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Technical Analysis for 27/09/2016

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Technical Analysis for 27/09/2016

Technical Analysis for 27/09/2016
September 27
09:00 2016

EUR / USD – Euro US Dollar

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During the day you can expect a moderate growth of quotations as the capital is leaving risky assets. The leading stock exchanges are experiencing the sale, which is a positive factor for the euro as a funding currency. On the eve the Fear index grew by 17% and the shares of the banking sector were the weakest US securities. It should also be noted that in the second half of the day we can expect the release of the weak data on consumer activity from the CB on the background of a slowdown in the employment and average earnings. The indicator of home sales, which was published on the eve, also showed a slowing rate of growth in the US primary market.  In August the sales increased by 20.5% y / y against 35.1% y / y in July and 22.6% y / y in June . In general, this is a positive dynamics because the level of sales is very high; but some slowdown has become a negative factor for the dollar in the short term. In my opinion, the single European currency may reach figure 13, but not more, where it will face the strong resistance, because the debt market is experiencing the reduction of the yield on 10-year German government bonds in relation to their counterparts in the US and the UK.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.1240 / 1.1220 and it is preferable to take profit at the level of 1.1280.

GBP / USD – British Pound Dollar

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Today we can expect a second wave of the corrective movement as there are two reasons for this. Firstly, the credit markets are experiencing the growth of the yield on 10-year UK government bonds relative to their counterparts from the United States and Germany, which increases the attractiveness of investments in British assets. And, thus, the growth will support the demand for the pound sterling. Secondly, a release of the moderately negative report on consumer spending from the CB can be expected in the midst of the US trading session. There are two indicators of the consumer confidence in the United States, which are closely correlated with each other: Conference Board and the University of Michigan. The last index has been showing a negative trend for three consecutive months and in this regard, it is difficult to rely on the release of the positive data .Thus, the dollar may be under pressure before the closing of the London trading session.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.2960 / 1.2930 and it is preferable to take profit at the level of 1.3005.

USD / JPY – US Dollar Japanese Yen

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At present a mixed background is being formed. On the one hand, panicky sales of shares will contribute to the inflow of capital in the “safe assets”, which traditionally include the Japanese yen. On Monday the shares of Deutsche Bank upgraded its historical minimum, ending the trade at 10.55 Euros, showing a decrease of 7.5%. Deutsche Bank is the most problematic financial institutions in the world among the largest banks. So, a steep dive of its securities evokes strong fears among the investors regarding the stability of the financial sector. This includes not only the euro zone, but also the entire global financial system as many banks from Wall Street are in the number of counterparties of Deutsche Bank. On the other hand, the pair is approaching the psychological level of 100 yen per dollar. This approach may cause the interest of long-term investors who can buy the pair, based on the devaluation of the yen in the medium term due to low inflation expectations.

Against this background, during the day we can expect the flat within the range of 100.00 -101.00.

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