By Deepta Bolaky
Risk aversion crept back into the markets following the deadlock in US stimulus negotiations, no Brexit breakthrough ahead of the deadline and the rising number of coronavirus cases in Europe.
European and US stocks closed in a sea of red on Tuesday:
On the earnings front, both JP Morgan and Citigroup beat expectations and reported a surge in trading in financial markets. The banks have also slowed the pace of provisions for bad debts. More banks are set to report their third-quarter earnings in the next couple of days.
In the FX space, the US dollar regained strength on its safe-haven status as risk appetite deteriorated overnight. To the exception of the New Zealand dollar, major G10 currencies were weaker against the greenback.
The British Pound struggled by Brexit woes and mixed employment reports:
Amid a subdued economic calendar, the Aussie dollar was left at the broader sentiment of the markets – US stimulus chaos and elevated tensions with China. The AUDUSD pair dropped from a high of 0.7213 level to a low of 0.7150.
Renewed selling interest in the EURJPY pair looks as if it may continue to lower levels during the upcoming sessions as the previous bullish technicals begin to waver.
The four-hour chart above shows a validated bullish trendline that originated towards the end of last month. Current support for this trendline sits at 124.30, and providing the price can stay above here, then the pair will remain bullish.
However, price action appears to be somewhat shaky with multiple failed attempts to break above the 200 MA line in yellow and a general loss of momentum as we see the shorter bursts of demand closer to the 125.08 high. We also have signs of some bearish divergence as displayed by the RSI indicator, and while the pair currently leans towards the oversold camp, there is still plenty of room for sellers to push this level further.
As mentioned earlier, the pair will need to hold above the 124.30 regions to keep within bullish sentiment. Otherwise, we could see EURJPY slip back down to 123.00 and 122.37, respectively.
Crude oil prices advanced on upbeat Chinese imports data despite the concerns over supply and demand. The World Energy Outlook 2020 report reiterates the struggles of the energy market in the coming years:
As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $40.14 and $41.45 respectively. Traders are to keep an eye on the following events for fresh trading impetus:
The precious metal lost ground on a stronger US dollar and the US stimulus stalemate. The XAUUSD pair has dropped back below the $1,900 and is currently trading around the $1,890 level.
Source: GO MT4
By Deepta Bolaky
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|Thursday, 15 October 2020
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