USD edges higher as uncertainty remains

The USD tended to gain yesterday and during today’s Asian session as uncertainty about the recovery of the global economy remains present. Markets seem to be shifting their attention towards the US Employment report for September due out on Friday, yet data about the employment market are also due out today and tomorrow and could come also under the focus of market participants. On the monetary front we note Chicago Fed President Evan’s comments that inflation in the US could drop below the bank’s 2% target once the bottleneck issues in the supply chains are addressed, which sounded more dovish. On the other hand, tensions in the US-Sino relationships seem to be easing for now, given that US President Biden stated yesterday that he spoke with Chinese President Xi and they agreed to follow the Taiwan agreement. We expect fundamentals to lead the USD, yet the ADP employment report for September may also capture trader’s attention.

The USD index was on the rise yesterday and during today’s Asian session seems to be testing the 94.10 (R1) resistance line. We would like to see the index clearly breaking the 94.10 (R1) resistance line before actually switching in favor of a bullish outlook for the index. Please note that the RSI indicator below our 4-hour chart is above the reading of 50, which could imply a slight advantage for the bulls. Should the bulls actually take charge of the index’s direction, we may see it breaking the 94.10 (R1) resistance line and aim for the 94.60 (R2) level. On the other hand, should the bears say enough is enough and take over, we may see the index, reversing course and breaking the 93.70 (S1) support line aiming for the 93.20 (S2) level. 

US Stockmarkets rose yesterday, yet the bulls remain capped

US stockmarkets rose yesterday yet the bull’s price action seemed to remain capped as they retreated in the after-market hours. It’s characteristic that Dow Jones, Nasdaq and S&P 500 rose yesterday, yet corrected lower during today’s Asian session. It should be noted that the uncertainty in the US Congress about the lifting or even the removal of the debt ceiling seems to weigh on investor’s sentiment, while at the same time, stockmarkets are also in a wait and see position ahead of the US employment report release for September. On the other hand, Facebook advanced recovering substantial part of Monday’s losses despite allegations about how the company deals with hateful speech, while other big tech companies also recovered some ground. We would also note that the US yields seem to continue to rise and if they continue their upward motion, they may have an adverse effect on US stockmarkets.

Dow Jones rose yesterday testing the 34400 (R1) resistance line, yet retreated lower later on. We tend to maintain a bias for a sideways motion for the index currently given also that the RSI indicator below our 4-hour chart runs along the reading of 50 which may imply a rather indecisive market. Should a selling interest be displayed by the market, we may see it breaking the 34060 (S1) support line and aim for the 33740 (S2) level. On the other hand, should buyers be in charge of the index’s direction ,we may see Dow Jones, breaking the 34400 (R1) resistance line and aim for the 34700 (R2) level.

Today’s events and expectations

Today during the European session we note the release of Germany’s industrial orders for August and UKs’ Markit/CIPS Construction PMI reading for September, while a bit later we get Eurozone’s retail sales for August. In the American session we note the release of the US ADP National employment figure for September while oil traders may be more interested in the release of the EIA weekly crude oil inventories figure. On the monetary front, we note that Atlanta Fed President Bostic is scheduled to speak twice today. 

USD Index H4 Chart 

Support: 93.70 (S1), 93.20 (S2), 92.75 (S3)

Resistance: 94.10 (R1), 94.60 (R2), 95.00 (R3)

US 30 Cash H4 Chart 

Support: 34060 (S1), 33740 (S2), 33400 (S3)

Resistance: 34400 (R1), 34700 (R2), 35075 (R3)

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