EUR/USD fell for an eighth consecutive week: Asian Open – 11/09/2023

Market Summary:

• China’s consumer prices rose 0.1% y/y and 0.3% m/m in August, after just one month of deflation
• Joe Biden’s visit to Vietnam resulted in deals on semiconductors and minerals, although he has stated that he is not trying to star a cold war with China
• A Bloomberg survey favours AUD/USD rising to 68c by March and closing the year at 66c, on the assumption that China will provide adequate stimulus to boost their economy
• BOJ governor Ueda told the newspaper Yomiuri on Saturday that the central bank will “patiently” maintain its ultra-loose policy but should have enough data by the end of the year to determine if they’ll keep negative interest rate
• Japan’s Prime Minister said he will compile a “drastic” economic package and reshuffle his cabinet on Wednesday

Events in focus (AEDT):

• 16:00 – Japan’s machine tool orders, M2 money stock
• 18:00 – China’s loan growth, total social financing, M2 money stock
• 01:00 – Consumer inflation expectations

Technically Speaking:

• USD/JPY gapped lower at the open following Ueda's hawkish comments and is on track for a bearish engulfing day
• EUR/USD declined for an eight consecutive week, a bearish sequence which has not been seen since September 2014
• USD/CNH closed at its highest level in nine months, and is now just -0.2% from the November 2022 high
• USD/CHF rose for an eight week, which is its most bullish sequence since February 2015
• Gold prices are trying to build a base above the 200-day average and printed an inverted hammer on Friday, and with the 200-day EMA around 1911 and the 1900 handle nearby for potential support levels, the reward to risk ratio seem unfavourable for bears
• The China A50 printed a small bearish doji on Friday, and whilst it doesn’t look set for a strong rally it does look like the downside is losing steam above 12,400 (a level which has provided decent support since June)
• WTI crude oil produced a small bullish candle on Friday, to suggest we may see an upside break from its small consolidation on the daily chart and attempt a move to 90

ASX 200 at a glance:

• The ASX 200 declined for a fourth day on Friday and erased most of the prior week’s gains
• However, prices are holding above the bullish trendline projected from the March 2020 low
• If the ASX 200 manages to rally today, 7200 makes a likely resistance area given the 200-day EMA sits just above it

EUR/USD technical analysis (daily chart):

EUR/USD declined for an eight consecutive week, which is its most bearish sequence in nine years. Yet the daily chart shows signs of stability above 1.07 with an inverted pinbar, and as I’d prefer not to be shorting around cycle lows I’d like to see a bounce towards the 1.0766 resistance level before considering short positions. If a swing high materialises beneath or around 1.0766, the bearish target is then 1.0650 or around the May low.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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