in favour of eventually reaching Fibonacci support between $1.1420 and $1.1522 (glued to the lower side of the weekly timeframe’s prime support at $1.1473-1.1583).

Momentum studies, according to the relative strength index (RSI), shows the value moving in on the 50.00 centreline. Reclaiming 50.00+ indicates positive momentum: average gains exceeding average losses.

H4 timeframe:

The $1.1690-1.1705 decision point had its lower boundary clipped late US hours Wednesday—a direct response to the latest FOMC policy meeting. Sell-stops beneath $1.1690-1.1705 potentially helped fuel recovery gains that, in recent hours, hauled the pair above resistance at $1.1742, a previous Quasimodo support base.

Quasimodo resistance at $1.1771, therefore, demands attention.

H1 timeframe:

For those who read Thursday’s technical briefing you may recall the following (italics):

$1.1742 commanding position could swing the pendulum in favour of a test of $1.17 on the H1. And by testing the psychological level, a whipsaw south to daily Quasimodo support at $1.1689 is a potential scenario to have noted on the technical watchlist. $1.1689 bids feeding off sell-stops below $1.17 might be enough to chalk up a bullish wave.

As evident from the daily and H1 charts, the above came to fruition, aided by USD downside (DXY 0.5 percent). Not only that, additional sell-stops were tripped under the H4 timeframe’s decision point at $1.1690-1.1705.

Going forward, technical eyes are likely on prime resistance coming in at $1.1767-1.1776 on the H1, joined by supply at $1.1762-1.1774 and H4 Quasimodo resistance mentioned above at $1.1771. Interestingly, meaty stops are perhaps located a touch above the Fed-induced high at $1.1755, liquidity that may excite sellers from $1.1767-1.1776/$1.1762-1.1774 on the H1.

Observed Technical Levels:

Short-term flow is geared towards a whipsaw above Wednesday’s high at $1.1755, a move perhaps drawing sellers into the market from $1.1767-1.1776/$1.1762-1.1774 on the H1. Focus, however, is directed to $1.1767-1.1776, as this area houses H4 Quasimodo resistance from $1.1771.

$1.1767-1.1776 sellers will likely adhere to strict trade management, as daily buyers off Quasimodo support from $1.1689 could take aim at higher levels.

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

The weekly timeframe has the currency pair retesting prime support at $0.6968-0.7242.

Since printing a two-week recovery in late August, however, the unit has been fighting to entice fresh bullish interest.

Failure to command position from $0.6968-0.7242 opens up support at $0.6673. Buyers regaining consciousness, nevertheless, has prime resistance at $0.7849-0.7599 to target.

Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, the response from $0.6968-0.7242 could STILL be the beginnings of a dip-buying attempt to merge with the current trend.

Daily timeframe:

From the daily chart, attention is concentrated on Fibonacci support at $0.7057-0.7126 and prime resistance at $0.7506-0.7474.

Outside of the aforementioned areas is a Quasimodo support-turned resistance at $0.7621 and the 200-day simple moving average at $0.7596. Nearby we also note a 100% Fibonacci projection at $0.7604, a 61.8% Fibonacci retracement at $0.7585 and a 1.618% Fibonacci extension at $0.7644.

To the downside, support also falls in around $0.7021.

Those who follow the relative strength index (RSI) will acknowledge the indicator zeroing in on the 50.00 centreline, coming from below. Moving above the latter signals momentum is to the upside.

H4 timeframe:

Upbeat market sentiment and the US dollar index registering losses witnessed AUD/USD climb resistance at $0.7281 on Thursday, leaving the $0.7200-0.7218 decision point unchallenged.

Resistance drawn from $0.7317 entered the fray in recent hours, a level boasting historical significance. Should we overthrow current resistance and (potentially weak) supply, touching gloves with a decision point at $0.7395-0.7410 may be in the offing.

H1 timeframe:

Thursday saw bulls take on $0.73 and hold the level as support, a move shifting resistance at $0.7322 in the headlights. Although the said resistance is a potential headwind for the currency pair, buy-stops above the level might fuel an assault on Quasimodo resistance at $0.7339. This is a short-term level, therefore, that has the capacity to entice sellers.

Failure to contain buyers, continuation moves could shape in the direction of prime resistance from $0.7401-0.7379.

Observed Technical Levels:

Having recently observed H1 action break/retest the $0.73 figure to the upside, and understanding price is showing signs of bullish life from weekly prime support at $0.6968-0.7242, H4 resistance at $0.7281 is unlikely to deliver much to write home about.

