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Technical Analysis for 26/09/2016

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Technical Analysis for 26/09/2016

Technical Analysis for 26/09/2016
September 26
09:00 2016

EUR / USD – Euro US Dollar

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In the first half of the day a downward trend should be expected for two reasons. Firstly, the report from the IFO Institute may disappoint investors with the weak data, which will put pressure on the euro. Last Friday we got the negative data on the German composite PMI index and it has a close direct correlation with the IFO indicator. Secondly, at the credit markets the yield on 10-year German government bonds is being reduced in relation to their counterparts in the US and the UK, which reduces the attractiveness of investments in European assets. The upward corrective movement on the background of the moderately negative macroeconomic statistics from the United States can be expected during the American trading session. The growth of the rates at the mortgage market together with the high base of the previous month, don’t let count on the positive release on the sales of new buildings in August.

Against this background, during the day Sell positions on the growth of quotations should be opened within 1.1235 / 1.1265 and it is preferable to take profit at the level of 1.1180.

GBP / USD – British Pound Dollar

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During the day, we should expect the development of the upward correction movement. Firstly, as noted earlier, we can expect the publication of the negative data from Germany during the European session, which will put pressure on the euro and contribute to the reduction of cross-rate quotations EUR / GBP, which traditionally has a positive effect on the pair GBP / USD. Secondly, the correction can be expected on the market of black gold after strong sales last Friday when Brent quotes slipped by 3.4%. The International Energy Forum starts in Algeria on Monday and investors will use the statements of various experts in order to raise the quotes. The possible negative report on sales of new buildings in the United States is for bulls’ benefit today. Last week the portion of the construction sector statistics was published. Unfortunately, it came out worse than expected by market participants. Taking into account the growth of mortgage rates we can expect a decrease in lending volume and in this regard, the negative trend in the sector of the economy can continue today.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.2940 / 1.2910 and it is preferable to take profit at the level of 1.3000.

USD / JPY – US Dollar Japanese Yen

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At present a mixed background is being formed. On the one hand, sales on leading world stock markets is a negative factor for the pair. Investors are turning off carry trade and the capital can go to the Japanese yen as a funding currency. On the other hand, the current levels are attractive for opening long positions as traders are well aware that the financial authorities of the country of the Rising Sun will conduct measures to devalue the yen in the medium term. This will be done in order to derive the inflation from the negative area. The public debt market shows no clear benchmark: the yield differential on the 10-year US and Japanese bonds was almost unchanged on Friday.

Against this background, during the day we should expect the flat within the range of 100.40 -101.40.

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