The USD continued to weaken yesterday on reduced safe haven demand as did the yen. According to analysts, the reduction of safe haven demand was caused mostly by the switch of investor’s view that the US-Sino trade war could be less harmful to global growth than anticipated. Analysts, also point out that the risk on mood has supported other currencies such as the EUR and the AUD in their recent price action. It should be noted though that the market’s sentiment towards the USD could start reversing, as next week the Fed may have a rather hawkish meeting. Currently, should trade fears continue to weaken, we could experience even less demand for safe havens.

USD/JPY rose yesterday and during today’s Asian session aiming the 112.80 (R1) resistance line. We could see the pair continue to trade in a bullish market as the upward trend-line incepted since the 7th of September remains intact. Should the bulls continue to hold the steering wheel of the pair’s direction, we could see it breaking the 112.80 (R1) resistance line and aim for the 113.60 (R2) resistance level. Should on the other hand the bears take over we could see the pair breaking the 112.05 (S1) support line and aim for the 111.30 (S2) support area.

UK’s improved financial results continue to support the GBP

The pound continued its rally yesterday as the retail sales growth rate accelerated more than expected and Brexit hopes linger on. The British may have had a not so pleasant experience in the Salzburg summit, in contrast to what they may have been expecting. According to media, EU officials had lukewarm reactions to Theresa May’s Brexit plan with comments such as “a Brexit deal is far away”, “no progress was made” and that “plans need to be reworked”. Should there be further negative headlines about Brexit we could see the GBP weakening.

Cable rallied yesterday as it broke the 1.3215 (S1) resistance line, now turned to support and tested the 1.3290 (R1) resistance level, correcting somewhat later on. Technically, the bullish bias for the pair’s direction is maintained as the upward trend-line incepted since the 5th of September was not broken, however the pair’s price action during the Asian session today could be suggesting a sideways movement. Should the pair be once again in the market’s buying interest, we could see it breaking the 1.3290 (R1) resistance level and aim for the 1.3360 (R2) resistance barrier. Should the market favor the pair’s short positions, we could see it breaking the 1.3215 (S1) support line and aim for the 1.3150 (S2) support hurdle.

In today’s other economic highlights:

In the European session we get from France, Germany and the Eurozone the preliminary PMI’s for September. In the American session we get Canada’s inflation data for August and the retail sales growth rates for July, while from the US we get the preliminary Markit PMI for September as well as the Baker Hughes active oil rig count figure. As for the crypto market, please be advised that Ripple continued its rally, even better than what we expected in our weekly Crypto outlook yesterday. The fundamentals behind the rally include an announcement by a major US bank, that it will use technology built by startup Ripple to process international payments in one of its divisions. Should you be interested in what next week has in store for the markets, don’t miss our weekly outlook, due out later today.

USD/JPY 4H

• Support: 112.05 (S1), 111.30 (S2), 110.75 (S3)

• Resistance: 112.80 (R1), 113.60 (R2), 114.75 (R3)

GBP/USD 4H

• Support: 1.3215 (S1), 1.3150 (S2), 1.3080 (S3)

• Resistance: 1.3290 (R1), 1.3360 (R2), 1.3422 (R3)