With that being said, buyers may remain in the driving seat today, taking on the noted H4 resistance as well as H1 resistance from $0.7322 and Quasimodo resistance at $0.7339 to target H1 prime resistance at $0.7401-0.7379. Although do note that $0.7339 is well placed to welcome a short-term bearish pop.

USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

¥108.40-109.41 demand recently welcomed a bullish ripple. Yet, before getting too enthusiastic, this area has failed to ignite buyers since mid-July.

Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance may eventually emerge to familiar supply at ¥113.81-112.22.

Daily timeframe:

The uninspiring vibe out of weekly demand is demonstrated by way of a consolidation on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27.

Range resistance—thanks to surging US Treasury yields—acknowledged price action on Thursday, which if a break comes to pass brings light to neighbouring Quasimodo resistance at ¥111.11.

Based on the relative strength index (RSI), the value remains confined in similar fashion to current price movement, between 40.87 and 56.85. Technicians will recognise the indicator tests the mettle of the upper range limit, as we write.

H4 timeframe:

Thursday’s continuation rally arranged a decision point at ¥109.76-109.98, and manoeuvred price to within a stone’s throw from two Quasimodo resistances at ¥110.48 and ¥110.42. The aforesaid levels also work with a 1.272% Fibonacci extension at ¥110.37 and a 78.6% Fibonacci retracement at ¥110.44.

Note the H4 Quasimodo levels and associated Fibonacci structure resides within the daily timeframe’s range resistance at ¥110.86-110.27.

H1 timeframe:

A closer examination of price action has the H1 candles closing in on Quasimodo resistance at ¥110.32, which happens to align closely with channel resistance, etched from the high ¥109.90. A response from noted structure could turn price towards support at ¥110.11, a previous Quasimodo resistance base.

¥110.32 interest are urged to pencil in the possibility of a whipsaw higher to take in willing sellers around H4 resistance between ¥110.48 and ¥110.37. Notice that a pop higher will also trip any stops located above ¥110.32, perhaps delivering enough liquidity to persuade heavier selling interest.

Observed Technical Levels:

Short-term focus directs emphasis towards Quasimodo resistance at ¥110.32 on the H1, and adjoining channel resistance. However, as referred to in the above text, a pop higher to bring in any H4 seller interest around resistance at ¥110.48-110.37 could also be on the cards before sellers attempt to put in an appearance.

In conjunction with lower timeframe resistances, the daily timeframe’s range resistance is also currently in play at ¥110.86-110.27, alongside the chart’s RSI indicator also displaying range resistance.

The only caveat to the above, of course, is weekly demand coming in at ¥108.40-109.41, albeit an area that’s been unable to inspire much bullish activity of late.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Dollar Slumps as Risk Appetite Rebounds

Investors’ risk appetite improved after Beijing injected fresh cash into its financial system ahead of an $83.5 million bond coupon by embattled property giant Evergrande, at risk of becoming one of the world’s largest-ever corporate defaults.

Worries about Evergrande’s payment obligations and what systemic risks to China’s financial system the property giant’s difficulties pose have weighed on global financial risk sentiment in recent sessions.

“Commodity currencies are broadly higher while havens are weaker, leaving the USD trading generally lower after a firm close following the FOMC (Federal Open Market Committee),” Shaun Osborne, chief currency strategist at Scotiabank, said in a note.

The U.S. Dollar Currency Index, which measures the greenback against a basket of six rivals, was 0.5% lower at 93.037. The index, which had risen 0.25% on Wednesday, was on pace for its biggest daily percentage drop in a month but remains close to the near 10-month high touched in late August.

The offshore Chinese yuan strengthened versus the greenback at 6.4599 per dollar.

The dollar found little support from data that showed the number of Americans filing new claims for jobless benefits unexpectedly rose last week amid a surge in California.

Thursday’s improved mood boosted risk-sensitive commodity currencies, with the Australian dollar rising 0.9% and the New Zealand dollar up 1.0%.

The improved risk-appetite was reflected in Wall Street’s major equity indexes, with the S&P 500 on track for a gain of more than 1% and its largest two-day percentage gain since late July.

On Wednesday, the Federal Reserve said it will likely begin reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected.

While positive for the dollar, the boost from the Fed’s announcement was undercut by hawkish messages from several central banks in Europe, and as Norway became the first developed nation to raise rates.

Norway’s crown jumped to a 3-1/2 month high versus the euro on Thursday after the central bank raised its benchmark interest rate and said more hikes will follow in the coming months.

