The USD bulls may start losing steam, as the Fed’s officials made some worrying comments about global growth and trade wars. Comments made by Fed’s Richard Clarida indicated caution about a slowdown in global growth and that it could relate to the outlook of the US economy. The comments were indirectly confirmed by Dallas Fed President Robert Kaplan, who said that he is seeing some slowdown in Europe and China. Analysts point out that the market may perceive the comments as hints of a possible slowdown of the Fed’s future rate hike path. New York Fed president John Williams will be speaking later today and volatility could rise again for the greenback.
EUR/USD rose on Friday, breaking the 1.1345 (S2) and the 1.1385 (S1) resistance lines (now turned to support) and stabilised above it. We could see the pair continuing to trade in a bullish market should the USD side remain under pressure. Also EU economic commissioner’s Moscovici, speech in Rome today could stir some volatility for the EUR side. Should the pair find fresh buying orders along its path we could see it breaking the 1.1430 (R1) resistance line and aim for the 1.1490 (R2) resistance level. Should the pair come under selling interest, we could see it breaking the 1.1385 (S1) support line and aim for the 1.1345 (S2) support barrier.
JPY strengthens against USD, on rising US-Sino trade frictions.
The JPY strengthened against the greenback on Friday, as US-Sino tensions escalated further on comments made by US Vice President Pence. The comments made, included calling nations to avoid loans that would leave them indebted to Beijing. Analysts point out that the comments made, strengthen concerns of a wider escalation in the US-Sino trade relationships. Also Pence said that the US isn’t in a rush to end the trade war and would “not change course until China changes its ways”. The comments reduced expectations of a possible deal or positive developments from the meeting of US president Trump and Chinese President Xi, near the end of the month. We would like also to mention the possibility of Vice President Pence’s comments being part of a US tactic ahead of the Trump-Xi meeting, however, both countries had indicated in the past that the tensions could linger on for a longer period of time. As a safe haven, the Yen seems to enjoy support, also from the risks regarding Brexit and the Italian budget issue.
USD/JPY dropped on Friday, breaking the 113.25 (R1) support line (now turned to resistance) and testing the 112.72 (S1) support level. We could see the pair continue to trade in a bears market, as the USD side seems to be in a weak position right now. Should the bears continue to dictate the pair’s direction we could see the pair breaking the 112.72 (S1) support line and aim for the 112.15 (S2) support level. Should the bulls take over, we could see the pair breaking the 113.25 (R1) resistance line.
In today’s other economic highlights:
In today’s European session we get Eurozone’s current account balance for September. Focus may be turned to today’s speakers, as EU’s economic commissioner Pierre Moscovici and New York Fed President John Williams speak.
As for the rest of the week:
On Tuesday, we get Germany’s PPI for October, and from the US the number of Building Permits and Housing starts for October and in the UK the inflation hearings will be held. On Wednesday from the US, the Durable goods orders growth rates for October, the number of Existing Home sales for October and the Michigan Consumer Sentiment for November are due out. On Thursday, Japan’s CPI rates for October are to be released as well as ECB’s account of its last monetary policy meeting. On Friday, we get Japan’s Mfg PMI for November, Germany’s GDP for Q3, a number of preliminary PMI’s affecting the Eurozone for November, Canada’s CPI rates for October and Canada’s retail sales for September.
USD/JPY H4
Support: 112.72 (S1), 112.15 (S2), 111.60 (S3)
Resistance: 113.25 (R1), 113.95 (R2), 114.55 (R3)
EUR/USD H4
Support: 1.1385 (S1), 1.1345 (S2), 1.1305 (S3)
Resistance: 1.1430 (R1), 1.1490 (R2), 1.1550 (R3)
