Last week the US dollar has grown, supported by better-than-expected US retail sales data released on Thursday that backed expectations for a reduction of asset purchases by the Fed before the end of the year.
The dollar index, a benchmark of the US Dollar value against six major currencies, grew to 93.22, 0.6%, its largest weekly percentage rise since mid-August.
The Fed will hold a two-day monetary policy meeting next week to start discussions on reducing its monthly bond purchases, while tying any actual change to U.S. job growth in September and beyond.
Most markets will likely be determined this week by the decisions made by the monetary policymakers at the Bank of Japan, the Bank of England and especially the Federal Reserve.
On Monday, Japanese banks will be closed in observance of Respect-for-the-Aged Day.
On Monday and Tuesday, Chinese banks will be closed in observance of the Mid-Autumn Festival.
The releases start Wednesday with the flash Eurozone consumer confidence index for September, which is expected by economists to fall to -5.6 from -5.3. The next day sees the release of manufacturing, services and composite PMIs for the Eurozone and its constituent countries, and many of these are also expected to be lower in September than in August.
On Thursday, Japanese banks will be closed in observance of Autumnal Equinox Day.
Finally, Friday will bring September’s Ifo business climate index for Germany, which is expected to drop to 98.5 from 99.4.
Major Currencies Performance and Signals
EUR/USD
Traders in EUR/USD and the Euro crosses would do well to look too at the opinion polls ahead of Sunday’s German Federal Election. We remain bearish because of the US Dollar’s strength.
FORECAST: SELL
Resistance: 1.1750, 1.1800, 1.1850,
Support: 1.1700, 1.1650, 1.1600,
GBP/USD
The British Pound declined on Friday because of US and domestic data releases. We remain bearish on the pair but with also watching this week’s FOMC decisions.
FORECAST: SELL
Resistance: 1.3750,1.3800, 1.3850
Support: 1.3700, 1.3650, 1.3600
AUD/USD
Chinese intentions on steel production drive iron ore prices but also AUD/USD. Energy commodities are facing supply chain issues as prices squeeze higher and the RBA minutes and FOMC are ahead, can Australian bond yields rise to turn AUD? We remain bearish.
FORECAST: SELL
Resistance: 0.7250, 0.7300, 0.7350
Support: 0.7200, 0.7150, 0.7100
USD/JPY
USDJPY restarts a fresh trading week in a muted tone. The US Dollar Index remains strong above 93.00 on mixed economic data. Coronavirus fears, geopolitical tensions keep inflow to safe-haven Yen.
FORECAST: BUY
Resistance: 110.00, 110.50, 111.00
Support: 109.50, 109.00, 108.50
USD/CAD
The Loonie moved higher after a week of consolidation around the weekly open. Risk-off mood, WTI pullback adds to the bullish catalysts. Canadian election results become the key amid light calendar, off in China, Japan.
FORECAST: BUY
Resistance: 1.2800, 1.2850, 1.2900
Support: 1.2750, 1.2700, 1.2650
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