Daily Market Report
22 Sep 2021

EURUSD

EUR/USD added to losses recorded at the beginning of the week, although it managed well to keep business above recent YTD low around the 1.1700 yardstick.
 
Furthermore, the generalized cautious note in the global markets, steady dollar and almost muted activity in US yields forced spot to erode initial gains to the 1.1750 region, all in light of the upcoming FOMC event (Wednesday).
 
In addition, the Evergrande-led spike in risk aversion witnessed on Monday appears to have lost some traction throughout Tuesday’s session pari passu with some mild improvement in the risk complex.
 
Actually, yields of the key US 10-year reference note retreated to the 1.30% region, correcting lower from recent peaks above 1.38%.
 
In another direction, ECB’s Vice-President L. de Guindos sees a strong reading from the Q3 GDP, while he expects inflation in the region to peak near 3.4%-3.5% around November. De Guindos added that most of the raise in inflation remains temporary and technical, noting that there are no suggestions that wages are increasing.
 
There were no data releases in the euro docket on Tuesday.
 
Across the Atlantic, Building Permits rose more than expected to 1.728M units (or 6.0%) in August and Housing Starts also surpassed estimates at 1.615M units (or 3.9%.
 
EUR/USD’s price action does not rule out further losses in the short-term horizon. That said, a breach of the monthly low at 1.1700 should prompt a move to the YTD low at 1.1663 (August 20). Further south from here emerges the November 2020 low in the 1.1600 neighbourhood ahead of the 200-week SMA, today at 1.1573. In case occasional rebounds pick up pace, the pair initially faces interim resistance in the 1.1781/1.1801 band, where coincides daily SMAs (10-, 20-, 55-) as well as a Fibo level (of the June-August descent). If cleared, then the next move could expose the mid-1.1800s, home of the short-term resistance line (off June’s high) and weekly highs. The RSI looks stabilized around 38 while the ADX around 17 indicates the weak note of the current trend.
 
Resistance levels: 1.1748 1.1778 1.1788 (4H chart)
 
Support levels: 1.1700 1.1663 1.1602 (4H chart 

USDJPY

USD/JPY extends the pessimism recorded at the beginning of the week and navigated the area of recent lows near 109.20 on turnaround Tuesday.
 
Lower US yields coupled with the steady dollar and perseverant concerns surrounding the debt crisis around Chinese real estate developer Evergrande continued to underpin the demand for the Japanese safe haven and kept the downside pressure intact around the pair.
 
USD/JPY is expected to face increased volatility in the very near term in light of the imminent monetary policy meetings by the BoJ and the Federal Reserve.
 
The absence of data releases in Japan motivates investors to re-focus on the upcoming BoJ event on Wednesday, where consensus expects no changes to the bank’s current uber-accommodative stance, let alone a move on rates.
 
“Consolidation” seems to be the name of the game around USD/JPY for the time being, as it keeps intact the rangebound theme between 109.00 and 110.50. Further north of the 110.10/15 band could expose a test to the 110.50 region (September 8) prior to a test of August highs around 110.80. On the flip side, immediate support aligns around 109.10. If cleared, it could allow for extra losses to the monthly low at 108.72 (August 20). The RSI eases ground to the 41 region, while the trend remains weak, as per the ADX just above 10.
 
Resistance levels: 109.70 109.90 110.08 (4H chart)
 
Support levels: 109.18 109.11 108.72 (4H chart)

GBPUSD

GBP/USD closed the session with marginal gains near 1.3660 on the back of the anemic price action around the greenback and mitigated risk aversion sentiment, particularly since investors shifted their focus to the upcoming FOMC and BoE meetings and thus relegating Evergrande jitters to the backburner.
 
In line with the better mood in the risk-associated universe, the UK stocks benchmark FT100 reversed two consecutive daily losses and returned albeit briefly to the 7,000 mark.
 
