Thread: Daily Market Analysis from ForexMart

The USD decreased in value in relation to the JPY during Wednesday’s trading session after the drop in US Treasury yields data, as well as speculations from market players that the Federal Reserve might not raise its interest rates before 2016 ends. The USD/JPY pair finished the last trading session at 103.440 points, dropping by -0.40% or 0.417 points.

The market is not expecting any major economic data release from Japan, however, the US housing data decreased by 9% in September, while housing permits increased by 6.3%. The Federal Reserve has also released its Beige Book during the last trading session, which outlines the economic conditions in the US. According to the book, the US economic environment increased by a modest percentage in most regions in the US.

Investors are now awaiting the results of the next US Presidential Debate, while reports from the European Central Bank with regards to their committee decisions on the eurozone’s monetary policy. This can have a significant impact on the market since this will become an indicator on whether traders should expect a risk-on trading session or a risk-off session.

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The GBP/USD pair closed the last trading session with a minimal decrease in its value after closing the session at 1.2260 points after reaching a weekly high of 1.2332 points, which was due to the release of the UK employment data. The employment data showed that the number of employed people in the UK increased up to 106,000 from June to August 2016, although the unemployment rate maintained its previous stance at 4.9%. On the other hand, the data for wages exceeded market expectations after surging to 2.3% excluding bonuses.

However, in spite of the fairly positive jobs data which is expected to persist until the following months, investors and traders are expressing concerns with regards to the possible divergence in inflation rates and salary increases, which might create market problems in the long run.

The resistance levels for the currency pair retreated significantly in the 4-hour chart. The resistance levels moved back from the 1.2320-1.2330 range, while other technical indicators are also reverting back from their previous values but still manages to remain in the positive side of the chart. If the pair breaks below 1.2230, then the pair is most likely to drop further into the 1.21 trading range.

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The USD/JPY pair is currently trading at 104.13 points after increasing by 0.18% during the last session and has recorded a session high of 104.18 and a session low of 103.91 points. The currency pair is already losing its Asian session bid after the USD finally regained some of its lost value. The Bank of Japan’s Sakura Regional Economic Report has expressed possibilities of the yen increasing its pressure and has decreased the economic assessment for the Tokai region.

Analysts are noting how the USD/JPY pair has remained stable all throughout the yield curve control set by the Bank of Japan, with all major Japanese markets such as JPY yields, Nikkei stock index and the USD/JPY experiencing relatively low volatility during the past trading sessions. The lower range for the USD/JPY pair might also be supported by the simultaneous selling off by Japan-based investors.

Since the current trading value for the USD/JPY is at 104.13 points, resistance levels are expected to be at 104.18 points and 104.20 points. Meanwhile, support levels are expected to come in at the 104.14 range and 104.12 and could possibly drop further to 103.89.

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The USD/CAD pair exhibited extreme volatility during the last trading session which was mainly caused by a slew of Canadian news and events which were consecutively released during the session. First was the release of the CAD’s overnight rate which came out at the expected range of 0.5%. The Canadian monetary policy report also came out and came in short of the previous predictions by 1.1%. This caused the USD/CAD pair to break through the 1.3100 range and also attempted to move towards the 1.3000 region.

The data for the oil inventory reports was also released, as well as the Bank of Canada’s press conference details which showed a massive decrease in the overall inventory, triggering an increase in oil prices and increasing the value of the CAD.

Support levels for the USD/CAD pair is currently at 1.3060, 1.3000 and could possibly dip into 1.2930. Resistance levels for the currency pair is expected to be at 1.3120, which was already broken by the currency pair and could possibly go over the 1.3250 region since the pair is currently at the 1.3141 region. The market is not expecting any major economic news releases from US or Canada any time soon, and traders are still speculating that the effects from yesterday’s subsequent releases would still have an influence on the currency pair’s value.

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The GBP/USD pair closed down the last trading session with little activity after the pair was unable to break through a large-scale resistance at the 1.2330 region. The sterling pound suffered during the first part of the London trading session after the release of retail sales data for September turned out to be a major disappointment for investors and traders. The initial demand for the EUR/GBP also increased significantly due to a reaction from investors after the release of the ECB’s statement, causing the GBP/USD to further plummet to a daily basis of 1.2209 points. However, the pair was able to revert back to its present value of 1.2260 during the New York session.

The general risk for the GBP/USD is currently leaning towards the negative territory, especially if the currency pair fails to go back to the 1.2300 region. The 4-hour chart for the currency pair is exhibiting a bearish-neutral stance, with the pair’s momentum possibly going over the downside with a significant downward curve.

Meanwhile, the pair’s RSI levels could possibly consolidate at 48 and the price could hit the 20 SMA. The currency pair might decline further to the 1.2100 trading range if selling interest gets reverted below the pair’s daily lows.

