The American dollar finally reversed course

EUR/USD

The American dollar finally reversed course, posting however, moderate losses against most of its major rivals after several sessions of gains. The EUR/USD pair fell below the 1.1000 mark for the first time since late July, posting 1.0985 before bouncing, whilst following recoveries were capped well below the 1.1100 region, indicating that the bearish potential remains intact. 

The macroeconomic calendar was quite scarce, with Germany releasing its September inflation figures, which matched markets' expectations and previous readings. On a monthly basis, the CPI rose by 0.1%, while compared to a year before, it advanced by 0.7%, passing unnoticed. In the US, weekly unemployment claims for the week ending October 8th, came in at 246K, unchanged from the previous week, holding near the multi-decade low of 244K posted in November 1973, indeed, a sign that the employment sector remains strong. Also, limiting dollar's decline were comments from Philly FED's Harker, backing a rate hike before the year end. 

The EUR/USD pair advanced steadily after bottoming at the mentioned 2-month low, although the price looks merely corrective, given that in the 4 hours chart, the price is well below a sharply bearish 20 SMA, while more relevant, below the 38.2% retracement of its latest decline, at 1.1070. Technical indicators in the mentioned time frame have recovered from oversold readings, and maintain upward slopes within negative territory, also indicating that EUR's demand is restricted. 

Support levels: 1.0995 1.0960 1.0920    

Resistance levels: 1.1070 1.1120 1.1160

USD/JPY

The USD/JPY pair rallied up to 104.63, its highest since late July, but change course amid the negative tone among equities, triggered by poor Chinese export data released at the beginning of the day. In US terms, Chinese trade surplus narrowed to $42 billion from $52.1 billion in August, but imports fell 1.9% in the 12 months through September, while the value of exports plunged 10% in the same period. Better-than-expected US data was unable to halt the pair's decline, which edged down to 103.33 in the American afternoon, before settling around 103.60 ahead of the Asian opening. The short term picture suggests that the pair may extend its decline, given that in the last few hours it has been capped by its 100 SMA, while technical indicators in the same time frame, have retreated within negative territory. In the 4 hours chart, technical indicators have recovered modestly after entering negative territory, whilst the price remains well above its 100 and 200 SMAs, both heading higher in the 102.00/30 region, all of which indicates that the downward potential is limited. The line in the sand is the 102.60 level, where the pair has its 100 DMA, as it will take a break below it to confirm a steeper decline. 

Support levels: 103.20 102.60 102.20

Resistance levels: 103.90 104.35 104.70

GBP/USD

The GBP/USD pair trades modestly higher this Thursday, holding around 1.2250 after trading as low as 1.2131 during the European morning. There were no significant headlines coming from the UK, although the first Brexit hearing took place in the High Court. The court is considering whether ministers can invoke the Art.50 of the Lisbon treaty without a parliamentary law. Hearings will continue up to October 18th, and is unlikely that they will have an impact on the Pound until the Court issues its opinion. In the meantime, the short term picture for the pair presents a modest positive tone, given that the price is above a horizontal 20 SMA, while technical indicators hold within positive territory, although with no directional momentum. In the 4 hours chart, the pair recovered up to a sharply bearish 20 SMA, capping the upside around the current level, while technical indicators head north below their mid-lines, supporting additional advances up to the 1.3220 region, the immediate resistance. Above this last, further gains are likely, up to 1.2400. 

Support levels: 1.2190 1.2150 1.2110 

Resistance levels: 1.2275 1.2320 1.2360 

AUD/USD

The AUD/USD pair fell down to 0.7506, on Chinese data, showing a large decline in exports and imports during September, reviving concerns about the economic health of the world's second largest economy. The pair traded briefly below a daily ascendant trend line coming from May's low at 0.7148, but quickly recovered on the back of stronger commodity prices, with further gains in coal and iron ore prices this week, and in spite of weak Chinese data. The Aussie recovered further in the US afternoon, as Wall Street moved off its lows, although it holds below the critical 0.7600 price zone. Technically, the 1 hour chart shows that the price has advanced well above a still fall 20 SMA, while technical indicators have lost their upward strength, and are currently turning lower near overbought readings. In the 4 hours chart,  the price is advancing above a bearish 20 SMA, while technical indicators maintain their bullish slopes after entering positive territory. Still, some follow through the mentioned 0.7600 is required to confirm additional gains for this Friday. 

Support levels: 07550 0.7520 0.7490    

Resistance levels: 0.7600 0.7635 0.7670

Dow Jones

Worldwide stocks closed in the red this Thursday, although Wall Street´s decline was modest, compared to that of its overseas counterparts. The DJIA closed at 18,098.94 down by 45 points, while the Nasdaq Composite shed 25 points, to 5,213.33. The  S&P closed 0.31% lower at 2,132.55, its lowest close in a month. US indexes were weighed by FOMC Minutes, as despite the unclear message a rate hike remains on the table for this year, and poor Chinese trade balance data. Financial shares were the worst performers, and within the DJIA, Goldman Sachs was at the bottom of the list, shedding 1.11%. The technical outlook for the benchmark is bearish according to the daily chart, given that it has extended its decline further below its 20 and 100 DMAs, while approached further to the 200 DMA, currently at 17,928. Indicators in the mentioned time frame head modestly lower, with the Momentum still within neutral territory, but the RSI around 43, anticipating a downward extension for this Friday. In the 4 hours chart, technical indicators have bounced from oversold readings, but the RSI already turned lower, whilst the 20 SMA caps the upside, heading south around 18,165. 