Sterling extended its rise on Thursday after the Bank of England said two of its policymakers had voted for an early end to pandemic-era government bond buying and markets brought forward their expectations for an interest rate rise to March.

In emerging markets, the Turkish lira plummeted to a record low after a surprise interest rate cut of 100 basis points to 18% that came despite inflation hitting 19.25% last month

Meanwhile, bitcoin extended its recovery from a sharp fall earlier this week, rising 2.42% to a 3-day high of $44,642.78.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Saqib Iqbal Ahmed and Chuck Mikolajczak; Additional reporting Sujata Rao and Saikat Chatterjee in London and Tom Westbrook in Singapore; Editing by Bernadette Baum, Will Dunham and Hugh Lawson)

Stocks Surge, Dollar Sags as Investor Risk Appetite Expands

Wall Street’s S&P 500 surged well over 1% following solid gains for European markets.

MSCI’s gauge of stocks across the globe jumped 1.06%. As it gained for a third session, the index had recovered all its losses from Monday, when it posted its biggest percentage drop in two months.

Safe-haven trades faded after benefiting earlier in the week, with gold prices dropping.

“We are seeing markets rally on the premise that while the situation in China particularly with Evergrande is not going away, the outcome is not perhaps going to be as severe or prompt some form of contagion that was originally feared,” said Craig Fehr, investment strategist at Edward Jones.

“You combine that with the fact that the tone that the Fed struck yesterday at its meeting suggests that while a reduction in stimulus is certainly coming, the Fed is not particularly eager to start tightening policy dramatically in the near term.”

The Fed said on Wednesday it will likely begin reducing its monthly bond purchases as soon as November and signalled interest rate increases may follow more quickly than expected as the U.S. central bank’s turn from pandemic crisis policies gains momentum.

In Hong Kong, shares of debt-laden property group Evergrande jumped 18% ahead of a key debt payment deadline. Fears the group’s distress could spill into the broad economy helped spark an equity sell-off to start the week.

On Wall Street, the Dow Jones Industrial Average rose 544.68 points, or 1.59%, to 34,803, the S&P 500 gained 59.11 points, or 1.34%, to 4,454.75 and the Nasdaq Composite added 146.28 points, or 0.98%, to 15,043.13.

The pan-European STOXX 600 index rose 0.93%.

Norway’s central bank raised its benchmark interest rate and said it expects to hike again in December, joining a short but growing list of nations moving away from emergency-level borrowing costs. Norway’s crown strengthened to its highest level since mid-June versus the euro.

In other currency trading, the dollar index fell 0.492% after hitting a one-month high earlier, with the euro up 0.49% to $1.1743. The Japanese yen weakened 0.34% versus the greenback at 110.15 per dollar.

Sterling was last trading at $1.3743, up 0.87% on the day, after the Bank of England said two of its policymakers had voted for an early end to pandemic-era government bond buying and markets brought forward their expectations of an interest rate rise to March.

Benchmark 10-year notes last fell 21/32 in price to yield 1.401%, from 1.331% late on Wednesday. Key Euro area bond yields also climbed after the hawkish signals from major central banks.

Oil prices rose, supported by growing fuel demand and a draw in U.S. crude inventories as production remained hampered in the Gulf of Mexico after two hurricanes.

U.S. crude gained 1.59% to $73.38 per barrel and Brent was at $77.25, up 1.39% on the day.

Spot gold dropped 1% to $1,749.66 an ounce.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Sujata Rao in London and Alun John in Hong Kong; Editing by Hugh Lawson, Alex Richardson, Steve Orlofsky and Catherine Evans)

EUR/USD Mid-Session Technical Analysis for September 23, 2021

The Euro is trading higher against the U.S. Dollar on Thursday as improved risk sentiment in global financial markets erased all the gains it notched in the previous session after the U.S. Federal Reserve flagged plans to reel in stimulus this year. A rise in U.S. Treasury yields is helping to cap gains.

AT 04:56 GMT, the EUR/USD is trading 1.1742, up 0.0052 or +0.45%.

In other news, the dollar found little support from data that showed the number of Americans filing new claims for jobless benefits unexpectedly rose last week amid a surge in California.

Additionally, while positive for the dollar, the boost from the Fed’s announcement was undercut by hawkish messages from several central banks in Europe, and as Norway became the first developed nation to raise rates.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1755 will change the main trend to up. A move through 1.1683 will signal a resumption of the downtrend.

