What happened in the US session?
The Unemployment Claims news results were better than expected, the actual data was 216K, which was lesser than the forecasted data of 232K. Since the dollar index (DXY) and Gold have a negative correlation, this led to an increase in the dollar index (DXY), and caused Gold to plunge.
What does it mean for the Asia Session?
With no major economic news on the calendar for the Asia session, we can expect the DXY to become bearish due to the bearish divergence that was present after DXY made a higher high, and thus causing the Euro and gold prices to drop.
The Dollar Index (DXY)
Key news events today
FOMC Member Barr Speaks (1:00 pm GMT)
What can we expect from DXY today?
Federal Reserve Governor Michael Barr is due to participate in a moderated discussion at the Federal Reserve Bank of Philadelphia Seventh Annual Fintech Conference where he may drop clues on the upcoming FOMC meeting next week. His remarks could have a major impact on the direction of the DXY.
Technical
The DXY chart presently demonstrates a bearish momentum, indicating a predisposition for further downward movement.
The 1st support level at 104.53 and the 2nd support level at 103.94 are both recognized as overlap supports, underlining their significance in potentially halting price declines.
Conversely, on the resistance side, the 1st resistance at 105.29 is classified as a swing high resistance, while the 2nd resistance at 105.86 also functions as a swing high resistance.
Furthermore, it is worth noting that the Relative Strength Index (RSI) is exhibiting bearish divergence in comparison to the price. This observation implies an increased likelihood of a swift and substantial price decline in the near term.
The Euro (EUR)
Key news events today
German CPI (6:00 am GMT)
What can we expect from EUR today?
The German consumer price inflation rate moderated to 6.1% YoY in August 2023, a marginal decline from 6.2% in the previous month based on the preliminary estimate. Should the final reading print lower than the estimate, this could cause the Euro to weaken.
Technical
The EUR/USD chart currently maintains a bearish momentum, as indicated by its position within a bearish descending channel.
There’s a potential for a bearish continuation towards the first support level at 1.0667. This support is significant due to its alignment with swing low support, the presence of the 161.80% Fibonacci Extension, and the -61.8% Fibonacci Expansion, indicating a strong Fibonacci confluence.
On the resistance side, the first resistance at 1.0741 is identified as an overlap resistance, while the second resistance at 1.0773 also functions as a pullback resistance. These levels could potentially act as barriers to any bullish movements.
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
The Pound was in a descending parallel channel, and it bounced off a support level, which was at the bottom of the descending parallel channel. Price is starting to rise towards a pullback resistance level, and could possibly make a correction to the upside. Hence, we are expecting bullishness from GBP/USD and GBP/JPY.
Technical
The GBP/USD chart currently exhibits a bearish momentum, characterized by its position within a descending channel.
In the short term, there’s a possibility that the price could rise towards the first resistance level at 1.2533 before potentially reversing off it and dropping towards the first support level at 1.2448.
The first support at 1.2448 is identified as an overlap support and aligns with the 127.20% Fibonacci Expansion, adding to its significance as a potential area of price support.
Another first support at 1.2369 is marked as an overlap support, suggesting that historical price action has found support in this area.
On the resistance side, the first resistance at 1.2533 is designated as a pullback resistance, while the second resistance at 1.2603 is also identified as an overlap resistance. Additionally, there’s an intermediate resistance at 1.2495, marked as a pullback resistance
The Canadian Dollar (CAD)
Key news events today
Employment Change (12:30 pm GMT)
Unemployment Rate (12:30 pm GMT)
What can we expect from CAD today?
Canada’s equivalent of the US NFPs will be released today and could have a major impact on the direction of USD/CAD. The unemployment rate has increased over the past three months with the latest rate at 5.5% – the latest estimate for the month of August points to another increase to 5.6%. Canada’s labour market has lost jobs in two out of the last three months but the forecast for August indicates a return to growth with approximately 19k jobs to be added to the labour mark.
Technical
The USD/CAD chart currently indicates a bullish overall momentum, suggesting a potential upward trend in price movement.
There’s a possibility of a bullish continuation towards the first resistance level at 1.3743. This resistance is identified as an overlap resistance and aligns with the 161.80% Fibonacci Extension, signifying a strong potential resistance zone.
On the support side, there are two levels to watch. The first support at 1.3636 is considered significant as it represents an overlap support. Additionally, the second support at 1.3562 is noted as a pullback support, reinforcing its role as a potential area of price support.
Furthermore, the second resistance at 1.3801 is identified as an overlap resistance, which could act as a barrier to any potential bullish movements.
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The Aussie was in consolidation overnight, and price was in a range. We can expect AUD/USD to continue ranging, until a breakout actually happens. AUD/USD could potentially breakout and fall to the downside as it is still currently in a bearish momentum. Hence, we can expect AUD/USD to be bearish since there is a possibility that a bearish pennant could be formed.
Technical
The AUD/USD chart currently reflects a neutral overall momentum, indicating a lack of a clear trend in price movement.
There’s a possibility that the price could oscillate within a range defined by the first support level at 0.6338 and the first resistance level at 0.6386.
The first support at 0.6338 is identified as an overlap support and is also aligned with the 127.20% Fibonacci Projection, potentially making it a significant level for price support.
Additionally, the second support at 0.6277 is noted as a pullback support and aligns with the 161.80% Fibonacci Projection, further reinforcing its role as a potential area of price support.
On the resistance side, the first resistance at 0.6386 is considered significant as it represents an overlap resistance, while the second resistance at 0.6441 is marked as a pullback resistance.
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The Kiwi was in a range overnight, however, it is starting to show signs of bullishness, and broke above the overlap resistance. Nonetheless, we should monitor the NZD/USD, and see if price is able to close above this overlap resistance. If price closes above, then we can expect slight bullishness from NZD/USD.
Technical
The NZD/USD chart currently exhibits a neutral overall momentum, indicating a lack of a clear trend in price movement.
There’s a potential scenario where the price may fluctuate within a range defined by the first support level at 0.5800 and the first resistance level at 0.5889.
The first support at 0.5800 is identified as an overlap support and is also aligned with the 127.20% Fibonacci Extension, potentially making it a significant level for price support.
Similarly, the second support at 0.5861 is noted as an overlap support and aligns with the 161.80% Fibonacci Extension, reinforcing its role as a potential area of price support.
On the resistance side, the first resistance at 0.5889 is considered significant as it represents an overlap resistance, while the second resistance at 0.5930 is marked as a pullback resistance.
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
USD/JPY formed a double top previously, and price did a retest to the neckline of this double top pattern overnight. We could potentially see USD/JPY fall further since this double top pattern indicates a bearish reversal. Price could drop further to an overlap support level, dropping further than last night’s price. Furthermore, since we expect bearishness from DXY, USD/JPY could possibly continue its bearish momentum. Therefore, it would be wise to monitor USD/JPY today and see how price reacts.
Technical
The USD/JPY chart currently maintains a bearish overall momentum. There’s a potential scenario where the price could rise towards the first resistance level at 148.76 in the short term before potentially reversing off it and dropping towards the first support.
The first support at 146.50 is identified as an overlap support, indicating historical instances of price finding support around this level. Similarly, the second support at 144.82 is also noted as an overlap support, further reinforcing its significance as a potential area of price support.
On the resistance side, the first resistance at 148.76 is considered significant as it represents swing high resistance. Additionally, the second resistance at 148.76 is also identified as swing high resistance.
