Daily Market Report
04 Oct 2021

EURUSD

EUR/USD finally managed to close a session with gains after five consecutive daily pullbacks on Friday. The pair, however, failed to close the day above 1.160 despite the bull run to daily highs near 1.1610.
 
The move higher in spot came in response to the corrective leg lower in the greenback, with USD-sellers dragging the US Dollar Index (DXY) back to the 94.00 neighbourhood, reaching the second negative daily performance in a row.
 
The improved mood in the risk complex gave extra oxygen to the European currency, while diminishing US yields also put the buck under extra pressure. On the latter, yields of the key US 10-year reference note returned to the vicinity of 1.45% after climbing to as high as past the 1.56% level earlier in the week.
 
The usual round of Fed-speakers this time saw Minneapolis Fed and well-known dovish member N.Kashkari also leaning towards starting the tapering process relatively soon. In addition, Philly Fed P.Harker sees significant upside risk for inflation, although he suggested the PCE could drift lower to 2% in the next two years. Cleveland Fed L.Mester believes that inflation pressure could start to mitigate once the supply constraints are over. She sees inflation expectations well anchored and an interest rate hike next year.
 
In the calendar, German Retail Sales expanded below estimates in August 1.1% inter-month and 0.4% YoY. Final Markit’s Manufacturing PMI in Germany came in at 58.4 and 58.6 in the broader Euroland. In addition, flash inflation figures in the euro area showed the headline CPI is expected to rise 3.4% in the year to September and 1.9% over the last twelve months when energy and food costs are excluded (Core CPI).
 
In the US data space, the always relevant ISM Manufacturing rose to 61.1 in September, the final Manufacturing PMI came in at 60.7 and the U-Mich index showed the Consumer Sentiment bettered to 72.8 in the same month. Results for the month of August noted the PCE rose 4.3% YoY and the Core CPI gained 3.6% YoY. Furthermore, Personal Income expanded 0.2% MoM and Personal Spending rose 0.8% from a month earlier.
 
Further downside in EUR/USD cannot be ruled out for the time being, with immediate support at recent 2021 lows near 1.1560 (September 30). Further south from here it should come to the round level at 1.1500 the figure prior to 1.1495 (high March 9 2020). The oversold conditions still prevail in spot, therefore another bullish attempt should remain well in the pipeline for the time being. In this scenario, the 10-day SMA at 1.1673 emerges as the initial minor hurdle ahead of the more relevant resistance area in the mid-1.1700s (weekly highs). The RSI stays just below 30, while the trend gathered some vigour, as per the ADX AROUND 28.
 
Resistance levels: 1.1607 1.1680 1.1755 (4H chart)
 
Support levels: 1.1562 1.1540 1.1507 (4H chart)

USDJPY

USD/JPY accelerated losses and briefly tested the sub-111.00 area on Friday, although it managed to close just above that key level.
 
The pair came under moderate selling pressure pari passu with the correction in the greenback from 2021 highs around 94.50 when tracked by the US Dollar Index (DXY). The renewed weakness in the buck emerged in response to profit taking mood, overbought conditions in light of the recent strong rebound and declining US yields.
 
Indeed, the short end of the curve posted its third consecutive session with losses on Friday, re-visiting the 0.26% region. The most watched belly of the curve eased to the 1.46% level, while yields of the 30-year note also corrected lower and reached the 2.03% area.
 
In Japan, the Tankan Large All Industry Capex rose 10.1% in Q3. Same path followed the Tankan Large Manufacturers Index at 18, the Tankan Large Non-Manufacturing Index at 2 and the Tankan Large Manufacturing Outlook at 14. The latter is the only one coming in short of expectations. In addition, the Unemployment Rate stayed unchanged at 2.8% in August while the Jobs/Applications Ratio eased to 1.14. Finally, the final Jibun Bank Manufacturing PMI dwindled to 51.5 for the month of September.
 
USD/JPY came under pressure just past the 112.00 mark, or new 2021 highs (September 30), where the overbought territory also coincides. The move lower now carries the potential to extend to the interim level at 110.61 (10-day SMA) ahead of the 110.40 region. Extra losses from here could test the minor levels at 110.23 and 109.99, home of the 20- and 55-day SMAs, respectively. On the upside, there are no levels of note until the 2020 peak at 112.22 (February 20) followed by the 2019 high at 112.40 (April 24). The RSI returns to the 58 area, while the ADX stays anemic <20.
 
