The Turbulent Week In FX
Airat Sattarov | Oct 15, 2018 09:54AM ET
The contradiction between the course of trading in the last few days, characterized by a gradual weakening of the us currency, and the corresponding technical picture, where the signals of the correction plan prevailed, began to affect the dynamics of quotations in the first hours of the coming week. And this is only the beginning of the projected turbulent events. The message that the UK and the EU at Sunday’s meeting failed to reach a compromise on the Brexit issue led to a price gap in the pair with the presence of the British pound. This week, the focus of the players will be on news scheduled for Wednesday, October 17, the summit of EU leaders, which was supposed to remove most of the remaining differences. However, in the light of an unsuccessful Sunday attempt, the probability of positive developments is sharply reduced, which can lead to strong turbulence in the markets and become an additional factor in favor of the US dollar and such defensive assets such as the Swiss franc and the Japanese yen.
Today, the economic calendar is not rich in statistics. The exception is the publication in the afternoon of information block on retail sales in the United States for September. In my opinion, the actual values of the indicators will demonstrate a high degree of consumer sentiment, which will be another local factor in favor of the US currency.
During the next hours of Monday, strong price movements are not predicted. The majority of the pairs will oscillate inside the reached price ranges. An exception can be made only by pairs with the presence of the British pound, in which it will be possible to observe periodic attacks of GBP sellers.
EUR/USD
On Friday, as a result of the negative dynamics of the EUR/USD pair quotes, prices fell to 200-periodic MA on the H1 time frame near the 1.1550 mark. No significant statistics are expected today. At the same time, on Monday, the players' attention will be directed toward reports on the approval of the Italian budget plan, which provides for a deficit of 2.4%, and the reaction to its presentation by the European Union. In case of contradictions in this issue, the local weakening of the European currency is not excluded.
In general, today it is predicted that prices will stabilize at the achieved levels. Quotes will oscillate in the range bounded above by resistance around 1.1600. From below, prices are supported by the moving average, mentioned above.
The support zone today is the area 1.1545-1.1555.
Resistance is in the range of 1.1600-1.1610.
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GBP/USD
The report of a failed Sunday attempt to reach a compromise on a number of issues related to Brexit led to the formation of a price gap in the GBP/USD pair. Friday's trading ended in the area of 1.3155. On Monday, the quotes started trading 40-50 points lower. However, no further significant price cuts are predicted today, because players will expect news from the EU leaders' summit opening on Wednesday, October 17, at which another attempt will be made to reach a compromise on the issue of the UK leaving the EU. In my opinion, the probability of a positive solution to the problem is decreasing every day. In the case, that I am right, the GBP/USD pair quotes can make a dizzying downward move in order to update the minimum prices of the current year, located just below the 1.2700 mark. However, today, the main movement has already taken place. Quotes for most of the day will fluctuate slightly above the 1.3100 mark, with the possibility of a decline closer to the close of trading in the 1.3050 area.
The support zone is today at 1.3050-1.3065 (green oval).
The resistance zone is still present in the range of 1.3155-1.3165 (red oval).
USD/JPY
The gradual growth of turbulence in the world markets and the decrease in investors' appetite for risk contribute to the further strengthening of the Japanese yen in the pair with the US dollar. As a result, the quotes of the USD/JPY pair were fixed in the area below the 112.00 mark in order to reach the area around the 111.00 mark according to the signals of a technical nature. The probability of such a development was repeatedly mentioned in previous overviews. At the same time, today, prices are unlikely to reach 111.00, since there is a well-traded range on its way with an upper limit of about 111.60, in which the pair was trading from July 23 to September 13 of the current year. Based on this, the prevalence of lateral fluctuations in the range bounded above the 200-period MA on the H4 time frame is predicted for today. From below prices will be supported by the upper limit of the referred above range.
The support area is the range 111.40-111.50 (green oval).
The resistance zone is located at 112.40-112.50 (red oval).
USD/CHF
Similar to the previous USD/JPY pair, for quotes of the USD/CHF pair, the prevalence of lateral fluctuations is predicted. At the same time, using the Swiss franc as a defensive asset while increasing nervousness in world markets (and in my opinion, the markets are on the threshold of strong price movements) will lead to the fact that the quotes of the pair will today fall to the bottom of the range. Limited top resistance in the area of 0.9900. From below, prices will be supported by their 200-period MA on H1 time frame passing through 0.9880.
The support zone is in the area of 0.9880-0.9890 (green oval).
Resistance is in the range 0.9910-0.9920 (red oval).
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