intraday

The EUR/USD pair has been seen moving higher on the daily time frame as there is still a room on the RSI indicator before it hits the extremely overbought market conditions. The next target for bulls is seen at the level of 1.1054 - 1.1097, which creates a supply zone for bears. The intraday technical support is located at 1.0971 and 1.0873. The bulls are clearly in control of the market and there is no indication of a up trend termination or reversal.      

USD/JPY has risen the most among the majors in the past month. The current swift up move of USD/JPY has prompted FX verbal intervention today from Japan’s Ministry of Finance. The current tonality of verbal intervention is the strongest since mid-August 2023 that occurred when the current upward trajectory of USD/JPY is fast approaching a key medium-term resistance zone of 148.40/148.85. Short-term upside momentum has started to wane.   This is a follow-up analysis of our prior report, “USD/JPY Technical: Bullish tone resumes, 148.20/85 next resistance to watch” published on 17 August 2023. Click here for a recap. The USD/JPY has indeed staged the expected up-move in the past two weeks and surpassed the 147.20/147.50 resistance highlighted in our previous report as it printed an intraday high of 147.80 during yesterday’s US session, 5 September.     USD/JPY is the top performer among the majors in the past month The recent movement seen in the USD/JPY has been fast and furious since last Friday, 1 September ex-post US non-farm payrolls data release. Based on the one-month rolling performances of the major currencies as of today, 6 September (at this time of the writing), the US dollar has strengthened the most against the JPY (+4%), a relatively stark USD/JPY outperformance versus other major pairs such as the USD/EUR (+2.6%), USD/CHF (+1.8%), and USD/GBP (+1.4%).   Fig 1:  Rolling one-month FX majors’ performances against the USD as of 6 September 2023 (Source: TradingView, click to enlarge chart) This recent bout of short-term shift rally seen in the USD/JPY has prompted Japan’s Ministry of Finance to issue a verbal warning to FX speculators this morning (Asian session) to negate the current bout of JPY weakness. Vice Finance Minister Masato Kanda, the Japanese official in charge of foreign exchange matters said that authorities “will not rule out any options on currencies if speculative moves persist” and added “it is important for currency moves to reflect fundamentals”, a possible hint that the current level of USD/JPY does not reflect the latest set of Japanese inflation data where inflationary pressures in Japan have remained elevated excluding fresh food and energy components. Interestingly, this latest tone of FX verbal intervention from Japan’s Ministry of Finance is the strongest warning since mid-August 2023 after the USD/JPY sailed past the psychological levels of 145 and 146. From a technical analysis perspective, today’s verbal intervention materialized while the current impulsive up-move sequence in the USD/JPY has been fast approaching the key medium-term resistance zone of 148.40/148.85 (see daily chart below). Therefore, it reinforces the significance of the 148.20/148.85 zone on the USD/JPY.   148.40/148.85 key medium-term resistance to watch on USD/JPY Fig 2:  USD/JPY medium-term trend as of 6 Sep 2023 (Source: TradingView, click to enlarge chart) Short-term downside momentum has started to ease below 147.90 Fig 3:  USD/JPY minor short-term trend as of 6 Sep 2023 (Source: TradingView, click to enlarge chart) Meanwhile, the hourly RSI indicator, a gauge of momentum has flashed a bearish divergence condition at its overbought zone yesterday and started to inch lower (below 70) in today’s Asian session. These observations have suggested the short-term upside momentum of the recent up move from last Friday, 1 September low of 144.44 has waned and the USD/JPY now faces the risk of a minor pull-back on an intraday basis. A breakdown below 147.20 may trigger the minor pull-back scenario to expose the intermediate support zone of 146.30/145.70 (also the 20-day moving average). On the flip side, a clearance above 147.90 is likely to resume the impulsive up-move sequence to see the key medium-term resistance zone coming in at 148.40/148.45.    

Industrial output in the eurozone fell more than expected, as total production dropped 1.1% on month in September, while forecasts were for output to be down 0.8% on month. However, this report did not lead to any noticeable movements in the foreign exchange market. Investors were clearly waiting for US data, the forecasts for which also carried a negative tone, as they intended to extend the dollar selloff. However, the annual trend in retail sales slowed from 4.1% y/y in September to 2.5% y/y in October, whereas a slowdown from 3.8% to 2.1% was expected. So not only were the actual reports better, but the previous results were also revised for the better. Afterwards, a full-fledged rebound started, and the dollar was able to improve its position. The only thing we can highlight for today is the initial jobless claims in the United States. The total number is expected to increase by 8,000. The changes are extremely insignificant and are unlikely to have a serious impact on the current situation. Considering that the rebound is not yet complete, we expect the dollar to gradually rise further.   The EUR/USD pair has entered a retracement phase due to the high overbought levels. The level of 1.0900 acts as resistance, and we observed a decline in the volume of long positions near this area. On the four-hour chart, the RSI downwardly crossed the 70 line. This technical signal indicates that the euro's overbought conditions have started to ease, given that a retracement phase is being formed. On the same time frame, the Alligator's MAs are headed upwards. The signal corresponds to the upward cycle, ignoring the ongoing retracement. Outlook The ongoing retracement persists, which is why traders are considering a scenario with the pair moving towards the level of 1.0800. The succeeding movement will depend on the price's behavior near this level—whether sellers can keep the quotes below it or if the level will act as support. The complex indicator analysis points to the retracement phase in the short-term and intraday periods.  

Unlike the euro, the pound has returned to the levels it was at before the release of preliminary inflation data in the eurozone. This is somewhat logical due to the fact that the data mounted pressure on the euro, while there were no economic reports or news from the UK. Today, the situation is quite similar. The economic calendar is basically empty, and only European Central Bank President Christine Lagarde's speech can affect the market. Primarily, it will affect the euro.   The impact on the pound will be significantly less noticeable. The question is, where will all this lead? Most likely, Lagarde will take note of the slowdown in inflation and maybe even suggest the possibility of a rate cut. Of course, she will not mention any specific timing. But it could be clear that she is already starting to make a hint in December. The euro will fall further, pulling the pound along with it. However, the decline in the British currency will be much less pronounced and possibly short-term.   Last Friday, the GBP/USD pair managed to recover relative to the recent corrective move. A s a result, the quote returned to the area of the resistance level of 1.2700. On the four-hour chart, the RSI technical indicator is hovering in the upper area of 50/70, thus reflecting bullish sentiment among traders. On the same chart, the Alligator's MAs are headed upwards, which corresponds to the upward cycle. Outlook The EUR/USD kicks off the new week with a decrease in the volume of long positions, accompanied by a rebound from the level of 1.2700. In this case, hitting the 1.2700 mark indicates a prevailing bullish sentiment. In perspective, this could extend the upward cycle in case the pair tests last week's high. The bearish scenario will come into play in case the pair trades sideways between the levels of 1.2600/1.2700. Comprehensive indicator analysis indicates a downward cycle in the short term due to the rebound. Meanwhile, the bullish sentiment remains in force in the intraday and medium-term periods.   Read more: https://www.instaforex.eu/forex_analysis/362129