The minor range is 1.1685 to 1.1755. In a sign of strength, the EUR/USD is currently trading on the strong side of its pivot at 1.1719, making it support.

The first short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1758 to 1.1787 is resistance.

The second short-term range is 1.1909 to 1.1683. Its retracement zone at 1.1796 to 1.1823 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is being controlled by 1.1690.

Bullish Scenario

A sustained move over 1.1690 will put the EUR/USD in a position to post a potentially bullish closing price reversal bottom. Holding above the pivot at 1.1719 indicates the buying is getting stronger.

Taking out 1.1755 will change the main trend to up. A move through the Fibonacci level at 1.1758 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the resistance cluster at 1.1787 to 1.1796 the next likely upside target.

Bearish Scenario

The inability to overcome 1.1755 will be the first sign of selling pressure. This could trigger a break into the pivot at 1.1719. Taking out this level will indicate the selling pressure is getting stronger. This could trigger a retest of the intraday low at 1.1683.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Price Forecast – Euro Rallies Towards Recent Resistance

The Euro has rallied a bit during the course of the trading session on Thursday to reach towards the 1.1725 region, an area that has been resistance more than once. That being the case, it had previously been support so I think we are trying to carve out a new range at this point. Notice that there are a lot of longer wicks just above, and that of course will suggest a “sell on the rallies” type of scenario. In that scenario, the market is going to continue to see a little bit of trouble in this area, but we are bouncing from an extreme low.

EUR/USD Video 24.09.21

At this point, the question is whether or not we just formed a double bottom? I do not necessarily believe we have yet, but we might be a little oversold at this point. If we break down below the 1.17 level on a daily close again, that would show the market yet again trying to chip away at the support and opening up the move towards the 1.16 level underneath.

If we do break above the 1.1750 level, then it is likely that we could go looking towards the 50 day EMA above, which is sitting just above the 1.18 level. Regardless, the Euro tends to be very choppy overall, as it is the domain of high-frequency traders. We are at relatively extreme lows, so I do think that we have some chopping around to do in the short term. The market breaking down below the 1.16 level could signal a massive selling opportunity, but right now that does not look likely.

For a look at all of today’s economic events, check out our economic calendar.

EURUSD Elliott Wave Cycles Look For A Support

However, the USD has seen some nice recovery already ahead of the event so it might have been priced in, thus any reversal may not be a surprise.

EURUSD is coming down from 1.1905, now approaching August levels after the FED press conference yesterday when USD bounced after some hawkish approach regarding tapering. Notice that drop from 1.1905 can even be counted in five waves so it’s a bearish trend, but again it may cause some rally in the short-term, in minimum three waves if channel resistance is broken. We still think pair will stabilize sooner or later.

EURUSD 4h Elliott Wave Analysis

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EUR/USD Daily Forecast – Euro Gains Ground Ahead Of PMI Reports

Euro Moves Higher Against U.S. Dollar

EUR/USD is currently trying to settle above 1.1720 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently moving towards the support level at 93.10. In case the U.S. Dollar Index manages to get to the test of this level, EUR/USD will gain additional upside momentum.

Today, foreign exchange market traders will focus on PMI data from EU. Analysts expect that Euro Area Manufacturing PMI declined from 61.4 in August to 60.3 in September. Euro Area Services PMI is projected to decrease from 59 to 58.5.

In the U.S., traders will take a look at Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report is expected to show that 320,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are expected to decline from 2.67 million to 2.65 million. U.S. Manufacturing PMI is expected to increase from 61.1 in August to 61.5 in September, while U.S. Services PMI is projected to decline from 55.1 to 55.

Technical Analysis

eur usd september 23 2021

EUR/USD is testing the resistance level at 1.1720. In case this test is successful, EUR/USD will move towards the next resistance at 1.1750.

A successful test of the resistance at 1.1750 will open the way to the test of the next resistance level which is located at the 20 EMA at 1.1765. In case EUR/USD gets above the 20 EMA, it will head towards the resistance level at 1.1775.

On the support side, the nearest support level for EUR/USD is located at 1.1690. This support level has already been tested several times in recent trading sessions and proved its strength.

In case EUR/USD declines below this level, it will move towards the support at 1.1660. A successful test of the support at 1.1660 will push EUR/USD towards the next support level at 1.1630. If EUR/USD manages to settle below this level, it will move towards the support at 1.1615.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Forex Technical Analysis – Weakens Under 1.1690, Strengthens Over 1.1719

The Euro is inching higher early Thursday after plunging the previous session as traders interpreted the Federal Reserve’s monetary policy statement and comments from Fed chief Jerome Powell as hawkish. The news also pushed Treasury yields higher which made the U.S. Dollar more attractive than a basket of major currencies.

