Trading plan for 22/09/2017:
North Korea once again reminds itself of the dreaded hydrogen bomb test, which leads to a jump in risk aversion. The Yen and Frank are the strongest in the Asian trade, but Gold also jumped. USD/JPY has fallen to 111.64, but it is already pulling out at 112, suggesting that once again the market is trying to shake off the «Korean fear» quickly. EUR/USD is holding at 1.1960. AUD and NZD remain the weakest currencies.
On Friday 22nd of September, the event calendar is busy in important news releases. During the London session, a set of Flash Manufacturing and Services PMI’s from the Eurozone will be released. During the US session, Canada will release a set of Consumer Price Index and Retail Sales data. The US will release the Flash Manufacturing and Services PMI’s as well.
EUR/USD analysis for 22/09/2017:
The set of PMI’s from the France, Germany and the rest of the Eurozone are scheduled for release early during the London session. The general sentiment is positive and the market participants expected mostly better numbers than a month ago. Nevertheless, the economic data releases might be quickly overshadowed by the concerns over the geopolitical issues. North Korean leader Kim Jong-un, also known as the «Man of the Rocket on a Suicide Mission» (quoted by President Trump), wants to be faithful to his nickname and scare the test of another fusion bomb. Such information was provided by the Foreign Minister of Korea in response to Trump’s legal acts aimed at companies working with the Kim regime. The markets have long heard nothing of Korea, so such reminder has frightened some, and the reactions were obvious — JPY, CHF and gold are gaining, South Korean won and yields of US bonds are losing. If the situation escalates, even the US Dollar might gain across the board.
Let’s now take a look at the EUR/USD technical picture on the H4 time frame. The market bounced from the level just above the technical support and currently is heading back towards the round number of 1.2000. Current moves on this pair are typical for a sideways market which might be about to break out higher. A weekly close above the level of 1.2000 would indicate a bullish trend resumption.
Market Snapshot: Gold bounces from the channel support line
The price of Gold had bounced from the lower line of the channel support around the level of $1,287 and currently is testing the lower boundary of the old technical support zone. The market conditions remain oversold, so a bounce higher or a sideways move might be expected soon. The next technical resistance is seen at the level of $1,308.
Market Snapshot: USD/CAD fails to break out above 50%Fibo
The price of USD/CAD has been capped around the level of 1.2361 and were unable to rally higher towards the 61%Fibo retracement at the level of 1.2432 so far. There is a clear bearish divergence between the price and the momentum oscillator, so now the immediate outlook is bearish. The next support is seen at the level of 1.2203.