The USD strengthened as worries about the US- Sino trade relationships intensified after a comment made by US President Trump. In an interview, US president Trump stated that he expects to actually impose additional tariffs on $200B worth of Chinese imports. We could be seeing part of a negotiation tactic on behalf of the US, ahead of the G20 meeting later in the week and the Trump-Xi meeting. Analysts mention that the USD strengthening could also be a result of a hawkish Fed as well as market nervousness which benefits the greenback in its dual nature as a safe haven. Analysts also tend to focus on the Fed’s next releases and statements which are to be made by Fed officials for further clues about the number of future rate hikes. Volatility could continue for the greenback, as statements by Fed officials are expected and the G20 meeting is getting nearer.
USD/JPY rose yesterday, clearly breaking the 113.25 (S1) resistance line (now turned to support). We could see the pair stabilising today, however should the USD continue to strengthen we could an upward trendline forming since the 23rd of the month. If the pair finds fresh buying orders along its path, we could see it breaking the 113.95 (R1) resistance line, while if it comes under the market’s selling interest, we could see it breaking the 113.25 (S1) support level and aim for the 112.72 (S2) support zone.
Euro weakens on Draghi’s comments
The euro weakened against the USD as ECB President Draghi acknowledged a possible slowdown of growth in the Eurozone. The comments practically acknowledged that the Eurozone has lost some growth momentum, however it’s not enough for the bank to stop a reversal of the stimulus previously provided. Analysts point out that the lower than expected reading of the Ifo business sentiment yesterday in conjunction with the speech by Mario Draghi at the European Parliament drove the Euro lower. The common currency had marked some gains earlier during the day as the Italian government signalled that it would be willing to discuss reducing its budget deficit. We could be seeing the single currency staying under pressure as more financial releases are due out near the end of the week.
EUR/USD during the European session yesterday, rose breaking the 1.1345 (R1) resistance line, however corrected lower during the American session and stabilized below it later on. Should the EUR remain under pressure we could see the pair dropping even lower and if the bears dictate the pair’s direction, we could see it breaking the 1.1305 (S1) support line and aim for the 1.1255 (S2) support barrier. Should on the other hand the bulls reign over the pair’s direction, we could see the pair breaking the 1.1345 (R1) resistance line and aim for the 1.1385 (R2) hurdle.
In today’s other economic highlights:
In the American session today, we get from the US the CB consumer Confidence indicator for November and later on the API weekly crude oil inventories figure. As for speakers, ECB’s Mersch, Fed’s Clarida, Chicago Fed president Evans, Minneapolis Fed president Kashkari and Atlanta Fed president Bostic speak.
USD/JPY H4
Support: 113.25 (S1), 112.72 (S2), 112.15 (S3)
Resistance: 113.95 (R1), 114.50 (R2), 115.10 (R3)
EUR/USD H4
Support: 1.1305 (S1), 1.1255 (S2), 1.1200 (S3)
Resistance: 1.1345 (R1), 1.1385 (R2), 1.1430 (R3)