At 01:54 GMT, the EUR/USD is trading 1.1694, up 0.0004 or +0.04%.

On Wednesday afternoon, the Fed held benchmark interest rates near zero as widely expected, but also indicated that rate hikes could be coming sooner than expected, and it significantly cut its economic outlook for this year.

Helping to drive the Euro lower were two factors. Firstly, Fed Chairman Jerome Powell, at his post-meeting news conference, said the committee is ready to move. This suggests a sense of urgency.

Secondly, more members now see the first rate hike happening in 2022. In June, when members last released their economic projections, a slight majority put that increase into 2023. That puts the Fed on-track to raise rates before the European Central Bank (ECB). Advantage U.S. Dollar.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the main bottom at 1.1664 will reaffirm the downtrend. Taking out 1.1755 will change the main trend to up.

The main range is 1.1664 to 1.1909. The EUR/USD is currently trading on the weak side of its retracement zone at 1.1758 to 1.1787, making it resistance.

The short-term range is 1.1909 to 1.16835. Its retracement zone at 1.1796 to 1.1823 is another potential upside target. This zone will move down as the EUR/USD moves lower.

The new minor range is 1.1755 to 1.16835. Its 50% level or pivot at 1.1719 is the nearest resistance. This level will move lower if traders extend the selling through 1.16835.

Daily Swing Chart Technical Forecast

The early direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1690.

 Bearish Scenario

A sustained move under 1.1690 will indicate the presence of sellers. The first downside target is the intraday low at 1.1683.

Taking out 1.1683 will indicate the selling pressure is getting stronger. This could trigger another acceleration to the downside with the next target the August 20 main bottom at 1.1664.

Bullish Scenario

A sustained move over 1.1690 will signal the presence of buyers. If this move creates enough upside momentum then look for a surge into the minor pivot at 1.1719.

Since the main trend is down, look for new sellers on the first test of 1.1719. Overcoming it could create enough upside momentum to challenge the resistance cluster at 1.1755 – 1.1758.

For a look at all of today’s economic events, check out our economic calendar.

How to Manage Risk in Your Forex Trading Account

Table of Content

Forex Money Management Defined

It is universally accepted that Forex money management is a set of processes that a Forex trader will use to manage the risk in their Forex trading account.

Successful Forex traders tend to accept the adage, “If I’m right on the entry, the upside will take care of itself. If I’m wrong, the downside or losses can be unforgiving.”

The underlying principle of Forex money management, or for that matter, any speculative investment, is to preserve trading capital. This doesn’t mean you won’t have any losing trades because that is impossible. The objective of Forex money management is to minimize trading losses so that they are “manageable”. That means keep your losses small and try to manage a winning trade to get the most profit out of the move.

Essentially a successful Forex trader doesn’t necessarily have more winning trades than losing trades, but rather the dollar amount of his winning traders are consistently bigger than the dollar amount of his losing trades.

The concept of money management is often used interchangeably with the term risk management. However, they are not the same. Risk management is about preparing for and managing all identifiable risks – that can include things as arbitrary as having a backup quote service or charting program. Money management, on the other hand, relates entirely on how to use your capital to grow your trading account balance without putting it in a position to risk it all.

How to Best Avoid Losing Money when Trading Forex Markets

The implementation of a Forex money management plan may be the best way to try to avoid losing money in the Forex market. No trading system is perfect nor are humans, or even robot traders. They all have similar traits (good or bad), but collectively, they do share common mistakes. These common mistakes are the ones that successful traders strive to avoid.

Successful Forex traders tend to think of trading as a business. In that business, there will be profitable trades and overall profitable days, but there will also be losses. Once again, if you want to stay in business then your profits are going to have to be greater than your losses. And once again, we are not saying that you can’t have any losses.

It is important to say at this time that yes, you can lose all your money in any investment where your funds are put at risk. So it is your job as trader/business owner to minimize the chance of that happening.

There are ways to fine tune a trading strategy i.e. optimal entry and/or optimal exit, tighter, well placed stop losses or identifying better profit objectives, with the goal to win more and lose less.

But that is not usually the main reason traders lose money in the Forex markets. The main reason tends to be having no specific money management rules to follow. Here is a list of the rules that top Forex money managers tend to follow.

