FX Market Recap
The U.S. dollar, in DXY terms, slid into more losses in recent movement, prolonging the pullback noticed from the 2019 highs of 98.33 set at the end of April.
Disappointing economic events, especially the U.S. core PPI number Thursday, followed by soft CPI Friday, adjacent with intensified US-China trade anxiety, collectively pressured on the greenback on Monday.
The U.S. indices felt the heat as the Nasdaq dropping 3.41%, the S&P and Dow underwent as well closing below 2.41% and 2.38% sequentially.
EUR/AUD - Bearish Channel Breakout, Is It Targeting 1.6340?
The U.S. China trade war hasn’t only impacted Yuan and U.S. Dollar, but the Australian dollar is also suffering from hell. Well, it’s because China is the biggest trading partner of Australian. Australia–China relations, often known as the Sino–Australian relations, refers to the relationships between the Commonwealth of Australia and China.
Therefore, negative fundamentals from China also bring bears for the Australian dollar. With that being said, the EUR/AUD violated the bearish channel on the daily chart which was providing substantial resistance around 1.5900.
The Australian dollar weakened further after China retaliated with another round of traiff on the U.S. products. Thus, the EUR/AUD reacted and violated the double top resistance level of 1.6080.
For now, the pair is still bullish as it recently closed bullish engulfing on the daily timeframe, which suggests the bullish power is still strong. The cross pair can target 1.6345 in coming days.
Support and Resistance
R3: 1.6459
R2: 1.6243
R1: 1.6147
Key Trading Level: 1.6026
S1: 1.593
S2: 1.581
S3: 1.5593
EUR/AUD - Trade Tips
In my opinion, it’s a bit late and risky to go long in EUR/AUD as the pair is already overbought and may trigger a retracement. But do consider staying bullish above 1.6050 to target 1.6250 and 1.6340 in coming days.
GBP/JPY Testing Bearish Channel Support
The Japanese yen is considered as a safe haven, and it’s demand typically surge during uncertainty and war sentiments. USD/JPY also has resumed its downward trend on Monday.
In the New York session, the GBP/JPY pair slipped from 142.850 to 141.300 with no U.S. events. Well, all of it got triggered due to safe-haven demand.
On the other hand, a new round of Brexit talks between the government and Labour to take place today. The British pound failed to capitalize on the broad-based USD weakness earlier in the day and pushed lower as the greenback started to recover its early losses.
Technically, the GBP/JPY is gaining substantial support around 141.740, and the pair is very likely to bounce off this level. The pair may find resistance around 142. So it’s sort of a narrow range, and we will be able to determine further trend upon the bullish or bearish breakout.
A bearish breakout could extend selling trend until 140, 139.50 and 137.40. Whereas, the pair may find resistance around 143 and 143.950 today.
Support and Resistance
R3: 151.17
R2: 147.44
R1: 145.21
Key Trading Level: 143.72
S1: 141.49
S2: 140
S3: 136.28
GBP/JPY - Trade Tip
Consider staying bearish below 143 and bullish above 141 as the pair is very likely to maintain this range in the absence of top tier economic events. All the best!
