USD seems to have weakened slightly after the US employment report for September, which on the one hand showed fewer job openings while on the other hand the unemployment rate reached a stunning low. Analysts, say that wages inflation is creeping higher but has not accelerated as much as the market has feared. They also point out that the report continues to be solid and shows a tight labor market, supportive of the Fed rate hike plans. We could see more turbulence ahead for the USD this week, especially if the US treasury yields continue to climb.

USD/JPY had a sideways movement on Friday, testing the 113.60 (S1) support line. Technically, it should be noted that the pair has broken the upward trend-line incepted since the 7th of September, hence we lift our bullish bias in favor of a sideways movement. Should the bulls continue to dictate the pair’s direction, we could see the pair breaking the 114.75 (R1) resistance line while if the bears take over we could see it breaking the 113.60 (S1) support line and aim for the 112.80 (S2) support level.

Sterling rises on renewed Brexit hopes

GBP strengthened on Friday, against the USD and the EUR, after a Reuters report citing two sources, stated that the two sides are very near to a Brexit deal. The Irish border remains a thorny issue for the time being, as the deadlock has not been broken yet and remains crucial. Analysts point out that the prospects of Brexit have been improving in the past few days and optimism grows that the two sides may finally reach a deal of some kind. Further headlines could continue to create volatility for GBP pairs in the current week.

Cable rose on Friday, breaking consecutively the 1.3030(S2) and the 1.3080 (S1) resistance lines, now turned to support. Technically an up-ward trend-line seems to be forming, incepted since the 4th of October, hence as long as the prementioned trend-line remains intact, we retain a bullish bias for the pair. Should the market continue to favor the pair’s long positions, we could see the pair breaking the 1.3150 (R1) resistance line, aiming for the 1.3215 (R2) resistance hurdle. Should the pair come under selling interest, we could see it breaking the 1.3080 (S1) support line aiming for the 1.3030 (S2) support barrier.

In today’s other economic highlights:

In a rather quiet Monday, with the markets closed for Canada and Japan, in the European session we get Germany’s industrial output growth rate for August. As for speakers, St. Louis Fed president James Bullard and ECB’s Ewald Nowotny speak.

As for the rest of the week:

On Tuesday, from Japan we get the Current Account balance for August and from Germany the Trade Balance figure also for August. On Wednesday, from the UK we get the GDP growth rate and the Trade Balance figure, both for August and from the US the PPI rate for September. On Thursday, from France we get the HICP rate for September, ECB publishes its account of monetary policy meeting and from the US we get the inflation data for September. On Friday, from Germany we get the HICP rate for September, from China the Trade Balance figure for September and from the US the preliminary Michigan Consumer Sentiment for October.

USD/JPY 4H

Support: 113.60 (S1), 112.80 (S2), 112.05 (S3)

Resistance: 114.75 (R1), 115.60 (R2), 116.25 (R3)

GBP/USD 4H

Support: 1.3080 (S1), 1.3030 (S2), 1.2965 (S3)

Resistance: 1.3150 (R1), 1.3215 (R2), 1.3285 (R3)