In the UK docket, the Public Sector Net Borrowing expanded to £19.78B, while the Public Sector Net Cash Requirement rose to £5.834B, both prints during August. In addition, the CBI Industrial Trends Orders improved to 22 in September (from 18).
 
GBP/USD faces immediate contention in so far weekly lows around 1.3640. If sellers push harder, then the next support of note is expected to emerge at the August’s low at 1.3602 (August 20) ahead of July’s low at 1.3571 (July 20). If buyers find fresh legs, then there is an interim resistance zone at 1.3773/95 band, where sits the 20-, 10- and 55-day SMAs. Further up comes the critical 200-day SMA at 1.1833. Above the short-term resistance line near 1.3850 Cable is expected to see its upside pressure somewhat renewed, with the immediate target at 1.3900 and beyond. The daily RSI bounces near 38, while the lack of strength in the trend is reflected by the ADX around 14.
 
Resistance levels: 1.3784 1.3812 1.3853 (4H chart)
 
Support levels: 1.3640 1.3602 1.3571 (4H chart)

AUDUSD

AUD/USD met support once again in the 0.7220 region, although it kept trading on the defensive for the fourth consecutive session following the confirmation of the “dovish taper” at the RBA Minutes, jitters surrounding the Chinese economy and the pick-up in the risk aversion mood on the back of Evergrande concerns.
 
In the RBA Minutes, the central bank said that the reduction of bond purchases to A$4B per week was in response to forecasts of a relatively rapid rebound in the economic recovery. The decision to taper the stimulus programme was also underpinned by the same path also followed by other central banks.
 
There are rising bets for the continuation of the downtrend in the near term at least. That being said, the Aussie dollar carries the potential to depreciate to, initially, the 0.7100 neighbourhood, or 2021 lows, recorded on August 20 ahead of a move to the psychological support at 0.7000. In case dip buyers turn up, there are some minor hurdles at the 20-day SMA (0.7329) and the 55-day SMA (0.7345). Further north from here comes the short-term resistance line around 07420, which if cleared should spark a probable visit to the monthly peaks around 0.7480 (September 3). The daily RSI grinds lower to 38 and approaches the oversold territory, while the ADX still shows the weakness of the current trend past 18.0.
 
Resistance levels: 0.7283 0.7315 0.7321 (4H chart)
 
Support levels: 0.7220 0.7105 0.7000 (4H chart)

GOLD

Gold charted a positive day and managed to extend the recovery from recent lows for the second session in a row on turnaround Tuesday. Actually, the ounce troy of gold regained the $1,775 level after Monday’s intense pullback to as low as the $1,740 area.
 
Declining US yields, the offered note in the dollar and the cautious stance from market participants ahead of the key FOMC event on Wednesday have likely underpinned Tuesday’s performance of the precious metal.
 
The greenback, in the meantime, shed further ground following Monday’s rejection from the 93.50 zone when gauged by the US Dollar Index (DXY), or new monthly peaks.
 
Indeed, investors appear to have shifted the attention to the upcoming FOMC meeting, relegating to a secondary role the debt crisis surrounding the Chinese giant developer Evergrande.
 
The resumption of the downtrend in gold is predicted to revisit recent lows around $1,740, where also coincides a Fibo level (of the August-September rally). Further south comes another minor support at $1,714 (Fibo level), all ahead of the monthly low at $1,681.95 (August 9). In case the recovery becomes more serious, there are interim hurdles at the 10-day SMA ($1,780.65), followed by the 55-day SMA ($1,795.15), all ahead of the key $1,800 mark per ounce. This key area of resistance is reinforced by the 200-day SMA, today at $1,805.92.
 
Resistance levels: $1,781.83 $1,786.41 $1,808.74 (4H chart)
 
Support levels: $1,759.49 $1,756.90 $1,741.90 (4H chart)

SILVER

Silver finally regained the smile and extended the rebound from the $22.00 area to as high as the $22.70 region on Tuesday, where some resistance emerged.
 