Top Forex Money Management Rules to Follow

Define Your Risk Per Trade Using a Position-Sizing Model

The idea behind this rule is that a trader should risk only a small percentage of their trading capital on any one trade. Several books or papers on Forex trading preach the ‘2% rule” where a trader should risk 2% of their account on every trade.

This ‘Fixed Percentage Risk’ can actually be any amount you are comfortable with and can afford.

If your trading account has a $50,000 balance then 2% of that amount will be $1000 of risk per trade.

A $1000 risk per trade may be a huge amount to a trader with a balance of $5000 in his account. In this case, 2% risk will be $100 of risk per trade.

The reason you’ll want to risk a fixed percentage is because if the first trade is a loss then the next trade will carry a smaller amount of dollars at risk.

Taking a smaller amount of risk following a loss will allow you to ride out a losing streak longer than an individual who risks the same amount on every trade. This will buy you time and allow you to have a big enough balance to perhaps start a willing streak.

Know Your Maximum Drawdown Level

A drawdown is the difference in account value from the highest the account balance has been over a certain period and the account value after some losing trades. For example, if a trader begins with $5000 in his account and she loses $1000 then she has a 20% drawdown.

The larger the drawdown, the harder it is to become profitable.

Following a 20% drawdown, a trader would have to make 25% in the market just to get back to even. If your trading system has never shown that kind of return over a reasonable time period then your maximum drawdown rule will tell you to stop trading.

At that point, you can reevaluate your trading strategy. You can lower your fixed percentage of risk, but most of all you can relax and breathe again, allowing you to regroup and reload after you have learned from your mistakes.

Assign a Risk/Reward Ratio to Every Trade

The generally accepted rule in the trading industry is that traders should aim to have winning trades that are on average twice as big as losing trades. With this risk:reward ratio, the trader need win only a third of their trades to breakeven.

The mathematics behind this rule says if a trader choses a risk/reward ratio of 1:1, then the trader must win a higher number of trades (at least 6 out of 10) trades to be profitable. If the trader chooses a risk/reward ratio of 3:1, then they need to win fewer trades (1 in every 4 trades) to break even.

It should be noted that this rule works great on paper, but in reality a trader really has little control of the actual risk/reward he will achieve on a trade.

Furthermore, a trader may be able to control is losses through stops (provided there is no slippage), but at the same time, a trader could cut his profits by not allowing a winning trade to end naturally, for example, by hitting a trailing stop.

The best trading strategy tends to cut losses and let profits run. Over the long-run you’ll get the actual risk/reward ratio.

Essentially, a successful trader has larger average wins than average losses. The bigger the average win, the less a trader has to worry about having a high percentage of wins. For example, you can have 90% accuracy, but if you average loss is $50 per trade and your average win is $10 per trade then one average loss will wipe out 5 of your winning trades.

Use a Stop Loss and Set a Profit Objective

Using a stop loss locks in the maximum amount a trader can expect to lose in any one trade, while a profit objective order locks in the maximum amount the trader can profit.

Don’t just use dollar stops. Place a stop in a place where you are wrong on the trade.

Additionally, if your strategy has been tested for fixed profit levels then follow the rules. If your strategy calls for trailing stops to lock in profits then follow that strategy. Try to avoid mixing your exit strategies because it can skew the risk/reward ratio your trading system needs to be profitable over the long-run.

Remember, in order to be successful, you’ll need to have a few big winners to offset a series of small losses.

Only Trade with Risk Capital

Successful trading is only possible when a trader can make unemotional decisions about what to do when a trading opportunity presents itself.

If you are undercapitalized, you will trade scared. If you trade scared then you will cut corners which could be trading without a stop, taking profits too soon, doubling down on a losing trade or putting yourself in a position too big to handle. If you do any of those things then you limit your chances of success.

Only trade with money you can afford to lose.

A Busy Economic Calendar and the BoE to Keep the Markets Busy

Earlier in the Day:

It was another particularly quiet start to the day on the economic calendar this morning. There were no major stats from the Asian session to provide the markets with direction.

While there were no stats, the markets responded further to the overnight FOMC projections, statement, and press conference.

For the Majors

At the time of writing, the Japanese Yen was down by 0.03% to ¥109.810 against the U.S Dollar, with the Aussie Dollar down by 0.08% to $0.7241. The Kiwi Dollar was down by 0.06% to $0.7005.

The Day Ahead

For the EUR

It’s a busy day ahead on the economic calendar. Prelim September private sector PMIs for France, Germany, and the Eurozone are due out along with Spanish GDP numbers.

