ECB interest rate decision in focus

EUR trader’s attention turns towards ECB’s interest rate decision today. A number of analysts highlight the possibility for the bank to pause its rate hiking path, yet EUR OIS imply that the bank may proceed with a 25-basis points rate hike a scenario that may provide some support for the common currency. We also highlight ECB President Lagarde’s press conference half an hour later as she may alter the market sentiment.   EUR/USD seems to continue to revolve around the 1.0735 (S1) axis. On a technical level and given that the RSI indicator continues to run along the reading of 50 we expect the pair to maintain its sideways movement, yet we highlight that ECB’s interest rate decision later today, may prove to be a game changer for EUR/USD. Should the bulls take over we may see the pair aiming if not breaking the 1.0835 (R1) resistance line. Should the bears take over, we may see the pair breaking the 1.0735 (S1) support line clearly and aim if not breach the 1.0635 (S2) support level.

The USD tended to gain against its counterparts yesterday as the US CPI rates for August came in hotter than expected and may sharpen the Fed’s hawkishness. Attention today turns towards the US PPI rates and retail sales for August and a possible acceleration could provide some support for the USD. The Aussie got some support today from the better-than-expected Australian employment data for August. The attention of Aussie traders now turns towards China’s urban investment, industrial output and retail sales growth rates for August and a possible acceleration could provide some support for the AUD as well as it would imply more exports of raw materials to China.

AUD/USD after bouncing on the 0.6400 (S1) support line was able to move higher yesterday marking a new higher high. We tend to maintain a bullish outlook given that the upward trendline incepted on the 7^th of September seems to remain intact, yet there may be some stabilisation tendencies for the pair. Should the pair find fresh buying orders along its path, we may see it aiming if not breaking the 0.6515 (R1) resistance line, while if a selling interest is expressed by the market we may see AUD/USD breaking the prementioned upward trendline in a first signal that the upward motion has been interrupted, breaking also the 0.6400 (S1) support line and take aim of the 0.6285 (S2) support base.

WTI prices rose yesterday, despite EIA showing an increase of US oil inventories implying that the tightness of the US oil market has eased. Should market worries for tightness for the supply side of the international oil market be maintained we may see oil prices rising further, yet there seems to be some fatigue among oil bulls and market worries for the economic outlook of China which in conjunction with inflationary pressures in the US economy may have an adverse effect on oil prices. The relative inactivity of Nasdaq was not interrupted even by the higher-than-expected US CPI rates. Today we highlight Arm’s IPO. The company is a British chipmaker and given the nature of its business and the size of the company it has attracted substantial interest among market participants and is expected to be the biggest IPO of the year.  Gold’s price remained relatively inactive, yet seems to be dropping and nearing the 1900 psychological threshold, a level coming to gold trader’s sights as any advancement of the USD tends to weigh, given the negative correlation of the two trading instruments.    

Other highlights for the day:

In today’s European session, we get Sweden’s CPI rates for August and in the American session, we note the release of the US weekly initial jobless claims figure, August’s PPI rates and retail sales and from Canada we get July’s wholesale trade. During tomorrow’s Asian session, we note the release of China’s Urban investment, industrial output and retail sales growth rate for August.  

EUR/USD H4 Chart

Support: 1.0735 (S1), 1.0635 (S2), 1.0515 (S3)

Resistance: 1.0835 (R1), 1.0940 (R2), 1.1065 (R3)

AUD/USD H4 Chart

Support: 0.6400 (S1), 0.6285 (S2), 0.6170 (S3)

Resistance: 0.6515 (R1), 0.6620 (R2), 0.6725 (R3)

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