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Technical Analysis for 23/09/2016

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Technical Analysis for 23/09/2016

Technical Analysis for 23/09/2016
September 23
09:00 2016

EUR / USD – Euro US Dollar


At present, a mixed background is being formed. On the one hand, the demand for risky assets will put pressure on the euro as a funding currency. Now traders are actively buying stocks and high-yield cross-rates and at such times long positions on the euro are not very interesting, since it is possible to get a higher return on risky assets in a short time. The yield differential on 10-year government bonds of Germany and the US is declining, which also negatively influences the euro. On the other hand, in the first half of the day we can expect the release of the moderately positive data on the PMI manufacturing sector in Germany as the increase in the production capacity by 0.3 % has been recorded in September. In addition, on the eve the market ignored a strong report on applications for unemployment benefits in the United States: the indicator of the 4-week curve, which excludes volatility and shows a smoother result, has fallen to the lowest level this year, which implies the growth in employment and a good report on the Non- Farm on Friday, 6 October. If the market was positive regarding the dollar, we would see a greater strengthening of the US currency in the afternoon.

Against this background, during the day the flat can be expected within the range of 1.1150 -1.1250.

GBP / USD – British Pound Dollar


At present a mixed background is being formed. On the one hand, the credit markets are experiencing the yield decline in 10-year UK government bonds relative to their counterparts from the United States and Germany, which reduces the attractiveness of investments in British assets. On the other hand, the growth of “risk appetite” pushes up the oil quotations, which in its turn will support the British currency. As it appears, investors have decided to push oil quotes up before the oil summit in Algeria in order to actively open Sell positions at high levels then.

Against this background, during the day the flat can be expected within the range of 1.3030 -1.3130.

USD / JPY – US Dollar Japanese Yen


During the day, you should increase long positions on pullbacks, because there is a high “risk appetite” of investors in the world. The US Fed’s decision not to raise interest rates has caused a high demand for stocks worldwide. The growth of quotations is being observed on all continents. Some papers have updated their historical maximums. Now the financial markets are experiencing euphoria and at such times investors are actively increasing volumes on carry trade operations through the Japanese yen as a funding currency. It is impossible to ignore the today’s release regarding the PMI manufacturing sector: against the excessive strengthening of the national currency, purchasing managers warn about an impending industry slowing that is also a positive factor for the Bulls.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 100.65 / 100.35 and it is preferable to take profit at the level of 101.25.

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