Expect the PMIs to draw plenty of interest as the markets look for any further signs of a slowdown in momentum.

At the time of writing, the EUR was up by 0.06% to $1.1694.

For the Pound

It’s a particularly busy day ahead on the economic calendar.

On the economic data front, prelim September private sector PMIs will be in focus. Expect the Services PMI to have a greater impact.

The main event of the day, however, will be the BoE monetary policy decision. With inflationary pressures lingering, will there be any decent to bring the Pound back to life?

At the time of writing, the Pound was flat at $1.3622.

Across the Pond

It’s a relatively busy day ahead. Key stats include prelim private sector PMIs for September and the weekly jobless claim figures.

Expect the jobless claims and services PMI to be the key drivers on the day.

Following Wednesday’s FOMC projections, FOMC member chatter will also influence.

On Wednesday, the U.S Dollar Spot Index rose by 0.26% to end the day at $93.450.

For the Loonie

It’s a relatively quiet day ahead for the Loonie. Retail sales figures for July will be in focus later in the day.

With little else for the markets to consider, expect today’s stats to influence.

At the time of writing, the Loonie was up by 0.01% to C$1.2771 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

September 23rd 2021: EUR/USD Testing $1.17, Reinforced by Daily Support at $1.1689

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

US hours Wednesday welcomed what appears to be a bullish Fed. While the FOMC left its target benchmark interest rate unchanged, a key note from the central bank was that ‘bond-buying may soon be warranted’. This immediately saw the US dollar—the US dollar index—spike to highs of 93.30 before withdrawing to lows ahead of 93.00 shortly after.

As evident from the H4 timeframe on EUR/USD, the aftermath of FOMC action watch the currency pair touch gloves with the $1.1690-1.1705 decision point, and subsequently confront resistance from $1.1742, a previous Quasimodo support base. Despite $1.1742 currently serving well, and the H1 timeframe’s Fibonacci cluster around $1.1756 also delivering a ceiling, traders are urged to pencil in prime resistance coming in at $1.1767-1.1776 on the H1, joined by supply at $1.1762-1.1774 and H4 Quasimodo resistance at $1.1771.

There’s not really much to discuss on the weekly scale for the time being until we connect with prime support at $1.1473-1.1583. Nevertheless, it’s important to remember the noted zone brings additional technical confluence to the table through a 100% Fib projection at $1.1613 and 1.27% Fib extension at $1.1550. In addition, we see trend on the weekly chart has largely been bullish since the early 2020.

In terms of the daily timeframe, light remains on Quasimodo support at $1.1689. Albeit sponsoring a late August bid (black arrow), action from $1.1689 failed to find approval north of late July tops at $1.1909; therefore, this ranks $1.1689 as perhaps frail support. Assuming bearish leadership on the daily, the $1.1612 and $1.1602 (September/November 2020) lows signify downside support targets, followed by Fibonacci support between $1.1420 and $1.1522 (glued to the lower side of the weekly timeframe’s prime support at $1.1473-1.1583).

Observed Technical Levels:

H4 resistance at $1.1742 (and the H1 Fibonacci cluster around $1.1756) relinquishing its spot on the chart unlocks the trapdoor for prime resistance at $1.1767-1.1776 on the H1, an area likely accepted by sellers.

Alternatively, as underlined in Wednesday’s technical briefing, $1.1742 commanding position could swing the pendulum in favour of a test of $1.17 on the H1. And by testing the psychological level, a whipsaw south to daily Quasimodo support at $1.1689 is a potential scenario to have noted on the technical watchlist. $1.1689 bids feeding off sell-stops below $1.17 might be enough to chalk up a bullish wave.

AUD/USD:

(Italics: previous analysis)

The weekly timeframe has the currency pair touching gloves with prime support at $0.6968-0.7242. Since printing a two-week recovery in late August, the pair has been fighting to entice fresh bullish interest. Failure to command position from $0.6968-0.7242 opens up support at $0.6673. Buyers regaining consciousness, nevertheless, has prime resistance at $0.7849-0.7599 to target. Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, the response from $0.6968-0.7242 could STILL be the beginnings of a dip-buying attempt to merge with the current trend.

Interestingly, the daily timeframe’s technical landscape informs traders bids are perhaps thin within weekly prime support, at least until price shakes hands with Fibonacci support at $0.7057-0.7126. Those who follow the relative strength index (RSI) will acknowledge the value journeyed through the 50.00 centreline last week and recently dipped a toe below 40.00. This highlights a bearish atmosphere until making contact with oversold territory.

