Forex trading plan for October 6

By Elizabeth Belugina

US dollar was hit by weak US labor market data (primarily, NFP) on Friday. However, technically American currency has managed to hold its ground after the initial selloff. Traders still see that the Federal Reserve will raise interest rate this year – earlier than other central banks. The speeches of the Fed’s members due this week and the FOMC minutes due on Thursday should clarify the situation. On Monday, ISM non-manufacturing PMI also declined more than expected.

EUR/USD once again attempted to overcome the resistance line connecting August and September highs, but met resistance in the 1.1290 area. Support is in the 1.1210/00 zone, at 1.1165 and 1.1100. Data of medium and minor importance released in the euro area were mostly negative. Meetings of the European finance ministers will continue on Tuesday. Mario Drahi will speak at 17:00 GMT. The breakthrough to the upside is unlikely ahead of this speech. Further resistance is at 1.1330 and 1.1460.

GBP/USD was rejected down as it tried to approach 1.5250. British services PMI came at the lowest level since 2013. Below 1.5160 it should revisit support in the 1.5100 region. Above 1.5250 the next obstacle lies at 1.5325 (200-day MA) which will provide rather strong resistance. Fundamentally, it will be difficult for the cable to push much higher as the expectation if the Bank of England’s rate hike will be likely pushed back.

USD/JPY keeps moving within sideways trend between 121.00/30 and 119.00/118.50. The fact that US dollar managed to recover quickly enough after the release of poor NFP figures strengthens 118.50 support. Now it is more a rectangle than a triangle. We expect the pair to stay put in this corridor at least until the Bank of Japan’s meeting on Wednesday.

AUD/USD was capped by resistance at 0.7110 ahead of the meeting of the Reserve Bank of Australia on Tuesday. The RBA is unlikely to ease policy. On the upside Aussie has potential to strengthen to the top of the triangle at 0.7200 (23.6% Fibo of the May-September decline). On the downside support is at 0.7025, 0.7000 and 0.6950. 

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