DAILY TECHNICAL ANALYSIS FOR SEPTEMBER 19, 2022
Current level – 1.0012
Over the past week, we saw highly volatile movements within the single European currency. The market reached a high of 1.0197, but was later affected by a sharp correction that took the pair down towards the levels at around 0.9950. There, we saw repeated attempts by the bulls to break through the resistances at around 1.0000, but with no success. The attempts of the bears to breach the bottom below 0.9950 were also fruitless. This week, we expect streams of important events that could lead to even greater volatility. On Wednesday, we will await the decision of the U.S. Federal Reserve on its main interest rate and the follow-up market reaction to the expected increase by another 0.75%. Then, on Friday, we will follow the EU managers’ estimates on manufacturing and services. Today, however, there are no scheduled events that are expected to move the EUR/USD in any fundamental way. Whether the pressure will continue and whether the level at 0.9950 will be breached remains to be seen later this week. However, a possible negative reaction to the dollar should not be ruled out as well.
Current level – 142.93
On Wednesday last week, the Ninja’s attempt to breach its previous high of 144.93 failed, and by the end of the week, the currency pair was locked in a narrow range between 143.60 and 142.60. The dollar is calling the shots so far, so the most important data in the coming days will be the Fed’s decision to raise the key interest rate in the U.S. by another 0.75% on Wednesday. Usually, the reaction is positive for the dollar and we will likely see an extension of the rally against the yen that has not stopped since the beginning of the year, but divergences in Fed expectations could shake the dollar and result in a deeper correction than the one we witnessed just a few trading sessions ago. Let’s also not forget the interest rate decision from Japan’s BoJ, which is expected this Thursday. No changes in the policy of the Japanese central bank are expected, but surprises here should not be ruled out still. Today is an official non-working day in Japan, so support for the currency is expected to be weak.
Current level – 1.1417
The Cable continued its downtrend from last week. After seeing a weekly high of 1.1736 on Tuesday, it looks like the bears have found good entry points as they took full control over the pair right until the end of the week. A few hours before the end of the last trading session for the week, we saw a new bottom at 1.1348. There, the pair stabilised and managed to end the session at about 80 pips higher than the local bottom. This week, on Thursday, the Bank of England will also announce its main interest rate decision, but not before the Fed’s decision on Wednesday. The BoE is expected to raise its rate by 0.50%. Rumours of both a larger and a smaller interest rate hike are both present, so the reaction to the data should be closely monitored. The downtrend is strong, but a potential interest rate hike could stabilise the currency pair and we could see sharp upward corrections.
Gold price achieves temporary gains
Gold price provided positive trades in the previous sessions to test the first key resistance at 1680.00, and begins to decline by today’s open to head towards resuming the main bearish trend, organized inside the bearish channel that appears on the chart, supported by stochastic negativity, waiting to head towards our extended targets that start at 1644.00 followed by 1630.00.
Therefore, the bearish trend scenario will remain dominant in the upcoming sessions conditioned by the price stability below 1690.00.
The expected trading range for today is between 1645.00 support and 1685.00 resistance.
The expected trend for today: Bearish
Source: Technical analysis