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Talking Forex Daily Wrap: October 7, 2013

Published 10/07/2013, 10:52 AM
Updated 07/09/2023, 06:31 AM

EUR/USD
The pair finished the London session relatively flat despite initial USD weakness, which was observed in the pair amid concerns following the US government shutdown and looming debt ceiling which caused the pair to rise by around 34 pips from Friday’s close. However, some of these gains were trimmed midway through the London session as some USD weakness was halted by a failure in the USD/JPY to move below its 200 DMA at 96.68 (as mentioned below). With little in the way of macroeconomic data for the Eurozone and the US, the pair will continue to largely be driven by the current situation in the US in the short-term. However, it is worth noting that the FOMC minutes for September 17th-18th are due for release on Wednesday and could provide some direction for the pair. In terms of technicals for the pair, the recent strength can be observed via the recent cross of the 100 DMA above the 200 DMA.


GBP/USD
The pair finished the London Session in positive territory after observing initial USD weakness which has been the case across FX markets due to the significance of the current US government shutdown and debt ceiling deadline on Oct. 17th. The difference in performance between the EUR/USD and the GBP/USD can be observed via the EUR/GBP which is trading in negative territory for the session as a result of the current positive outlook for the UK ahead of Thursday’s BoE rate and APF decision. Additionally, the pair is beginning to trim some of the losses observed on Friday. From a technical perspective strength in the pairing can be observed as the 100 DMA begins to cross back above the 200 DMA.


USD/JPY
The pair finished the London Session in negative territory due to a combination of unfavourable interest rate flows and the demand for safe haven assets amid USD weakness. As with the EUR/USD and the GBP/USD this move was observed as a result of the current US situation. However, due to safe haven flows the USD/JPY was affected to a greater extent than the other two pairs. From a technical perspective, this weakness in the cross saw the USD/JPY head towards the 200DMA at 96.68, however, this test was unsuccessful as a result of strong bids at the 96.85 level. It is also worth noting for future price action that there is a large option expiry at 97.00. Furthermore, the pair is trading in close proximity to the Aug 28 swing low at 96.81.

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