Resistance levels: 112.07 112.22 112.40 (4H chart)
 
Support levels: 110.90 110.66 110.08 (4H chart)

GBPUSD

In line with the rest of the risk-associated peers, the sterling charted a positive session on Friday, lifting GBP/USD close to 1.3580, where some decent resistance seems to have turned up.
 
Cable, therefore, closed the second consecutive session with gain, gaining more than a cent since fresh YTD lows near the 1.3400 level recorded earlier in the week.
 
Despite Friday’s rebound, the British pound is still under some downside pressure, mainly stemming from the fuel crisis – which is expected to last for some extra days – and uncertainties around the UK economy and (still, yes) Brexit.
 
In the UK calendar, the final Markit Manufacturing PMI came at 57.1, surpassing forecasts albeit retreating from August’s 60.3.
 
GBP/USD staged quite a decent comeback in the second half of the week, regaining the 1.3500 barrier and above after bottoming out near 1.3400 on September 29/30. Further upside from here is seen testing the 10-day SMA at 1.3597 ahead of the more important resistance zone in the 1.3730 (pre-BoE meeting highs). This barrier is also reinforced by the proximity of the 20-day SMA around 1.3700. Further up comes the 55-day SMA at 1.3760, while the 200-day SMA is located near 1.3840. The RSI extended the rebound to 40 and the ADX approaches 20, indicating that the trend is gathering some muscle.
 
Resistance levels: 1.3575 1.3605 1.3729 (4H chart)
 
Support levels: 1.3411 1.3187 1.3134 (4H chart)

AUDUSD

 
 AUD/USD advanced and closed Friday’s session in 3-day highs in the 0.7265/70 band, clinching its second positive move in a row.
 
The improved mood in the broad risk complex, the inactivity in the Chinese markets (due to the National Day holiday) and the renewed offered bias in the greenback all helped the Aussie dollar claw back part of the ground lost in the first half of the week.
 
In addition, yields of the Australian 10-year note reversed the weakness witnessed in the last couple of sessions and tested once again levels beyond 1.52%, or multi-month highs.
 
Data wise Down Under, the Ai Group Manufacturing Index eased to 51.2 in September (from 51.6), while the manufacturing PMI gauged by Markit rose to 56.8 (from 52).
 
Further recovery in AUD/USD now looks to visit the minor resistance at the 20-day SMA at 0.7295. A more significant resistance zone lies around 0.7320/30 (weekly highs), which is also underpinned by the 55-day SMA, today at 0.7315. On the downside, weekly lows near 0.7170 comes first in case sellers regain the upper hand. If the selling impulse gathers extra pace from here, then a drop to the YTD low in the 0.7100 neighbourhood (August 20) could be exposed. The daily RSI bounces to 48, although the lack of strength in the trend remains visible with the ADX around 18.
 
Resistance levels: 0.7276 0.7291 0.7310 (4H chart)
 
Support levels: 0.7191 0.7169 0.7105 (4H chart)

GOLD

Gold prices closed the first week with gains after three consecutive weekly pullbacks, always on the back of the moderate move lower in the greenback, the loss of momentum in US yields and also partly in response to some safe haven inflows.
 
Indeed, the US Dollar Index (DXY) – which gauges the greenback vs. a bundle of its main competitors – traded well on the defensive and charted the second daily pullback in a row, all after hitting new highs around 94.50 on September 30, levels last seen back in September 2020.
 
Also adding to the improvement in the precious metal, yields of the key US 10-year reference note extended the leg lower to the 1.46% area at the end of last week, shedding around 10bps since tops past 1.56% clocked on September 29.
 
Furthermore, persevering uncertainty surrounding the global economic recovery, the ongoing energy crisis in China and the supply constraints in the UK’s fuel sector also lent some legs to the yellow metal via inflows into the safe haven universe.
 
If the rebound in gold picks up extra impulse, then there a couple of minor hurdles at the 10-day SMA at $1,770.58 ahead of a Fibo level at $1,776.04. The next hurdle of note comes at the weekly high at $1,787.24, which is also reinforced by the 55-day SMA at $1,785.96. The $1,800 mark per ounce troy remains the magnet for any serious bullish attempt in the meantime, area also propped up by the 200-day SMA at $1,801.27. On the flip side, the next support comes at the September low at $1,721.71 seconded by the minor level at $1,714 (Fibo) and then August’s low at $1,681.95.
 
