Quadruple witching is gone and now there are no reasons for the market to hinder. From banks statements and economic data to gas storage reading and Fed’s Powell speech – get ready for active trading.
Cautious optimism on Friday
Yesterday was Thanksgiving Day in the USA – the national holiday, that’s why we saw the reduction of volatility. The US dollar has started the day on the back foot, driven down by the poor US labor data. Unemployment claims came out worse than expected for the second consecutive week.
Investors are cautiously optimistic as new virus cases are constantly rising in the USA and Europe, and it’s still unclear how much time the vaccine roll-out will take and how many people will agree to make vaccinations. However, the risk-on sentiment still prevails on the market, but in a more modest manner.
EUR/USD is making efforts to escape the familiar range. If it manages to break the high of August 31 at 1.1937, the way up to the key psychological mark of 1.2000 will be open. However, we must admit it has failed to cross this level so far. Bulls need to be really strong, but they aren’t. Yesterday’s candlestick formed a long-legged doji. It has long upper and lower shadows that are almost equal in length and reflect a great amount of indecision in the market. That’s why it’s more likely that we’ll see a pullback rather than the breakout. The move below yesterday’s low of 1.1900 will drive the pair lower to the 50-period moving average of 1.1875, which has been supporting the pair so far.
GBP/USD is edging higher as well driven up by the weak US dollar. The Brexit process is not moving anywhere. The main sticking point over fisheries is still on the table, while the deadline of the year-end is getting closer. EU Chief Brexit Negotiator Michel Barnier will hold a meeting of EU fisheries today, so we can expect some news, which will impact the pound today.
It’s unlikely to break the resistance of 1.3400 as it has failed to do it several times. The move below the recent lows of 1.3310 will drive the pair to the 100-period moving average of 1.3235. In the opposite scenario, the move above the key resistance of 1.3400 will drive the pair to the next round number of 1.3500.
The S&P 500 is moving up. On the hourly chart, we can observe that every next green candlestick opens at a high of the previous one, which signals that momentum is bullish. The move above yesterday’s high of 3 637 will drive the stock index to Wednesday’s high of 3 650. On the flip side, the move below the support of 3 617 will open doors towards the psychological level of 3 600.
Finally, let's discuss USD/JPY. It has broken the psychological level of 104.00 but briefly surged back above it. The combination of the weak US dollar with the current cautious sentiment should underpin the JPY and drive the pair down. If the pair closes below the recent lows of 103.70, the way to the low of November 6 at 103.25 will be clear. Resistance levels are 104.67 and 105.00.
The US showed strong retail sales for August despite the spread of the Delta virus strain. As a result, the US dollar rocketed and gold dropped by 2286 points in half an hour after the release.
The United States will release MoM Retail Sales data on September 16, 15:30 GMT+3.
A selloff in stocks stopped. S&P 500 has reversed up from the 100-day moving average. It should be the perfect time to buy the index.
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The FOMC, a committee within the Federal Reserve, will hold an important meeting and press conference on September 22 at 21:00 MT time (GMT+3).