· The dollar climbed on Monday, building on last week’s gains as weakness in global markets, led by Chinese equities, and recent strong U.S. data boosted demand for the greenback.
Against a basket of its rivals =USD the greenback rose 0.2 percent to 95.85, edging toward a 14-month high of 96.991 hit in mid-August.
“The dollar has been supported by some strong data but with the market already long dollars at these levels, new data has to surprise investors by a bigger margin to push it higher,” said Manuel Oliveri, an FX strategist at Credit Agricole in London.
The euro EUR=EBS fell a quarter of a percent to $1.15 and nearing a low of $1.1463, its lowest since Aug, 20, 2018 as a fresh rise in Italian bond yields weighed on investors' minds.
The big focus for dollar bulls this week will be the release of U.S. CPI data on Thursday. Markets expect a 0.2 percent increase on a monthly basis in September, similar to last month and a bigger increase will bolster U.S. rate hike bets in 2019.
· EUR/USD Technical Analysis: Euro bulls challenging 1.1530 key level after worse-than-expected NFP
EUR/USD is challenging the 1.1530 key level after the release of the US Nonfarm Payrolls (Sept) which came in at 134K versus 185K forecast.
EUR/USD is trading below its 50, 100 and 200-period simple moving averages while the RSI, MACD and Stochastics are gaining bullish traction.
If bulls can break above 1.1530 then 1.1569 (Sept. 28 low) and 1.1600 figure become the next target. On the flip side bears objective is to keep the market below 1.1530.
Main trend: Bearish
Resistance: 1.1530, 1.1569, 1.1600
Support: 1.1500, 1.1491, 1.1400
· EUR/USD Weekly Technical Outlook: Euro Breakdown Set to Continue
The euro broke big support just above 11500 on Wednesday, then spent the remaining two days of the week testing the break. Friday, post NFPs, there was a second attempt into two days to recapture the broken threshold but to no avail.
This sets EUR/USD up for further losses in the week ahead. First up as support is last week’s low at 11463, but buyers are seen as putting up much of a fight there. That will likely be reserved for a more important line of support extending higher since December 2016.
To negate a bearish outlook a clear break and close back above resistance will be needed, with the euro closing somewhere in the upper 11500s. Until a close occurs firmly above, the outlook will remain bearish.
· U.S. Secretary of State Mike Pompeo said on Monday North Korean leader Kim Jong Un was ready to allow international inspectors into the North’s nuclear and missile testing sites, one of the main sticking points over an earlier denuclearization pledge.
The top U.S. diplomat also said both sides were “pretty close” to agreement on the details of a second summit, which Kim proposed to U.S. President Donald Trump in a letter last month.
· German industrial output unexpectedly dipped in August for the third consecutive month, data showed on Monday, and the Economy Ministry said production had suffered a weak summer overall.
Data from the ministry showed industrial output fell by 0.3 percent, confounding a Reuters forecast for a rise of 0.4 percent. The fall came after a downwardly revised drop of 1.3 percent in July and was driven by a drop in construction activity.
· China's central bank said on Sunday it would cut the amount of cash that most banks must hold as reserves to lower financing costs and spur growth, amid concerns over a potential economic drag from an escalating trade dispute with the United States.
Reserve requirement ratios (RRRs) - currently 15.5 percent for large institutions and 13.5 percent for smaller banks - would be cut by 100 basis points effective Oct. 15, the PBOC said.
The decision by China's central bank to cut the amount of reserves held by banks is an indication that authorities in the world's second-largest economy are getting nervous about a long-drawn trade war with the U.S., experts said.
· Brent crude oil prices fell more than 1 percent on Monday after Washington said it may grant waivers to sanctions against Iran’s oil exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran.
International benchmark Brent crude oil futures LCOc1 were at $83.26 per barrel at 0352 GMT, down 90 cents, or 1.1 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 54 cents, or 0.7 percent, at $73.80 a barrel.
U.S. sanctions will target Iran’s crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero.
However, a U.S. government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil.
· Crude Oil WTI Technical Analysis: Head-and-Shoulders pattern can put the bull party on hold
Crude oil is in a strong bull trend as it is trading above its 50, 100 and 200-period simple moving averages.
Crude oil has created a head-and-shoulders pattern which can create a pullback in the bull run. A break below 74.00 would be seen as bearish and can lead to a sell-off to 73.00 and possibly to 71.45 (September 26 low).
On the flip side, a bull breakout above 75.24 (July high) would invalidate the short-term bearish pullback scenario.
Main Trend: Bullish
Resistance: 75.24, 75.88, 77.00
Support: 74.00, 72.00, 71.45Reference: Reuters, CNBC, DailyFX
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