EUR/USD is seeing fresh volatility thanks to global risk sentiment souring on geopolitical news. Could this move draw in more sellers as bearish price patterns are forming?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12168.39 -1.13% FTSE: 7258.82 -0.45% S&P 500: 2967.40 +0.03% DJIA: 26887.20 +0.30% |
US 10-yr 1.665% +0.03 Bund 10-YR -0.605% -0.011 UK 10-YR: 0.503% -0.026 JPN 10-YR: -0.252% -0.015 |
Oil: 55.88 -2.46% Gold: 1533.50 -0.43% Bitcoin: 8409.29 -1.49% Etherium: 168.25 -1.24% |
Fresh Market Headlines & Economic Data:
- U.S. House Democrats plunge into Trump impeachment inquiry
- U.S. mortgage applications post biggest drop since late 2016: MBA
- U.S. sales of new single‐family houses in Aug. 2019 were at a seasonally adjusted annual rate of 713K, 7.1% above Jul. 2019
- Bitcoin near three-month lows after tepid response to NYSE owner’s futures
- China’s economy struggling across all sectors, Beige Book says
- Gross U.K. mortgage lending across the residential market in Aug 2019 was £24B, 3.2% lower y/y
- U.K. Retail sales fall for fifth month in a row – CBI Distributive Trends Survey
- PM Johnson faces hostile parliament as Brexit chaos deepens
- UK Liberal Democrats to try to remove no-deal Brexit threat more quickly
- New Zealand trade balance was a deficit of $1.6B in August 2019
- New Zealand central bank stands pat, flags scope for more stimulus
- BOJ ready to ease again if price momentum lost, risks grow: Masai
- BOJ meeting minutes: Reiterates continued easing, sees that Japan’s economy as moderately expanding; global macro risks increasing
- In August, Japan services producer prices index rises 0.6% y/y to 102.9 vs. a 0.6% y/y rise in July
- Bank of Japan’s Core CPI index grew 0.4% in August vs. 0.6% rise in July
Upcoming Potential Catalysts on the Forex Calendar:
- Fed’s Kaplan speaks in moderated Q&A at 12:00 am GMT (Sept. 26)
- German GfK Consumer sentiment at 7:00 am GMT (Sept. 26)
- ECB Economic Bulletin at 9:00 am GMT (Sept. 26)
- Euro area M3 money supply & Private loans at 9:00 am GMT (Sept. 26)
- U.S. GDP q/q, Goods trade balance, Wholesale inventories, & unemployment claims at 1:30 pm GMT (Sept. 26)
What to Watch: EUR/USD
We’re seeing a strong rally in the Greenback against the major currencies today, likely on the recent slew of geopolitical risks hitting the news wires, including calls for impeachment of U.S. President Donald Trump and rising trade tensions after Trump’s negative comments on China’s trade practices at the U.N. General Assembly. And with potential catalysts coming from the Europe (ECB head Draghi’s speech) and the U.S. (GDP, housing, inflation data) in the final days of the week, the break down in EUR/USD looks very interesting.
On the one hour chart above of EUR/USD, we can see a very clear breakdown from a strong area of interest around the 1.1000 handle. There’s also a clear pattern of lower ‘highs’ ahead of the breakdown showing the total control the bears have had over the last two weeks. So, the current market is obviously in the bears favor and if upcoming speech from Draghi signals more stimulus and/or the U.S. gives us more positive economic surprises, the next support area just below 1.0950 is a likely reachable target–and it may not hold long as support if geopolitical risks continue to rise. This market looks shortable from current levels up to the falling ‘highs’ pattern, where exactly is all dependent on the each individual trader.
The bull argument on EUR/USD is pretty tough right now, but if we do see the impeach story and/or the U.S.-China trade sentiment flip, the Greenback COULD see sellers. Gotta emphasize the “could” as positive developments in the U.S.-China trade situation tends to be bullish for the Greenback. It may take very weak U.S. economic updates on Friday to really get bearish dollar momentum going, and if that is the case and the falling ‘highs’ pattern is broken, look for a move up to the next resistance area around 1.1050 – 1.1075.