Yesterday's trading added another batch of technical analysis signals, which indicate the possibility of strengthening the US currency. The price surge in the middle of Tuesday in the EUR/USD and GBP/USD pairs, when the quotes stormed the corresponding resistance zones, was accompanied by the formation of divergences between the local price maxima and the values of the RSI and MACD indicators. Such a development strengthens the point of view repeatedly expressed in previous overviews about the substantial strengthening of the US dollar in the coming trading sessions.
Perhaps the reason for the start of this scenario will be the publication of minutes from the Fed last meeting, which is expected tonight.
Today, players' attention is drawn to the output of data on consumer inflation in the UK and the Eurozone. At the time of writing this overview, the actual values of consumer inflation in the UK in September became known. The value of CPI in annual terms was 2.4%, which was below expectations at 2.6% and worse than the previous value of 2.7%. Similar statistics for the Eurozone will be published at 12:00 Moscow time. The prediction is at 2.1% (y/y). In my opinion, the value of the indicator will be at the level of the participants' expectations, which will lead to a local stabilization of quotations.
The focus today is on the publication of the Fed's minutes and on the messages that will come from the opening EU Leaders Summit, which is planned to make another attempt to achieve progress in the Brexit negotiation process.
Until 21:00 Moscow time, when the minutes of the last Fed meeting come out, the prevailing lateral fluctuations of quotations are predicted. Players took a wait-and-see position, which led to a narrowing of the ranges between the support and resistance zones for most of the analyzed currency pairs.
On Tuesday afternoon, buyers attempted to break through the resistance zone located near the 1.1600 mark. However, this attack was repulsed. Moreover, according to the results of this quotation dynamics, another divergence is observed between the local price maxima and the corresponding values of the MACD indicator. The gradual accumulation of signals of a corrective nature indicates the likelihood of price reductions in subsequent trading sessions. At the same time, waiting for the publication of the minutes from the last Fed meeting restrains players from active actions, which translates into fluctuations in the EUR/USD quotes around the 200-period MA round 1.1550 mark. Until the evening, the pair will not go beyond the range limited by the resistance zone just below the level of 1.1600 and the support in the area of Friday's (at October 12) minimum prices, around 1.1540.
Areas of support and resistance are areas 1.1530-1.1545 and 1.1575-1.1585, respectively.
The technical pattern of trading on Tuesday for the GBP/USD pair was similar to the previous pair. A surge in quotations to the area of 1.3220-1.3230 was accompanied on the H1 and H4 time frames by the formation of divergences between local price maxima and the values of the MACD indicator. The statistics on consumer inflation published in the first half of today was worse than the market expectations, which led to a local decline in prices in the support area in the area of 1.3140-1.3150. Further dynamics of quotations will depend on the reaction of players to the Fed protocols, which publication is expected later in the evening. Up to this point, the pair will trade in close proximity to its 200-period MA on the H1 time frame, located near the 1.3145 mark. However, the gradual accumulation of a set of correction signals indicates a high probability of a more significant decline in quotations in subsequent trading sessions.
The support zone today is in the area of 1.3135-1.3150 (green oval).
The resistance zone is present in the range 1.3200-1.3210 (red oval).
The pair USD/JPY worked on Tuesday for convergence between the local price minima and the corresponding MACD indicator values and almost reached the area of the 200-period MA passing through the 112.45 mark.
Today is predicted the stabilization of the situation. Until 21:00 Moscow time, when the Fed protocols are expected, quotations will make lateral fluctuations in the area just below the above mention moving average. At the same time, in the case of the scenario of strengthening of the US currency in the following days, prices can overcome the resistance zone in the area of 112.50 and rush to the level of 113.00.
The support zone is the range 111.85-112.00 (green oval).
The resistance zone is located in the area of 112.45-112.55 (red oval).
The USD/CHF pair worked out the convergence between the local minima of the quotes and the corresponding values of the MACD indicator, which resulted in quotes above the level of 0.9900. As a result of this movement, from a technical point of view, the formation of the “double bottom” figure is observed, the hollows of which are the minimum prices on October 11 and 15. In the case of further price increases (and I am precisely on this point of view, since the US dollar is expected to strengthen in world markets), the growth target will be the area of 0.9950-0.9960. The implementation of this scenario is highlighted in the graph with a yellow marker.
Today, until 21:00 Moscow time, prices will fluctuate in a narrow range bounded by support and resistance zones in the areas of 0.9885-0.9895 (green oval) and 0.9915-0.9925 (red oval), respectively.
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