The offered bias in the dollar prompted the US Dollar Index (DXY) to recede further from Monday’s monthly highs near 93.50 and lent some oxygen to silver, always amidst some lack of traction in US yields and somewhat alleviated worries around the Evergrande debt crisis.
 
The grey metal thus managed to stop the sharp selloff in the $22.00 area, levels last seen back in November 2020. However, the prospects around silver are far away from constructive, at least for the time being and against the backdrop of the sooner-than-later QE tapering by the Federal Reserve and downside risks stemming from the progress of the Delta variant.
 
Extra support for silver came in response to the corrective move in the gold/silver ratio from Monday’s 2021 highs past the 79.00 area.
 
If silver drops below the $22.00 mark, it could expose a visit to the November 2020 low at $21.89 ahead of the September low of the same year at $21.66. A technical rebound could be underway in the meantime since the metal tested the oversold territory on Monday. Further recovery now faces the initial hurdle at the former support at $22.88 ahead of the 10-day SMA ($23.31) and the 20-day SMA ($23.70). Further up, the $24.00 round level stays as the key magnet for bulls for the time being.
 
Resistance levels: $22.71 $23.13 $23.81 (4H chart)
 
Support levels: $22.00 $21.87 $21.66 (4H chart)

CRUDE WTI

Prices of the barrel of the WTI reversed part of the recent bearishness and closed Tuesday’s session with decent gains although below the $71.00 mark.
 
Indeed, prices staged a moderate rebound as concerns on the demand side seemed to have outweighed those coming from the supply side, particularly now that the activity in the Gulf of Mexico has practically returned to normality and the OPEC+ faces issues to meet the increasing demand following further re-opening of the economic in a post-pandemic world.
 
In the data space, the American Petroleum Institute will report on US crude oil supplies during the week ended on September 17.
 
The next key support for WTI remains at the $70.00. If the commodity breaks below this key level, then there is scope for move to the next support of relevance in the $67.60 region per barrel after leaving behind minor obstacles at the 55-day SMA ($69.71) and the 100-day SMA ($69.42). On the upside, there is no barrier until the recent monthly peaks past the $73.00 mark. If cleared, the next hurdle of note is seen at the late July peaks above the $74.00 level.
 
Resistance levels: $71.46 $73.11 $74.21 (4H chart)
 
Support levels: $69.38 $68.47 67.56 (4H chart)

DOW JONES

The Dow Jones Industrial Average regained some composure and managed to close Tuesday’s session with modest gains, reversing at the same time Monday’s meltdown to 3-month lows.
 
Actually, the Dow gained 0.32% at 34,074.93, the S&P500 rose 0.40% at 4,374.60 and the Nasdaq Composite advanced 0.63% at 15,105,76.
 
US stocks, along with most of the benchmark indices across the Atlantic left behind recent sharp losses triggered by the debt crisis around the Chinese developer Evergrande, although the unease surrounding this issue is expected to keep haunting markets at least in the very near term.
 
Investors will now shift their focus to the FOMC event (Wednesday), where a potential timetable for the QE tapering and the fresh dots plot will take centre stage.
 
In the meantime, renewed downside could well see Monday’s low at 33,613 retested. A deeper move should open the door to a probable move to May’s low at 33,473.80 ahead of the June’s low at 33,271.93. A more serious rebound should meet interim hurdle at the 100-day SMA at 34,671.68 prior to the 55-day SMA, today at 34,983.55. The RSI just bounces off the oversold territory at 34 while the trend looks stronger, as per the ADX near 30.
 
Top Performers: American Express, Home Depot, Nike
 
Worst Performers: Walt Disney, 3M, Dow
 
Resistance levels: 34,313.88 34,673.86 34,990.36 (4H chart)
 
Support levels: 33,613.03 33,473.80 33,271.93 (4H chart)

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