Support levels: 18,079 18,020 17,956

Resistance levels: 18,165  18,235 18,303 

FTSE 100

The FTSE 100 closed the day at 6,977.74, down by 45 points or 0.66%, as poor Chinese trade data weighed on mining-related equities, while the Pound pared losses, and even managed to regain some ground. News that Chinese exports fell by 10% in September revived fears of a slowdown in the country, a major buyer of base metals. Rio Tinto, Anglo American and BHP Billiton all closed over 4%  lower, although Fresnillo managed to advance 1.83%. The Footsie fell down to 6,934 before recovering ground, meeting some buying interest around a bullish 20 SMA. Still, and in the mentioned time frame, technical indicators keep heading lower within positive territory, indicating a fading upward potential. In the 4 hours chart, the index is clearly bearish, having gapped lower at the opening and extended below a now bearish 20 SMA, while the Momentum indicator heads south below its 100 level, reaching fresh one month low, and the RSI indicator also turned lower, now around 44. 

Support levels: 6,986 6,934 6,879

Resistance levels: 7,020 7,063 7,129

DAX

European indexes closed lower, weighed by a decline in banks and automobile stocks, with the German DAX shedding 1.04% or 107 points to end at 10,414.07. The banking sector was hit by news that Deutsche Bank is implementing a companywide hiring freeze, in an attempt to lower costs and shore up investors' confidence. Shares fell 2.03%, while Commerzbank lost 2.73% on the day. Volkswagen was also among the worst performers, shedding 1.31%. The index gapped lower at the opening, but trimmed most of its daily losses ahead of the close. Nevertheless, the daily chart favors a downward extension, given that the benchmark was unable to recover above its 20 SMA, now around 10,489, while technical indicators have entered negative territory, maintaining their bearish slopes. In the 4 hours chart, the technical outlook is also bearish as technical indicators head south well below their mid-lines, whilst the benchmark has settled above all of its moving averages. 

Support levels: 10,403 10,342 10,286

Resistance levels: 10,469 10,524 10,575 

Nikkei

Asian equities fell this Thursday, with the Nikkei 225 down by 0.39% or 65 points to close a 16,774.24. The index was undermined by a recovery in the Japanese yen, following the release of poor Chinese trade balance figures, which showed that imports and exports shrank beyond expected last September. Among the best performers was Suzuki Motor up by 2.24% following   a report that the automotive company is in talks with Toyota Motor Corp. on a potential partnership. Holding around the mentioned close, the daily chart for the index shows that it fell intraday down to its 20 SMA before recovering ground, although technical indicators present modest bearish slopes near their mid-lines, suggesting the decline may extend further this Friday. In the shorter term, the benchmark presents a neutral stance as in the 4 hours chart, it stands below a bearish 20 SMA, while the Momentum indicator heads higher below the 100 level and the RSI indicator holds flat around 44, giving no clear clues on what's next. The index fell to a fresh weekly low of 16,637, and a weekly close below it should signal a bearish continuation for the next sessions.

Support levels: 16,702 16,636 16,562

Resistance levels: 16,695 16,742 16,815 

Gold

Spot gold recovered modestly this Thursday as the dollar retreated against all of its major rivals. The precious metal, however, seems to have entered in a consolidative phase after last week's decline, unable to find a way ever since this Monday. Quite notable, is the fact that Minutes from the US FOMC latest meeting were unable to trigger a sell-off in the commodity, making investors think that a rate hike may have been already priced in. From a technical point of view and despite this latest stagnation, the risk is towards the downside, given that the price remains below the 61.8% retracement of its latest bullish run at 1,266.30. In the daily chart, technical indicators have turned modestly higher within oversold levels, while the 20 SMA keeps falling far above the current level. In the 4 hours chart, the commodity presents a neutral stance, with the price moving back and forth around a horizontal 20 SMA and technical indicators heading nowhere around their mid-lines. 

Support levels: 1,249.50 1,241.35 1,234.70

Resistance levels: 1,266.30 1,277.50 1,284.10

WTI Crude Oil

Crude oil prices were trading modestly higher ahead of the release of US weekly inventories, falling sharply afterward, but quickly bouncing back. West Texas Intermediate crude oil prices fell down to $49.35 a barrel, after the EIA report showed that domestic crude inventories rose by 4.9 million barrels in the week ended Oct. 7, above the 650,000-barrel increase expected. The EIA had reported surprise inventory falls in each of the previous 5 weeks. A deeper scrutiny to the report showed that gasoline supplies dropped by 1.9 million barrels, while distillate stockpiles fell by 3.7 million barrels, while total production also declined a tad, triggering a bounce up to $50.57, ending the day a few cents below this last. WTI  is up after declining for two consecutive days, and in the daily chart, technical indicators have resumed their advances within positive territory, suggesting that the bullish tone remains intact, moreover as the 20 SMA maintains its sharp bullish slope below the current price. In the 4 hours chart, however, the recovery stalled right below a now flat 20 SMA, while technical indicators turned flat around their mid-lines, indicating that another leg higher will depend on the price surpassing the mentioned daily high.

Support levels: 49.90 49.40 48.70

Resistance levels: 50.60 51.10 51.60