Key Levels Tested Ahead of Busy IMF Week in DC

EUR/USD started the week on the defensive as the pair traded as low as the 1.10129 level yesterday after peaking on Friday around the 1.10628 area.  The pair’s upward progress from the multi-month low of 1.08792 on 1 October has been relatively steady, and technicians are waiting to see if EUR/USD can derive technical support around the 1.10051 area, representing the 23.6% retracement of the 1.14125 – 1.08792 range.  Notably, the 1.10829 area is the 38.2% retracement of the same range and may provide some additional upside selling pressure. Traders will carefully watch price activity around the 1.11002 area, representing the 23.6% retracement of the move from 1.18155 to 1.08792. The ZEW October economic sentiment index for the eurozone will be released today. Remarks from Fed officials Bostic, George, and Daly are expected today.  September eurozone CPI data are due tomorrow with the core rate expected around +1.0% y/y. September advance retail sales are due in the US tomorrow along with the Fed’s Beige Book. Fed officials Evans and Brainard are due to speak tomorrow and many US economic data are due on Thursday. Additional Fed officials are speaking on Friday including Kaplan, George, and Clarida. An ECB rate decision is expected next week.

USD/JPY continues to be challenged by a significant amount of technical resistance that continues to block it from testing multi-month highs.  Stops were elected when USD/JPY finally moved above the 108.43 area en route to the 108.62 level on Friday, representing the 50% retracement of the 2019 absolute range of 112.40 – 104.46.  Some larger stops were triggered when the pair moved above the 108.32 area, representing the 38.2% retracement of the 114.58 – 104.46 range. If USD/JPY is able to resume its upside trajectory, traders will look at levels such as 109.21, representing the 76.4% retracement of the 110.67 – 104.46 range. Likewise, the 109.52 area is another important upside price objective. September national CPI data will be released on Thursday in Japan with the core rate expected to print around 0.5%.

GBP/USD pulled back after testing a major technical level on Friday when cable traded as high as the 1.2705, its strongest print since 28 June and right around the 61.8% retracement of the move from 1.3177 to 1.1958.  Stops were elected above the 1.2670 area during the ascent higher late last week, representing the 50% retracement of the 1.3382 – 1.1958 range. Above this area, the pair’s next upside target is the 1.2746 area, representing the 61.8% retracement of the move from 1.1739 to 1.4376.  Traders will closely monitor remarks from Bank of England Governor Carney in Parliament today, and MPC’s Vlieghe will also speak later today. September CPI data will be released tomorrow and the core y/y print is estimated to be around 1.7%. Carney also speaks later this week at the IMF event followed by remarks at Harvard and then additional remarks later in the week.

USD/CHF has maintained a weaker bias over the past few trading sessions after briefly trading above parity when the pair traded as high as the 1.0028 area on 3 October. Stops were elected above the 0.9989 area during the move higher and have since emerged as technical resistance during the pullback lower.  The pair’s next potential important area of technical support is around the 0.9901 area, representing the 61.8% retracement of the move from 1.0342 to 0.9186. September producer and import prices will be released today.

USD/CAD continues to move higher after testing an important level last Friday when the pair fell sharply and tested bids around the 1.3169 level, representing the 23.6% retracement of the 1.3664 – 1.3016 range.  Prior to that recent depreciation, the pair had tested the 1.3340 area, representing the 50% retracement of the 1.3664 – 1.3016 range. Below the recent low in USD/CAD, traders will examine price activity around the 1.3145 level. September existing home sales data are due today followed by September CPI data tomorrow.

AUD/USD continues to orbit a very important technical level, namely the 0.6768 area that represents the 23.6% retracement of the 0.7082 – 0.6670 range.  The pair recently established a fresh multi-year low around the 0.6670 area after AUD/USD was unable to move too far above the 0.6876 area. The September Westpac leading index will be released tomorrow and RBA’s Debelle speaks in Sydney this week. Remarks from RBA Governor Lowe are expected on Thursday.

NZD/USD is trading between two important technical levels as price activity has been toppish around the 0.6350 level and supported around the 0.6294 area, right around the 38.2% and 23.6% retracements of the 0.6588 – 0.6204 range.  If the pair’s recent upside momentum continues, the 0.6384 area could be challenged, representing the 23.6% retracement of the 0.6970 to 0.6204. Third quarter CPI data are due later today and are estimated to print around +0.6% q/q and +1.4% y/y. 

USD/CNY gained moderate ground today following its recent move lower from the 7.1687 level, an area that it traded around after breaking above the 7.1569 level and triggering stops on 2 October.  During the pair’s pullback lower, the 7.0508 area was tested, representing the 38.2% retracement of the 6.8163 – 7.1957 range. China will release many economic data on Friday including Q3 GDP prints with a +1.5% q/q and +6.1% y/y print expected.