Trading plan for Oct. 8
EUR/USD rose to $1.2650 on Monday almost compensating the Friday’s selloff and finishing the day close to the high. In addition, the euro is holding pretty well in the past 2 days despite weak data from the euro area. This actually means that the pair was seriously oversold and support at $1.2500 is really strong. As a result, the odds are that the pair may test higher levels. A powerful fix above $1.2570 and inside the H4 Ichimoku Cloud will be a bullish signal. The fate of the pair depends on the FOMC meeting minutes due tomorrow (18:00 GMT): there’s the risk of the market’s disappointment and lower USD on this release. In such case EUR/USD may test $1.2800 (previous channel support). Support is at $1.2570. Below this level we’ll once again turn bearish.
GBP/USD hovers slightly below the $1.6100 mark in the late European trade. The pair holds below the trend line resistance, descending from the local $1.6520 high. Despite this week’s recovery, we remain bearish below the $1.6300 mark and expect the downside to continue after a few days of consolidation.
Japanese yen keeps on strengthening: USD/JPY dipped to 108.20 in Europe. As expected, the BOJ left policy unchanged and gave no clear signals on its policy intentions, but the recent Abe’s remarks on cheap currency are a bearish factor for the pair. Fix below the 108.00 mark will open the way to our initial bearish target at 107.30. Watch the Japanese current account data on Wednesday (surplus is expected to widen towards 0.19T).
AUD/USD has reached the target at $0.8330 (top of the H4 Cloud), which we outlined yesterday as our alternative scenario. Despite the expectation, the RBA didn’t make many dovish comments. In addition, there’s a general setback in the USD today. There are bullish signs from Ichimoku. Above $0.8830 resistance is at $0.8850 (a still descending 100-period MA), $0.8890, $0.8925 and $0.9000. Support is at $0.8750 and $0.8650.