20/09/2022 Daily Reports
- The EUR/USD rose after the beginning of the American session and recently climbed to 1.0029, before pulling back to the 1.0020 area. It is posting modest gains on Monday, as it continues to trade in a range, neutral to bearish in the daily chart.
- The move higher in EUR/USD took place amid a small retreat of the US dollar as Wall Street indexes turned positive. US yields are off highs but still near multi-year highs ahead of the FOMC meeting on Wednesday.
- The US central bank is expected to raise interest rates by 75 basis points on Wednesday. The combination of an aggressive Fed and a cautious tone among investors regarding signs of a global economic slowdown support the greenback. The repricing of Fed tightening risks is likely to keep the dollar bid across the board near-term. During this most recent dollar correction lower, nothing has really changed fundamentally and the global backdrop continues to favor the dollar and U.S. assets in general.
- The EUR/USD pair is trading near the 1.0020, unchanged for the day with the neutral to bearish stance in daily chart. The pair stabilized below 20 and 50 SMA, indicates bearish strength in short term. Meanwhile, 20 SMA started turning flat but continued developing below longer ones, suggests bears not exhausted yet. On upside, the immediate resistance is 1.0200, break above this level will extend the advance to 1.0280.
- Technical readings in the daily chart support the bearish stances. The RSI indicators hovering below the midlines and stabilized around 48, shows bearish strength. The Momentum indicator stabilized near the midline, indicating directionless potentials. On downside, the immediate support is 0.9875 and below this level will open the gate to 0.9800.
- GBP/USD is back to trading flat on the day as the bulls move in from the lows of 1.1355, taking on the 1.14 area again. The pair ended Monday around 1.1435, modestly up for the day and still bearish in the daily chart.
- The sentiment surrounding surging inflation and tighter monetary policy continues to run the show, favoring the US dollar more so as the UK economy fares poorly vs. the US economy. The greenback remains close to two-decade highs as per the US dollar index DXY which measures the currency against six counterparts. DXY was up at 110.18 the high on Monday, not far from 20-year high of 110.79 hit on September. 7.
- Risk-off sentiment is also contributing to a higher US dollar in the face of the aggressive tightening path that global banks are on as they try to contain uncomfortably high inflation. A slew of central banks will meet this week and Fed funds futures have priced in a 79% chance of a 75-basis-point rate hike this week and a 21% probability of a 100-basis-point increase at the conclusion of the Fed committee’s two-day policy meeting. Meanwhile, the BoE is expected to raise rates by either 50bps and 75bps.
- The GBP/USD offers bearish stance in daily chart, it maintains the downward slope and now is stabilized below all main SMAs, indicating bearish strength. Meanwhile, the 20 SMA continued accelerating south and developing far below longer ones, suggesting bears not exhausted yet. On upside, The immediate resistance is 1.1540 with a break above it exposing to 1.1740.
- Technical readings in the daily chart support the bearish stances. RSI indicator stabilized around 34, while the Momentum indicator stabilized below the midline, suggesting downward potentials. On downside, the immediate support is 1.1350, unable to defend this level will resume the decline to 1.1300.
- The XAU/USD continues losing ground through the early European session and drops to a fresh daily low, around the $1,660 area. It then recovered all losses and ended Monday around 1675, still bearish in the daily chart.
- Expectations that the Federal Reserve will stick to its aggressive rate-hike path to tame uncomfortably high inflation continue to underpin the greenback. A fall in the near-term inflation expectations for consumer prices in the US to a one-year low in September forced investors to scale back bets for a full 100 bps Fed rate hike move. The FED, however, is expected to deliver at least a 75 bps at the end of a two-day monetary policy meeting on Wednesday, which continues to underpin the greenback.
- This, in turn, remains supportive of elevated US Treasury bond yields. This, along with the prospects for a faster interest rate hike by other major central banks, further contributes to driving flows away from the non-yielding yellow metal. That said, the prevalent risk-off environment, as depicted by a fresh leg down in the equity markets, offers some support to traditional safe-haven assets. This turns out to be the only factor lending some support to gold and limiting the downside, at least for now.
- Gold price stabilized around 1675, unchanged for the day and bearish in the daily chart. The gold price stabilized below all main SMAs, suggesting bearish strength in short term. Meanwhile, the 20 SMA continued accelerating south and developing below longer ones, indicating bears not exhausted yet. On upside, the immediate resistance is 1681, break above this level will open the gate to extend the advance to 1735 area.
- From a technical perspective, the RSI indicator holds below the midline and stabilized around 35, suggesting bearish strength. The Momentum indicator struggled below the midline, suggests bearish potentials. On downside, the immediate support is 1654, below this area may resume the decline to 1610 level.
- The USD/JPY seesaws around 24-year highs above the 143.00 psychological level, for the third consecutive trading session, amidst a risk-off impulse, courtesy of fears that the Fed’s aggression would likely tip the US economy into a recession. It ended Monday around 143.20, bullish in the daily chart.
- The US consumer inflation figures for August all but cemented expectations for a more aggressive policy tightening by the Fed. In fact, the markets have been pricing in at least a 75 bps rate increase and a smaller chance of a full 100 bps hike at this week’s FOMC meeting. This remains supportive of elevated US Treasury bond yields, which continue to act as a tailwind for the greenback and is offering support to the USD/JPY pair.
- In contrast, the Bank of Japan has been lagging far behind in the process of policy normalization and remains committed to continuing with its monetary easing. This marks a big divergence in comparison to a more hawkish stance adopted by other major central banks, which continues to undermine the Japanese yen and provide an additional lift to the USD/JPY pair. That said, a combination of factors might keep a lid on any further gains.
- The USD/JPY pair stabilized around 143.20, up for the day and bullish in the daily chart. The price still maintains the upward slope and stabilized above all main SMAs, suggests bullish strength. Meanwhile, 20 SMA continued accelerating north and developing above longer ones, indicating bulls not exhausted in the long term. On upside, overcome 145.00 may encourage bulls to challenge 146.00, break above that level will open the gate to 147.00.
- Technical indicators suggest the bullish strength. RSI stabilized around 66, while the Momentum indicator continued developing above the midline, suggests upward potentials. On downside, the immediately support is 142.50, break below this level will open the gate to 140.00 area.
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- DJI made a strong rally after retest low 30640 area. It climbed to 31182 high and ended Monday nearby, bullish in the hourly chart. It stabilized above 20 and 50 SMA, suggests bullish strength. Meanwhile, the 20 SMA started turning north and heading towards longer ones, suggesting bulls not exhausted yet. On upside, overcome 31200 may encourage bulls to challenge 31400, break above that level will open the gate to 31700.
- Technical indicators suggest the bullish strength, developing above the midline. RSI stabilized around 64, while the Momentum indicator stabilized in positive territory, suggests upward potentials. On downside, the immediately support is 30800, break below this level will open the gate for more decline to 30400 area.
- Brent under the strong sell pressure on the first half of the day, tumbled to low 88.50 area. It then made a U turn, recovered all losses and back to 91.90 to ended Monday, bullish in the hourly chart. The price stabilized above 20 and 50 SMAs, suggests bullish strength in short term. Meanwhile, the 20 SMA started turning flat but continued developing below longer ones, indicating bears not exhausted yet. On upside, overcome 92.70 may encourage bulls to challenge 94.70, break above this level will open the gate to 95.80.
- Technical indicators suggest the directionless movement, hovering near the midline. RSI stabilized around 57, while the Momentum indicator continued developing in positive territory, suggests upward potentials. On downside, the immediately support is 90.00, break below this level will open the gate for more decline to 87.30 area.
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