FX Commentary – EUR/USD Is Well Supported

– A surprisingly strong UK GDP send Sterling higher but political uncertainty send the British pound lower again after   British parliament rejected to hold an early general election before the Oct. 31 Brexit deadline.

– The euro rose on Monday after a report that Germany may boost fiscal stimulus increased hopes that governments will act to boost growth in the region, giving the euro a pop higher to 1.1067. The single currency fell as investors remained convinced the European Central Bank would introduce a new wave of monetary policy stimulus at its meeting on Thursday.

– AUD/USD jumped to a five-week high of 0.6874 against the U.S. dollar this morning as traders became more optimistic that China would withstand the impact of trade disputes with the United States, after its central bank cut its reserve rate ratio.

– Gold fell to an over two-week low on Monday, briefly breaking below the key $1,500 support, as renewed risk appetite and gaining U.S. yields outweighed support for bullion from expectations for interest rate reductions by the US central banks.

– Crude Oil had jumped 2% as economic growth worries receded and sending USD/CAD to a low of 1.3138. The loonie may have hit a low with signs on the 4-hourly chart, hinting of a possible low and corrective rally ahead.

Chart Focus EURUSD
Key Points
1. Buy USD/JPY recommendation
2. Buy USD/JPY at 107.20. Stop at 106.90 and profit target at 107.95
3. Reduction in trade tension has reduced demand for safe haven JPY and interest rate is in the US$ favour
4. Price is supported at the previous high and momentum indicators are showing a last push to the Fibonacci 161.8% point.

Fundamental Comment
1. Reduction in trade tension has reduced demand for safe haven JPY
2. Interest rate differential is in the US dollar’s favour.

Technical Comments
1. Price is supported by a previous high and a Fibonacci 127% support
2. MACD and Stochastic are both rising.

Key Levels

Support 107.20106.90106.65
Resistance 107.60107.90108.10

Technical Overview

EUR/AUD – Price reached a low of 1.6046 but the decline does not seem complete. We think price will be capped at the 20EMA point of 1.6110 and there will be one more drop to 1.6030 to complete this decline. Stochastic is rising but MACD is still bearish. Both MACD lines are also far away from the zero line, hinting of a strong bearish trend.

Support 1.60751.60451.6015
Resistance 1.61151.61551.6200

AUD/USD – Our buy call from Sep 4th was closed last night when price reached a high of 0.6874. We made a profit of 100 pips over a 5 calendar-day period (3 trading days). MACD is still bullish but has given bearish divergence warning of a possible high. 20EMA is bullish and its gradient steep. We will wait for better trading opportunity

Support 0.68350.68050.6760
Resistance 0.68750.68950.6925

GBP/USD – Price dropped to a low of 1.2232 yesterday and this could be the correction we have been looking for. Price has rallied to a high of 1.2383. However, we could be near to a possible high and MACD and Stochastic are both warning with divergences. 20EMA is still rising and a price move below this would confirm the reversal

Support 1.23301.22951.2250
Resistance 1.23851.24151.2455

XAU/USD – The price decline continued for a 3rd day and the decline may continue lower to 1478. Stochastic and MACD are still declining and 20EMA has started to turn down and bearish. Overall the trend is still bullish and once this correction is over, price is likely to move higher again in line with declining US interest rate.

Support 1486.101474.251460.20
Resistance 1498.251510.401524.60

EUR/USD – Price dropped to a low of 1.1021 yesterday, filling our buy call at 1.1025. Price is currently at 1.1040 and our view remains the same as yesterday. We would recommend bringing stop higher to 1.0995 and keep profit target at 1.1110. Stochastic is rising and MACD is bullish. 20EMA is rising as well.

Support 1.10101.09751.0945
Resistance 1.10551.10851.1120

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