Financial Market Research and Analysis

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USD strengthens on hawkish Fed minutes
The EURUSD shortly slipped below the 1.1000 handle as the Federal Reserve (Fed) meeting minutes suggested that the Fed may be closer to a rate hike. The negative bias should remain below the 1.1096 (major 38.2% retracement on Sep 30th to Oct 13th fall), for a potential extension of losses to 1.0951 (Jul 24th low) and 1.0910 (Jun 23rd low). Intermediate resistance is eyed at 1.1060 (minor 23.6% retrace).

The USDJPY extended gains to 104.64 on the back of a broad-based USD appreciation. The positive trend is expected to encourage a test of the 105.00 handle, max 105.50. The short-term bias remains positive above the 102.89 level (major 38.2% retracement on Sep 27th to Oct 13th). Intra-day supports are eyed at 103.55 (minor 23.6% retrace) and 103.20 (200-hour moving average).

The broad-based USD strength further weighed on the GBPUSD. A minor recovery is expected given the oversold market conditions, nevertheless the upside attempts remain capped due to high political risk in the UK. Intra-day resistances are eyed at 1.2230 (50-hour moving average), 1.2295 (major 38.2% retracement on Sep 29th to Oct 7th crash), 1.2310 (100-hour moving average) and 1.2440 (Fibonacci 50% level). Stops are eyed below 1.20.

The AUDUSD is testing the 0.7515 support (minor 76.4% retrace on Sep 15th to Sep 29th rise), if broken, should pave the way to 0.7455 (Sep 15th low), mid-term support. Higher US yields, stronger US dollar should keep the carry appetite limited. Intra-day resistances could be found at 0.7551/0.7555 (major 61.8% retrace / 50-hour moving average), 0.7573 / 0.7582 (100-hour moving average / major 50% level) and 0.7600 (200-hour moving average).

There is little conviction in the minor recovery in gold, given that the Fed hawks are still dominating. The 200-day moving average ($1275) remains the major mid-term resistance as traders disinvest along with the improvement in the US yields. Support is eyed at $1250 (major 38.2% retracement on Dec 16th to Jun 5th rise). Only a successful recovery attempt above $1275, could encourage a rise to $1297 (minor 23.6% retrace).

Stronger US dollar weighs on the oil prices. Combined with the lack of conviction that the recent production cut from the OPEC would do little on the global supply gap, the WTI slipped below $50. The next key support stands at $48.92 (major 38.2% retracement), which should distinguish between a recovery and a short-term bearish reversal.

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