What happened in the US session?
With US markets closed for Labor Day, it was an extremely quiet trading session as the dollar index (DXY) ranged between 104.00 and 104.20 while gold prices traded around the $1,940/oz region.
What does it mean for the Asia Session?
The Reserve Bank of Australia (RBA) will be announcing their cash rate statement later this morning at 4:30 am GMT where they are likely to keep the rate on hold at 4.10% for the third meeting in a row. The Aussie dollar is currently trading around 0.6450 this morning and could see downside action should the RBA keep rates on hold along with a neutral outlook in respect to their monetary policy stance.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
US markets will resume regular trading hours today after yesterday’s Labor Day holiday and we can expect trading volume to revert back to the usual level of activity later today. The DXY trades above 104.00 this morning and appears to be waiting for the next catalyst to trigger a move in either direction.
Technical
The DXY chart exhibits a bullish momentum, indicating an upward trend in price movement. This sentiment is supported by the price’s position within a bullish ascending channel, suggesting the potential for further upward momentum.
There’s a potential scenario for a bullish continuation towards the 1st resistance level. The 1st support at 103.40 holds significance as a pullback support, indicating that historical price action has found support around this level during pullbacks.
The 2nd support at 103.40 is identified as an overlap support, reinforcing the notion of historical support around this area. This adds to the potential strength of this support level.
In terms of resistance, the 1st resistance at 104.43 gains importance due to its alignment with a swing high resistance level. This suggests that historical price action has faced resistance around this level.
Additionally, the 2nd resistance at 104.71 is marked as a swing high resistance, further emphasizing its potential significance as a level where price might encounter resistance.
The Euro (EUR)
Key news events today
Services PMI (8:00 am GMT)
What can we expect from EUR today?
The services sector in the Eurozone fell into contraction for the first time in eight months when the flash report was released on 23rd August. The final forecast For August’s survey also points to reading below 50 which signals contraction for this sector. A weaker than expected reading could cause the Euro to weaken.
Technical
The EUR/USD chart reflects a bearish momentum, indicating a downward trend in price movement. This sentiment is supported by the price’s position within a bearish descending channel, suggesting the potential for further downward momentum.
There’s a potential scenario for a bearish continuation towards the 1st support level. The 1st support at 1.0741 is identified as an overlap support and aligns with the -27% Fibonacci Expansion level. This confluence of support factors strengthens its potential as a key support zone.
The 2nd support at 1.0667 is noted as a multi-swing low support, highlighting historical instances of the price finding support around this level. This adds to the significance of this support level.
On the resistance side, the 1st resistance at 1.0840 is marked as pullback resistance, indicating that historical price action has faced resistance around this level during pullbacks.
Additionally, the 2nd resistance at 1.0939 is identified as an overlap resistance, further reinforcing its potential significance as a level where price might encounter resistance.
An intermediate support level at 1.0771 is recognized as a multi-swing low support, adding to its importance as a potential area where price could find support during pullbacks.
The Pound (GBP)
Key news events today
Services PMI (8:30 am GMT)
What can we expect from GBP today?
UK’s services activity also fell into contraction territory for the first time in seven months when the flash report was released on 23rd August. The final forecast For August’s survey also points to reading below 50 which signals contraction for this sector. A ‘softer’ reading is likely to cause the Pound to weaken.
Technical
The GBP/USD chart indicates a bearish momentum, signaling a downward trend in price movement. This sentiment is reinforced by the price’s position below a significant descending trend line, hinting at the potential for continued bearish momentum.
A potential scenario involves a bearish reaction at the 1st resistance level, potentially leading to a drop towards the 1st support.
The 1st support at 1.2564 is identified as a multi-swing low support, indicating historical instances of price finding support around this level. This adds to its importance as a potential support zone.
Another 1st support at 1.2504 is noted as an overlap support, suggesting that historical price action has found support in this area.
Looking at resistance levels, the 1st resistance at 1.2624 is marked as an overlap resistance, indicating historical instances of price encountering resistance at this level.
Furthermore, the 2nd resistance at 1.2724 is also identified as an overlap resistance, with the added significance of aligning with the 61.80% Fibonacci Projection level, enhancing its potential as a resistance zone.
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
With renewed demand for the US dollar emerging today, USD/CAD climbed above 1.3600 and could remain elevated today.
Technical
The USD/CAD chart is currently displaying an overall bullish momentum, which suggests an upward trend in its price movement. This positive momentum is attributed to price bouncing off the bullish Ichimoku cloud, indicating favourable conditions for further bullish movement towards the 1st resistance level.
The 1st resistance level at 1.3633 is identified as a multiple swing-high resistance. In addition, the 2nd resistance level at 1.3668 is identified as a swing-high resistance that aligns with the 127.20% Fibonacci extension level.
To the downside, the 1st support level at 1.3569 is identified as an overlap support. Similarly, the 2nd support level at 1.3502 is also identified as an overlap support that aligns with the 50.00% Fibonacci retracement level.
The Australian Dollar (AUD)
Key news events today
RBA Cash Rate Statement (4:30 am GMT)
What can we expect from AUD today?
The Reserve Bank of Australia (RBA) will be announcing their cash rate statement later this morning at 4:30 am GMT where they are likely to keep the rate on hold at 4.10% for the third meeting in a row. The Aussie dollar is currently trading around 0.6450 this morning and could see downside action should the RBA keep rates on hold along with a neutral outlook in respect to their monetary policy stance.
Technical
The AUD/USD chart is currently demonstrating a bearish momentum, with price having broken below the intermediate support level at 0.6440. This break suggests the potential for further bearish movement towards the 1st support level.
The 1st support level at 0.6386 is identified as a pullback support while the 2nd support level at 0.6338 also serves as a pullback support, further reinforcing its significance as a potential area of price support.
To the upside, the 1st resistance at 0.6506 is marked as an overlap resistance. Similarly, the 2nd resistance level at 0.6606 is also identified as an overlap resistance that aligns with the 50.00% Fibonacci retracement level.
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The Kiwi is one of the weakest currencies this morning along with the Aussie dollar. With the RBA meeting coming up at 4:30 am GMT, the Kiwi is likely to follow the direction of its Pacific neighbour.
Technical
The NZD/USD chart is currently exhibiting a bearish momentum, which is attributed to the price crossing below the Ichimoku cloud. This crossing indicates the potential for further bearish movement towards the 1st support level should price also break below the intermediate support level at 0.5917.
The 1st support level at 0.5889 is identified as a pullback support while the 2nd support level at 0.5862 is also identified as a pullback support that aligns with the 127.20% Fibonacci extension level.
To the upside, the 1st resistance at 0.5995 is marked as an overlap resistance that coincides with the 23.60% Fibonacci retracement level. Furthermore, the 2nd resistance level at 0.6050 is identified as a pullback resistance.
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
With demand for the US dollar picking up this morning, USD/JPY is rising towards 147.00 and is likely to remain elevated today.
Technical
Overall momentum of the chart: Bullish
The USD/JPY chart indicates a bullish overall momentum, suggesting a tendency towards upward price movement.
There’s potential for a bullish continuation towards the 1st resistance level.
The 1st support at 144.69 is recognized as an overlap support, reflecting historical instances of the price finding support around this level.
Looking at resistance levels, the 1st resistance at 147.24 gains significance due to its alignment with the 127.20% Fibonacci Extension, suggesting a potential point of resistance.
The 2nd resistance at 148.76 is also identified as a swing high resistance, indicating historical price action encountering resistance in this region.
Additionally, an intermediate resistance at 146.59 is noted as a pullback resistance, potentially serving as a temporary obstacle to a bullish movement.