Resistance levels: $1,764.29 $1,783.94 $1,787.94 (4H chart)
 
Support levels: $1,748.70 $1,740.11 $1,720.40 (4H chart)

SILVER

Silver staged a rebound to the $22.60 area on Friday, just to close around $22.50 on what was the second consecutive daily gain in the grey metal.
 
The recovery in silver, and thus in the risk peers and the dollar-labelled assets, was sponsored by another downtick in the greenback after lower US yields weighed on the US Dollar Index (DXY) and dragged it to the 94.00 neighbourhood at the end of last week.
 
Despite losing ground for two sessions in a row, DXY managed to finish within the positive territory for the fourth consecutive week, while the grey metal posted its second week in a row with gains.
 
Extra support for silver came on the back of further downside in the Gold/Silver ratio, which receded to the boundaries of the 78.00 yardstick on Friday.
 
Further upside momentum in Silver now faces the next minor hurdle at the 20-day SMA ($23.03) prior to the more remarkable barrier at the weekly top at $23.14. Further up comes the short-term resistance line in the $23.80 zone, which in collaboration with the 55-day SMA ($23.85), emerges as quite a decent resistance. Above the latter, the downside bias is expected to mitigate somewhat. In the opposite direction, a drop below the $22.00 mark should re-shift the focus to the 200-week SMA at $19.05. Still on the downside, June 2020 low at $16.95 should come next ahead of $16.72 (May 22 2020).
 
Resistance levels: $22.58 $22.84 $23.14 (4H chart)
 
Support levels: $21.96 $21.39 $21.00 (4H chart)

CRUDE WTI

The barrel of West Texas Intermediate (WTI) closed Friday’s session with decent gains above the $75.00 mark, recording at the same time the third consecutive daily advance.
 
The upside path in WTI prices intensified by the constant weakness surrounding the dollar as well as the positive impact on trader’ sentiment of the news of a pill developed by US pharmaceutical Merk&Co to fight the COVID.
 
In fact, traders practically by-passed recent news that the OPEC+ could pump in extra oil into the markets apart from the already planned 400 kbpd. This will be the centre of the debate on Monday when the cartel will meet once again.
 
In the docket, driller Baker Hughes reported an increase of 7 oil rigs during the week ended on October 1, taking the total US active oil rigs to 428.
 
In light of the ongoing move higher in crude oil prices, extra gains now look to re-visit, initially, the September’s top at $76.65 (September 28) ahead of the 2021 highs at $76.95 (July 6). Moving further north comes $77.79 (November 21 2014) seconded by $79.82 (high November 10 2014). Once cleared, the focus of attention should shift to the $80.00 mark. Occasional bearish move should meet initial contention at last week’s low at $73.16 ahead of the 100-day SMA ($70.17) and the weekly low at $69.42 (September 21)
 
Resistance levels: $75.97 76.65 $76.95 (4H chart)
 
Support levels: $74.21 $73.71 73.12 (4H chart)

DOW JONES

US stocks started the new month on a positive footing, clinching decent gains and reversing at the same time part of the pessimism observed throughout September.
 
In fact, positive results from the US docket on Friday added to the COVID-linked news surrounding US pharmaceutical Merk&Co and upbeat prospects for President Biden’s huge bill on infrastructure.
 
On the not-so-bright side, investors remain vigilant on the progress of the debt ceiling discussions as well as rumours of a potential downgrade of the US debt, all pouring extra uncertainty into the markets.
 
All in all, the Dow Jones Industrial Average gained 1.43% at 34,326.46, the S&P500 advanced 1.15% at 4,357.05 and tech reference Nasdaq Composite went up 0.82% at 14,566.70.
 
The 33,600 area (September low) remains a solid contention area in case sellers make a comeback to the markets. South from here aligns May’s low at 33,473.80 followed by June’s low at 33,271.93. This level is reinforced by the vicinity of the 200-day SMA at 33,380.88. Looking up, extra gains could gather pace on the breakout of the weekly high at 35,061, considered the last defense for an assault to the key resistance area near 35,500. The RSI leapt to 45, and the trend remains quite healthy, as per the ADX > 30.
 
Top Performers: Merk&Co, Walt Disney, Amereican Express
 
Worst Performers: Walmart, J&J, Walgreen Boots
 
Resistance levels: 34,490.56 34,682.87 35,061.12 (4H chart)
 
Support levels: 33,785.54 33,613.03 33,271.93 (4H chart)

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