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We could see more action for the Greenback soon depending on the performance of both candidates in the upcoming first U.S. Presidential debate.

If so, will it bring buyers or sellers to EUR/USD as it bounces from its current downtrend?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/GBP ahead of data from Germany & the U.K., so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 12846.67 +3.03%
FTSE: 5950.54 +1.85%
S&P 500: 3350.87 +1.59%
DJIA: 27676.41 +1.85%
US 10-YR: 0.661% +0.002
Bund 10-YR: -0.526% -0.002
UK 10-YR: 0.201% +0.011
JPN 10-YR: +0.008% +0.007
Oil: 39.75 -2.09%
Gold: 1896.80 +0.77%
Bitcoin: 10755.88 +0.66%
Ethereum: 357.68 +0.011%

Fresh Market Headlines & Economic Data:

Stocks open little changed as Wall Street takes a breather following Monday’s rally

S&P CoreLogic Case-Shiller Index Reports 4.8% Annual Home Price Gain in July

US Consumer confidence to the moon in September – largest gain in 17 years

U.S. goods trade deficit rises; inventories increase

The Canadian Industrial Product Price Index (IPPI), increased 0.3% in August; Raw materials prices rose 3.2% in August vs. +3.0% in July.

Hopes of deal rise as EU says it is ready to work on legal agreement

UK mortgage approvals soar to 13-year high in August

Net UK consumer credit borrowing remained positive in August at £0.3B, following a +£1.1B in July; the flow of money (M4ex) was -£0.9B in Aug. vs. +£25.6B in July.

German expected inflation rate for September 2020: -0.2%

Spanish flash CPI estimate for September: -0.4% y/y

Upcoming Potential Catalysts on the Economic Calendar

Fed Williams speech at 5:00 pm GMT
API Crude Oil stock change at 8:30 pm GMT
Japan Retail sales, Industrial production at 11:50 pm GMT
China Manufacturing & Services PMI at 1:00 am GMT (Sept. 30)
U.S. Presidential Debate at 1:00 am GMT (Sept. 30)
Australia Private Sector Credit at 1:30 am GMT (Sept. 30)
China Caixin Manufacturing PMI at 1:45 am GMT (Sept. 30)
Japan Housing Starts, Leading Economic Index at 5:00 am GMT (Sept. 30)

What to Watch: EUR/USD

EUR/USD 1-Hour Forex Chart
EUR/USD 1-Hour Forex Chart

On the one hour chart above of EUR/USD, we can see the pair is currently in rally mode after finding support just above the 1.1600 handle following a strong move lower in favor of the Greenback.

This creates a technical bearish setup as the pair retests not only a broken support area (around the 1.1750 handle), but also the 50% Fibonacci retracement area of the swing move from 1.1870 down to 1.1610.

With the stochastic indicator showing potentially overbought conditions short-term, this could draw in technical sellers to restart the downtrend lower. 

But we’ve got a slew of potential catalysts ahead, most notably the upcoming U.S. Presidential debate at 1:00 am GMT (Sept. 30), that could spark volatility in the Greenback.

Expectations are that we won’t see new policy ideas during the debate, but if there is a surprise policy revelation, and/or there seems to be a clear winner between the two candidates the Greenback could see a strong directional bias during/after the event.

So, all of you Dollar traders may want to wait for the event to take a position, but if you’re bearish on the pair and we see bearish reversal patterns at its current trading levels (around 1.1730), opting to start with nibbler positions is solid way to start a short position and then build on to it if conditions warrant after the event.

For you EUR/USD bulls out there, if there are no surprises or clear debate winner, and we get positive updates from the round of economic updates from the Asia region, then the short-term trend higher in EUR/USD may continue.

If so, watch for a break above the 50% Fib area/previous support area before considering a long position. Or if we see a pullback down to the 1.1700 handle and bullish reversal patterns form there, that could attract buyers