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The USD/JPY pair reached a daily session high of 104.20 points before closing down the trading session at the 103.82 trading range, with daily lows for the pair recorded at 103.52 points. The USD/JPY received rejection at the 104.00 region during the Tokyo session and is currently at the 103.86 region.

The Japanese economic data for this year took on a generally disappointing note, with export data for the nation plummeting by 6.9%. Import data also dropped by 16.3% at the same period, with trade surpluses worth 498.3 billion yen. Chinese exports also decreased by up to 10.6%, causing the Bank of Japan to face renewed pressure with regards to lowering the value of the yen. However, analysts are saying that a Fed-induced drop in the yen might not resolve the issue of dropping Chinese exports since the yuan could decrease further as compared to the yen once the Fed decides to implement its long-awaited rate hike.

The economic calendar for today is primarily dominated by the Fed, with the possibility of an interest rate hike clocking in only at 70%. This possibility is not expected to increase any time soon due to the impending US national elections which overshadows hawkish sentiment from various policymakers. On the other hand, the yen might become more stable due to dovish statements and bearings.

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The EUR/USD pair closed down last week’s trading session at its lowest levels since March after the pair dipped significantly last Thursday due to a statement from the European Central Bank that it will be maintaining its current economic policies. However. ECB’s Mario Draghi will be maintaining its substantial accommodation until such time that inflation rates revert back to the 2% range which will stave off any major policy changes until December. Meanwhile, consumer confidence for the European Union increased by up to -8.2 from October’s -8.


In the coming sessions, market players are shifting their focus to the reading of the US preliminary Q3 GDP reading, with market players expecting a significant growth in the US economy. For the European Union, the market is currently awaiting the PMI data for the month of October, with data for manufacturing expected to increase significantly and services data regaining some of its stability after declining in September.


The EUR/USD pair has already reached a critical trading range, especially since the pair has been unable to get out of the 1.0840 -1.1460 region. However, the impending imbalance brought about by the ECB and the Federal Reserve could possibly cause the pair to break through this particular range. But for now, the currency pair is expected to drop further into the 1.0505 range, and further drops in value are expected for the coming trading sessions.


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The EUR/JPY pair dropped in value for the second straight week, recording session lows of 112.60 last Friday and closing down the last trading session at 112.96 points. The Japanese yen was boosted by statements from the Bank of Japan’s governor Kuroda, who has said that there is little possibility that the financial activity in the region would be facing actual risk-taking anytime soon. Furthermore, Kuroda also added that the BoJ might delay hitting its inflation target of 2%, with the imminent weakness in the euro adding up to the bearish stance of the currency pair.


The EUR/JPY has been trading with the 112.05-116.30 since July, and charts for the currency pair are showing that it could possibly go even lower especially since technical indicators for the currency pair are exhibiting bearish stances. The pricing for the EUR/JPY has also received repeated rejections while attempting to break through its 100 DMA.


However, if the pair manages to go beyond its recorded lows, then this could cause the pair to reach 112.05 points, while a further drop could lead to a speeding up of the pair’s momentum with regards to its bearish stance.


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The Canadian dollar is moving uptrend because of the oil market price activity. Hence, the pair USD/CAD broker higher last Friday because of signs of market exhaustion keeping a bullish pressure with the US dollar. Traders should also monitor the market activity of oil market as it is substantial in the pair’s proceedings.


The charts formed a shooting pattern last week relative to the crude oil market activity. With this market behavior, it could incite a spur in long positions and could further increase higher than 1.35 level. For the past days last week, a candle pattern was predominant which is advantageous for buyers and send them active. A hammer pattern was also sighted as it leaped to the 1.30 physiological level.


A bullish pressure is about to set in after forming new highs and strong support. This could persist and which is mainly due to the strong position of the US dollars hence, indicative of more bullish pressure. Traders have to find means in case of drawback when go for a long position. It is expected for the physiological level to stand at 1.32 level being the initial support level and could rally going upward.


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The USD increased in relation to the JPY amid the impending interest rate hike by the Federal Reserve in December, along with a heightened demand for assets with higher yields. For the last trading session, the USD/JPY pair closed down at 104.175 points after increasing by up to 0.35% or 0.365 points.


The MarketWatch program of the CME Group reported that market traders are expecting a 70% probability that the Fed will be pushing through with its interest rate hike in December. Positive economic data from the previous session caused a reaction from dollar traders with bullish stances while simultaneously reacting to hawkish comments from the FOMC. St. Louis Federal Reserve President James Bullard also commented on Monday that the market would only need a one-time interest rate hike to sustain the economy.


The USD/JPY pair further surged during Monday’s session after a significant increase in the US equity markets caused an increase in demand for high-yield assets. However, this has caused the Japanese yen to decrease in value. The market is not expecting any major economic data from Japan in today’s trading session, and the main determinant of the direction of the currency pair will be the US equity market movement. The USD/JPY is expected to receive more stable support from an increased demand for stocks.

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