Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
Market updates on October 10
Key events ahead:
US-China trade talks
Speech by the BOE Governor Mark Carney – 12:20 MT (9:30 GMT)
ECB Monetary Policy Meeting Accounts – 14:30 MT (11:30 GMT)
US CPI and core CPI – 15:30 MT (12:30 GMT)
The Asian trading session was highlighted by the mixed reports ahead of US-China trade talks. The news that the US administration will issue licenses, which will allow sales to Huawei and that a currency agreement between the counties may be reached, boosted the risk sentiment in the markets. Let’s see how the currency pairs reacted to this news and what levels we need to pay attention to.
- EUR/USD bulls reacted optimistically to the news about the progress in US-China trade negotiations. The pair has broken the upper border of the long-term descending channel and risen to the 1.1023 level. If this level is broken, the pair will rise further to the 1.1037 level. The next key resistance level will be placed at 1.1055. If the risk sentiment fades away, EUR/USD will fall below the 200-period SMA towards the support at 1.0985. Bears may be looking for a breakout of this level and attempt to pull the pair lower to the 1.0967 level.
- AUD/USD inched higher, too. Bulls have been trying to push the pair higher towards the 100-period SMA on H4, which lies close to the 0.6757 level. The next resistance level will lie at 0.6771. After the breakout, reaching the 0.6780 level may seem possible. In case of risk-off sentiment, the pair will reverse to the 50-period SMA near the 0.6734 level. If this level is broken, the next support will be placed at 0.6728. After that, it is recommended to pay attention to the support at 0.6709.
- As the trading session will be driven by the updates from the US-China trade talks, we expect USD/JPY to move, too. In case of a risk-on sentiment, the pair will rise above the 107.59 level (100-period SMA) on H4. The further resistance levels will lie at 107.67 and 107.75. In case of negative news, it is recommended to look for a breakout of the support at 107.33 (50-period SMA). The next support will lie at 107.22 (200-period SMA). The breakout of this level will make the pair vulnerable to the fall to 107.03 (lower border of the ascending trading channel).
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
Jump in to know the key market events and trading ideas for this week!
The Canadian central bank will make a monetary policy report and announce interest rates on Wednesday, January 20, at 17:00 MT time. Also, the BOC press conference will be held later.
USD’s rally takes a pause, while riskier assets are modestly rising.