FX Commentary – Impeachment And US Consumer Confidence Sent US Dollar Lower

Market Talk

– The dollar fell across the board on Tuesday as Nancy Pelosi announced a formal impeachment inquiry against President Donald Trump, while a weak consumer confidence data added to worries from the prolonged China-U.S. trade war.

– Trump confirmed on Tuesday he had withheld nearly $400 million in U.S. aid to Ukraine but denied he did so to get foreign help to smear Democratic presidential front-runner Joe Biden. House of Representatives Speaker Nancy Pelosi met with fellow Democratic lawmakers to consider impeachment of the Republican president, who has withstood repeated scandals since taking office in 2017.

– Consumer confidence fell by the most in nine months to 125.1, more than expected. U.S. consumer confidence ebbed in September as an escalation in trade tensions fanned concerns about business and labor market conditions and darkened economic outlooks in the face of the U.S.-China conflict

– Sterling gained after the UK Supreme Court ruled that Prime Minister Boris Johnson’s decision to suspend parliament for five weeks was unlawful, which was seen as making it less likely that Britain would leave the European Union without a transition agreement.

– Reserve Bank of New Zealand left rates on hold as expected at 1%. The Committee agreed that new information since the previous rate cut did not warrant a signification change to current monetary policy. The central bank left the door opened for more cuts if necessary should the economy or inflation warrant a cut.

Chart Focus USD/CHF
Key Points
1. Trading Sell USD/CHF recommendation
2. Sell USD/CHF at 0.9890. Stop at 0.9920 and target at 0.9840
3. Impeachment talk and a decline in US Consumer confidence are both not good for the US$
4. Strong resistance point with MACD hinting of more downside price movement is likely to see USD/CHF go lower

Fundamental Comments
1. Impeachment talk is likely to shifted capital away from US$ to safe haven CHF
2. US Consumer Confidence fell by the most in 9 months due to trade tension with China, is not good for the US$

Technical Comments
1. There is a strong resistance zone provided by the 20EMA and a previous low point.
2. MACD is bearish and hinting of more downside price movement

Key Levels

Support 0.98600.98400.9815
Resistance 0.98900.99250.9950

Technical Overview

USD/JPY – We had raised our profit target on Monday for this pair to 107.20 and this was filled last night. Stochastic is starting to warning of a potential low with divergence. MACD while bearish is starting to turn around. Price may have reached a temporary low and we could see a test of the high at 107.60-107.70 in the next 24 hours.

Support 107.20106.95106.65
Resistance 107.55107.80108.10

EUR/USD – Price reached a high of 1.1023 which was a former price resistance point as well. 20EMA is pointing downward but Stochastic is moving higher. MACD is still bearish but is also moving higher. If price is capped at 1.1025, we are inclined to be bearish and we are looking at a price move to 1.0965 again.

Support 1.09901.09601.0925
Resistance 1.10251.10501.1080

GBP/USD – Price’s rally was capped at the Fibonacci 50% correction point of the decline from 1.2582 to 1.2412. Stochastic is moving higher but MACD is still bearish at the moment. Momentum indicators are in conflict at the moment. If price is capped at 1.2500, we think the next direction is lower to 1.2370.

Support 1.24551.24151.2365
Resistance 1.25051.25551.2585

XAU/USD – Price has moved above 1530 which is the 62% Fibonacci correction point of the decline from 1556 to 1480. 20EMA is also bullish and pointing upwards. We are inclined towards the bullish side; however a divergence from MACD is discouraging us to get into a long position at the moment. Wait for better confirmation to get into a long position.

Support 1526.701515.301504.15
Resistance 1535.601546.351552.10

AUD/USD – Our buy call from Monday is still pending. Price reached a high of 0.6805 but has declined to 0.6775 today. We believe AUD/USD can go higher but would recommend bringing stop higher to 0.6760 while keeping target unchanged at 0.6830. Momentum indicators are both near to their extreme and could be turning up again.

Support 0.67600.67300.6705
Resistance 0.67900.68050.6835

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