Following Fed movement amid US trading Wednesday, AUD/USD took hold of H4 resistance at $0.7281 and chalked up healthy bearish interest. The $0.7200-0.7218 H4 decision point is now within touching distance.

From the H1 timeframe, alongside the aforementioned H4 resistance, Quasimodo support-turned resistance made a show at $0.7288 (sharing space with a 61.8% Fibonacci retracement at $0.7283 and a 100% Fibonacci projection at $0.7286) after the unit whipsawed through trendline resistance, taken from the high $0.7469.

Observed Technical Levels (Unchanged Perspective):

According to chart studies on the higher timeframes right now, sellers are in the driving seat, and unlikely to give way until daily Fibonacci support at $0.7057-0.7126.

This echoes a bearish vibe and consequently places a question mark on the H4 decision point at $0.7200-0.7218 and, by extension, the H1 timeframe’s support at $0.7221 and $0.72.

Bearish themes sub $0.7221 and $0.72?

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Fed Signals Bond-Buying Taper Coming ‘soon,’ Rate Hike in 2022

The moves, which were included in the Fed’s latest policy statement and separate economic projections, represent a hawkish tilt by a central bank that sees inflation running this year at 4.2%, more than double its target rate, and is positioning itself to act against it.

That action may proceed slowly, with interest rates seen rising to 1% in 2023, faster than projected by the Fed in its projections in June, and then to 1.8% in 2024, which would still be considered a loose monetary policy stance.

Inflation throughout that time would be allowed to run slightly above the Fed’s 2% target, consistent with its new, more tolerant approach to the pace of price increases, while unemployment is seen falling back to around the pre-pandemic level of 3.5%. Policymakers also downgraded their expectations for economic growth this year, with gross domestic product expected to grow 5.9% compared to the 7.0% projected in June.

Still, the shift shows movement among policymakers divided over whether the coronavirus pandemic’s ongoing impact on the economy or the threat of breakout inflation constitutes the bigger risk.

While no decisions have been made on the exact pace and timing of how the central bank will reduce its asset purchases, Fed Chair Jerome Powell said it seems “appropriate” that the taper could begin “soon” and be completed by the middle of 2022.

“Participants generally view that as long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” he said in a news conference after the end of the Fed’s latest two-day policy meeting.

Powell told reporters financial conditions would remain accommodative even after the Fed stops purchasing Treasuries and mortgage-backed securities and emphasized that the decision on the bond-buying program was separate from any actions regarding interest rates.

The Fed on Wednesday held its current target interest rate steady in a range of 0% to 0.25%.

“It’s probably a little bit more hawkish than many would have anticipated basically acknowledging that should the economy continue to grow as we have seen it would warrant a tapering to occur,” said Sam Stovall, chief investment strategist for CFRA Research in New York. “You could say it’s a tentative tapering announcement even though they did lower their 2021 GDP forecast.”

U.S. stocks extended gains after the release of the statement before retreating slightly during Powell’s news conference, with the S&P 500 index up 1.2% on the day. The dollar rose while the yield on the U.S. 10-year Treasury note edged lower.

SLOWING RECOVERY

Though acknowledging the new surge of the pandemic had slowed the recovery of some parts of the economy, overall indicators “have continued to strengthen,” the central bank’s policy-setting Federal Open Market Committee said in its unanimous policy statement.

If that progress continues “broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” it said.

The statement had been widely expected to signal that the Fed would soon begin winding down the $120 billion in monthly bond purchases it has been making to blunt the economic impact of the pandemic.

Fed officials said last December that they would continue purchasing bonds at the current pace until there was “substantial further progress” on the central bank’s goals for maximum employment and inflation.

Powell on Wednesday said officials could decide as soon as the next policy meeting in November that both of those standards have been met, based on what happens with the labor market and the broader economy, and make a decision on whether to taper.

But it was in their broader economic outlook that Fed policymakers made a less anticipated change.

The outlook for inflation jumped 0.8 percentage point for 2021 and the unemployment rate seen at the end of this year rose. In turn, two officials brought forward into 2022 their projected timeline for slightly lifting the Fed’s benchmark overnight interest rate from the current level, enough to raise the median projection to 0.3% for next year.

The move to lower GDP growth expectations for 2021 reflected concerns that the coronavirus is weighing on the economy.

“The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery,” the Fed said in its policy statement.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Howard Schneider; Additional reporting by Jonnelle Marte and U.S. Finance and Markets Breaking News teamEditing by Paul Simao)