AUD/USD, EUR/JPY analysis: European open – 07/09/2023

Asian Indices:

Australia's ASX 200 index fell by -91.4 points (-1.26%) and currently trades at 7,165.70
Japan's Nikkei 225 index has fallen by -218.37 points (-0.66%) and currently trades at 33,022.65
Hong Kong's Hang Seng index has fallen by -175.07 points (-0.95%) and currently trades at 18,274.91
China's A50 Index has fallen by -106.99 points (-0.84%) and currently trades at 12,704.70

UK and Europe:

UK's FTSE 100 futures are currently down -19 points (-0.26%), the cash market is currently estimated to open at 7,407.14
Euro STOXX 50 futures are currently down -14 points (-0.33%), the cash market is currently estimated to open at 4,224.26
Germany's DAX futures are currently down -51 points (-0.32%), the cash market is currently estimated to open at 15,690.37

US Futures:

DJI futures are currently down -52 points (-0.15%)
S&P 500 futures are currently down -8 points (-0.18%)
Nasdaq 100 futures are currently down -41.5 points (-0.27%)

It was a very quiet Asian session, with currency markets mostly retracing against Wednesday’s moves within various degrees. Yet Asian equity markets were mostly lower following trade data from China.

China’s trade data was not as bad as expected, with exports declining -8.8% y/y (-9.1% expected, -14.5% prior) and imports falling -7.3% (-9% expected, -12.4%), although the market reaction was muted.

I think we’re all fatigued over weak the China-data theme. Trade data was expected to come in relatively soft, and whilst it surpassed expectations we’re going to need to see a much stronger beat to get markets out of their rocking chairs. And think we’re all just glad the negative numbers weren’t in double digits again.

BOJ member Nakagawa aid the central bank should be vigilant to the risk of a global slowdown, although added there is a risk that inflation could rise faster than expected with Japanese companies raising prices and wages.

US bond yields pulled back slightly from Wednesday’s highs and the US dollar index treaded water in a tight range, in the upper wick of Wednesday’s indecision candle
USD/JPY briefly tapped a 10-month high after the Tokyo open, yet its pullback within the first hour of trade currently mark the daily high (just as it did on Wednesday)
USD/CAD formed a bearish pinbar around the April and May highs with the BOC’s hawkish hold helping to keep the lid on a runaway breakout. But if yields pull pack further today then perhaps we’ll see USD/CAD retrace
WTI crude oil printed a tweezer top on the daily chart to suggest near-term exhaustion around $88, which leaves the potential for it to snap its six-day winning streak
Gold closed beneath the 200-day MA but has the 200-day EMA nearby for potential support around 1910, although it may require the US dollar and yields to pull back from their highs

Events in focus (GMT+1):

07:00 – German industrial production
09:30 – ECB's Elderson Speaks
10:00 – European GDP, employment
13:30 – US jobless claims

AUD/USD technical analysis (daily chart):

There’s not a lot to update on my AUD/USD analysis, given it has failed to bounce from the cycle lows and is now considering a break beneath them. Note that yesterday’s high (and indecision candle) made a feeble attempt to break back above the March 2020 trendline, and if global stocks trade lower today then there is a reasonable chance to expect AUD/USD to follow them, and head towards 63c.

EUR/JPY technical analysis (daily chart):

Hand up, this is not the prettiest price action I have seen in a while. However, it is clearly struggling to break above the 158.50 area having formed a double top in the area. Its mediocre rise from the September low pales in comparison to the drop form the August highs, which leads me to believe current price action is corrective and it is preparing for another leg lower.

This also fits in line with earlier analysis where I suggested EUR/JPY may have topped on the daily chart. For today, we may see some noise around the open and for prices to try and regain ground above the daily pivot point / 200-bar EMA, but bears could seek evidence of weakness below the upper resistance zone for an anticipated move towards 158 and 157.85.

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.