Global markets continue to be dominated by last weeks Fed announcement. Its decision to leave rates unchanged is again raising concerns over the economy as investors remain twitchy as markets continue to experience a mild selloff. European and U.S stocks suffered the most yesterday, with the German DAX, S&P 500 and the DOW Jones suffering their biggest one day loss in almost one month.
In Asia this morning, poor manufacturing PMI data from China, 47.0 versus 47.6 expected, further compounded the misery as markets in the region experience losses.
One mans loss is another mans gain, and this certainly applies to the greenback. The USD, with the exception of the JPY, continues to strengthen against other currencies as its safe haven appeal returns. Interestingly, the Dollar index today touched its highest level in more than one month.
Today, we can expect volatility and opportunities in the market as flash manufacturing data from the Eurozone and Germany (08:30 GMT), and the U.S (13:45 GMT) is due for release.
In between this news at 13:00 GMT, ECB President Mario Draghi is scheduled to testify to the European Monetary Committee on the state of the Eurozone economy. As recent figures show, the Eurozone’s recovery continues to struggle as inflation remains a major concern, so investors will be looking for the ECB to perhaps increase its QE bond purchasing programme and provide a much needed boost.
Trading quote of the day:
“What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower.”
-William O’Neil
EURUSD
Pivot: 1.118
Likely scenario: Short positions below 1.118 with targets @ 1.108 & 1.102 in extension.
Alternative scenario: Above 1.118 look for further upside with 1.1255 & 1.132 as targets.
Comment: As long as the resistance at 1.118 is not surpassed, the risk of the break below 1.108 remains high.
GBPUSD
Pivot: 1.54
Likely scenario: Short positions below 1.54 with targets @ 1.529 & 1.524 in extension.
Alternative scenario: Above 1.54 look for further upside with 1.546 & 1.553 as targets.
Comment: The RSI is badly directed.
AUDUSD
Pivot: 0.709
Likely scenario: Short positions below 0.709 with targets @ 0.701 & 0.6985 in extension.
Alternative scenario: Above 0.709 look for further upside with 0.7115 & 0.716 as targets.
Comment: The RSI is bearish and calls for further decline.
USDJPY
Pivot: 120.3
Likely scenario: Short positions below 120.3 with targets @ 119.35 & 119 in extension.
Alternative scenario: Above 120.3 look for further upside with 120.65 & 121 as targets.
Comment: The RSI is bearish and calls for further downside.
USDCAD
Pivot: 1.321
Likely scenario: Long positions above 1.321 with targets @ 1.331 & 1.335 in extension.
Alternative scenario: Below 1.321 look for further downside with 1.317 & 1.311 as targets.
Comment: The RSI is well directed.
USDCHF
Pivot: 0.9705
Likely scenario: Long positions above 0.9705 with targets @ 0.979 & 0.9825 in extension.
Alternative scenario: Below 0.9705 look for further downside with 0.9675 & 0.964 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
GOLD
Pivot: 1136
Likely scenario: Short positions below 1136 with targets @ 1116 & 1109 in extension.
Alternative scenario: Above 1136 look for further upside with 1142 & 1148 as targets.
Comment: The RSI is capped by a bearish trend line.
OIL
Pivot: 46.7
Likely scenario: Short positions below 46.7 with targets @ 45.37 & 45 in extension.
Alternative scenario: Above 46.7 look for further upside with 47.03 & 47.35 as targets.
Comment: As long as 46.7 is resistance, likely decline to 45.37.
DAX
Pivot: 9780
Likely scenario: Short positions below 9780 with targets @ 9320 & 9235 in extension.
Alternative scenario: Above 9780 look for further upside with 10020 & 10175 as targets.
Comment: The RSI advocates for further downside.
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