Asian Indices:
- Australia's ASX 200 index rose by 30.5 points (0.42%) and currently trades at 7,308.80
- Japan's Nikkei 225 index has risen by 160.46 points (0.49%) and currently trades at 32,871.08
- Hong Kong's Hang Seng index has risen by 469.29 points (2.55%) and currently trades at 18,851.35
- China's A50 Index has risen by 211.04 points (1.66%) and currently trades at 12,922.44
UK and Europe:
- UK's FTSE 100 futures are currently up 32 points (0.43%), the cash market is currently estimated to open at 7,496.54
- Euro STOXX 50 futures are currently up 14 points (0.33%), the cash market is currently estimated to open at 4,296.64
- Germany's DAX futures are currently up 36 points (0.23%), the cash market is currently estimated to open at 15,876.34
US Futures:
- DJI futures are currently down -4 points (-0.01%)
- S&P 500 futures are currently up 0.5 points (0.01%)
- Nasdaq 100 futures are currently up 16.5 points (0.11%)
- Asian equity markets were higher on bets that the Fed was done with hiking interest rates
- Index futures are higher today ahead of the European open, but take note that US stock markets are closed today or the Labor Day weekend
- Forex majors traded in very small ranges overnight, although 1-day implied volatility for all seven pairs are above their 20-dy averages
- The Europe-US CESI spread has continued to narrow, which could bring some upside pressure to EUR/USD
- Gold remains confined well within Friday’s doji range, although it found support at 1940 during the Asian session
- WTI crude oil gapped up above $86, although the weekend opening gap has now been closed
Events in focus (GMT+1):
- 07:00 – German trade balance
- 08:00 – Switzerland’s GDP
- 09:30 – Eurozone Sentix investor confidence
- 12:30 - ECB’s Elderson speas
- 14:30 – EVB president Lagarde speaks
- 15:00 – ECB’s Lane, Panetta speaks
EUR/USD technical analysis (weekly chart):
EUR/USD has now fallen for seven consecutive weeks, which is its most bearish run since September 2014. We know that the longer a sequence becomes, the greater the probability for it to break. However, that does not necessarily mean it will provide a meaningful reversal. When EUR/USD fell for eight weeks in 2014, the sequence was broken with a single small up week, and the pair went on to fall another -19% over the next six months.
EUR/USD technical analysis (daily chart):
EUR/USD fell sharply on Thursday and Friday to erase the prior three-days worth of gains, and prices are considering a break of the August low to extends it bearish trend. Given the public holiday in the US and Canada, we may find trading ranges are on the low side today. But on the flip side of that, markets can also move quickly in low-liquidity environments if the correct catalyst arrives.
Retracements aside, it looks as though EUR/USD could move towards the monthly S1 pivot around 1.0700, a break beneath which brings the 1.0600 handle into focus near the May low and monthly S2 pivot point. I suspect that support zone will tempt bears to book some profits and prompt a countertrend bounce. But if we find that the Fed start hinting that they are done hiking rates this week (ahead of Saturday’s blackout period) it could drag yields and the US dollar lower, and help EUR/USD regain its footing.
View the full economic calendar
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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