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Technical Analysis for 29/09/2016

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Technical Analysis for 29/09/2016

Technical Analysis for 29/09/2016
September 29
09:00 2016

EUR / USD – Euro US Dollar

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The pair may show the growth in the first half of the day on a positive news background. In Algeria, the world’s leading oil producers have agreed to limit the oil production, which will put pressure on the dollar since energy costs are denominated in the US currency. The yield differential on the10-year US and German government bonds is being reduced in the debt market, which also favors the bulls regarding the euro. Against this background, the pair can show the growth within 1.1250 / 1.1270 before the opening of the US trading session. Then the bidding will be determined by the statistics from the United States, primarily by the data on unemployment benefit applications. During the month this indicator has been showing the positive dynamics. And in the case of continuation of this trend, the pair is able to demonstrate the corrective decline as the strong data will signal about a good report on the labor market next Friday.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.1210 / 1.1170 and it is preferable to take profit at the level of 1.1250.

GBP / USD – British Pound Dollar

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During the day we should expect the development of an upward trend for two reasons. Firstly, in the credit markets the yield on 10-year UK government bonds is being increased in relation to their counterparts from the United States and Germany, which increases the attractiveness of investments in British assets. Thus, this increase will support the pound. Secondly, the OPEC decided to limit the volume of oil production at the level of 32.5 million barrels / day at the International Energy Forum in Algeria. The black gold market reacted to the rapid growth of this event and on Wednesday quotes for Brent have risen by 4.5%. The OPEC will present a final plan in order to cut the production at its meeting in Vienna on 30 November. How will this event influence the foreign exchange market? We can expect the growth of quotations to 50.25 / 51.00 for Brent in the short term, as investors have doubted a successful scenario so far. This factor is also positive for the pair GBP / USD. In my opinion, you can expect a decrease in quotations in the medium term because the production level of 32.5 million barrels / day is high enough. For example, before the summit in Qatar on 17 April, when the players were unable to agree to freeze production levels, the OPEC countries had mined 32.44 million barrels.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.3010 / 1.2975 and it is preferable to take profit at the level of 1.3050.

USD / JPY – US Dollar Japanese Yen

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The pair has finished the last two trading days in the “green zone”, However, the growth of quotations was quite sluggish. What trend can we expect today? In my view, the upward trend will continue and the main driver of the growth of quotations will be high “risk appetite”. On Wednesday there was an increase in the leading stock markets and high-yield cross-rates. Investors are building up carry trade positions, which traditionally put pressure on the Japanese yen as a funding currency. Also, positive changes happened in the debt market the day before. The yield differential on10-year US and Japanese government bonds showed the growth, which is also positive for the dollar.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 100.58 / 100.35 and it is preferable to take profit at the level of 100.95.

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