On a quite kick start for the week, the U.S. Dollar is consolidating near Friday’s established highs with investors unwilling to bet towards a rebound/consolidation of the U.S. Dollar even after the dollar index (an indicator tracking the U.S. Dollar against 6 major currencies) has recorded an 8% increase in its price for the year. The U.S. economy added 248K new jobs last month, and the unemployment rate fell to 5.9% its lowest since July 2008.
EUR/USD broke below the indicated support level of 1.2570 last Friday amidst the stronger than expected released U.S. Non Farm Payrolls data. The pair moved fast towards 1.25 levels which provided support on Friday and early this morning. Today’s and this week’s puzzle for the traders is whether 1.25 level will hold and the pair will rebound or consolidate, or there will be another break lower opening the way towards 1.2286 and 1.2041 thereafter before the yea end.
USD/JPY attempted to challenge on Friday the 110 level, failing to establish a break above there. The pair is now trading lower at 109.40 but the bias remains on the upside as the pair trades near its post financial crisis highs. August 2008 high remains the initial target for the pair at 110.65, and December’s 2007 high at 114.65 thereafter.
GBP/USD broke lower than its pre referendum lows (1.6050) and it even moved further to violate the psychological level of 1.60 on Friday post data trading session. The pair is now trading at 1.5970, but on the daily chart it looks a bit oversold with the RSI index below 30 for the second time the past month. Technically speaking, the pair is now looking to challenge November’s 2013 low 1.5853, before June’s 2013 peak at 1.5750. Fundamentally however, with the BoE deciding on Thursday its monetary policy for this month we would not be surprised if the pair rebounds as the reasons for the GBP selloff seems to have been priced in, and maybe overpriced already.
The Gold spot metal lost the psychological level of 1200$/ounce on Friday, and it found support just before touching January’s low at 1183$/ounce. XAU/USD which is now flat for the year, is looking for a support level in order to consolidate and maybe rebound. The target level of 1180 (4-year lows) has now been established, and will be interesting to see whether the spot metal rebounds up from here and for the rest of the year, or it seeks to establish new lows for the last 4-years.
German Construction PMIs will be released at 07:30 GMT and Eurozone retail PMI at 08:10 GMT. Tomorrow early morning Reserve Bank of Australia will announce its October’s rate decision at 03:30 GMT (October 7th).
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.