USD Remains Supported

Sep 27 19, 09:08 GMT

USD remained supported yesterday and during today’s Asian session, against a number of other currencies. Analysts tend to note that the greenback may be enjoying safe haven inflows form the heightened political instability within the US. It would be indicative that analysts mention that the positive USD trend remains despite lots of noise playing in the background. Also signs of a resilient US economy as well as a somewhat less dovish language than expected by the markets, used by Fed members recently could also have contributed to the greenbacks strengthening. We see the case for the USD to remain supported currently, yet financial releases and new political developments could overturn the current direction. USD/CHF strengthened yesterday and stabilised somewhat during today’s Asian session, failing to break clearly the 0.9945 (R1) resistance line. As the pair’s price action continues to be consistently testing the 0.9945 (R1), pushing upwards, we could see the pair having some bullish tendencies. Should the bulls be in charge of the pair’s direction, we could see it breaking the 0.9945 (R1) resistance line and aim for parity level at 1.0000 (R2), which contained prices also on the 12th of the month. Should the bears take over, we could see the pair breaking the 0.9890 (S1) support line which served the pair during the 20th-24th of the month.

While EUR hits new lows…

The common currency seems to be weakening against the USD, as it reached new two-year+ lows yesterday. However, it could prove to be incomplete to consider the move as a result of only USD strengthening, as the outlook for the common currency remain bleak. Analysts tend to note that building evidence about the economic weakness of the Eurozone tends to weigh on the common currency. Also, the different approaches within the ECB about future economic policy seem to be providing some uncertainy for the common currency. The recent resignation of Sabine Lautenscläger, which seemed to be more hawkish than dovish, could be the highlight of the latest developments for the balance of power within the ECB and may also have contributed to EUR’s bearishness. We expect EUR to remain data driven for fresh signs regarding the area’s economy, however also statements from ECB officials could affect substantially its direction. EUR/USD dropped yesterday breaking the 1.0950 (R1) resistance line, yet the drop was contained by the 1.0910 (S1) support line. As the downward trendline for the past two days remains intact, we maintain a bearish outlook for the pair’s direction. Should the pair remain under the selling interest of the market, we could see it breaking the 1.0910 (S1) support line and aim for the 1.08665 (S2) support level. Should the pair’s long positions be favored by the market, we could see the pair breaking the downward trendline and aim if not break the 1.0950 (R1) resistance line and aim for the 1.1000 (R2) resistance level.

Other economic highlights today and early tomorrow

In today’s European session, we get France’s preliminary HICP rate for September, and Eurozone’s consumer confidence and industrial sentiment indicators for September. In the American session, we get from the US the durable goods orders growth rates for August, the core PCE price index growth rate for August, the personal spending growth rate for August, the Michigan consumer sentiment for September and the Baker Hughes oil rig count. In Mondays’ Asian session we get the industrial production growth rate of Japan for August, New Zealand’s business confidence indicator for September and China’s manufacturing NBS and Caixin PMIs for September. As for speakers BoE’s Saunders, ECB’s De Guidos, BuBa President Weidman, Fed’s Quarles and Philadelphia Fed President Harker speak and BoJ is to release minutes of its last meeting.

EUR/USD H4