Technical Analysis for 13/10/2016
EUR / USD – Euro US Dollar
Today the release regarding the US stocks of the crude oil for the last week will become the main event of the day. Black gold is beginning to show the weakness. And in the case of the negative data release we will see the decrease in quotations of basic reference oil brands, which will have a positive impact on the US currency and will be able to send the euro lower than Figure 10. The nearest strong resistance on the dollar index USDX is at around the mark of 98.59 decrease in quotations of the pair EUR / USD to the area of 1.0950. Chances that we will see this mark during the remaining two trading days are very high. This probability is due to a weekly report from the oilfield services company Baker Hughes that shows an increase in the number of drilling rigs in the United States and Canada by 3 units and in Mexico by 2 platforms, respectively. Thus, today the number of active drilling rigs in the United States and Canada has been at the highest level since February 19, 2016. In Mexico this number has been at its high from 15 April of the current year. Taking into account the growth of the production capacity in North America, we can expect the release of the negative data on crude oil inventories, which will contribute to sales both the black gold and the single European currency.
Against this background, during the day Sell positions on the growth of quotations should be opened within 1.1030 / 1.1070 and it is preferable to take profit at the level of 1.0960.
GBP / USD – British Pound Dollar
Let’s sell the pair for two reasons. Firstly, the protocol of the last FOMC meeting, which was published on the eve, did not disappoint investors, because it wasn’t negative; it even pointed to the need to raise interest rates. In the current conditions, when the trend regarding the dollar is gaining momentum (the index of the dollar basket USDX has been at the maximum for the last 7 months), the absence of bad news from the US is being rather positive. Secondly, the strengthening of the greenback puts pressure on the commodity market instruments, primarily on oil, as the value of all commodities has been denominated in the US currency. Brent crude oil is still unable to confidently fix its maximum of the current year -52.99 $ / barrel; so, in the near future we can expect a reduction of quotations to the area of the psychological level of $ 50 / barrel, which in turn will increase the pressure on the sterling.
Against this background, during the day Sell positions on the growth of quotations should be opened within 1.2220 / 1.2260 and it is preferable to take profit at the level of 1.2120.
USD / JPY – US Dollar Japanese Yen
During the day you should increase long positions on pullbacks, because the credit market is experiencing a strong expansion of the yield differential on the 10-year US and Japanese government bonds. There was a “strong argument” in favor of the rate hike in September. This information was got from the US Fed minutes, which were published late in the evening. On Wednesday the pair renewed a maximum of September this year and now the way to the Figure 107 is being opened. I continue to expect that we will see this mark before the end of this year. Perhaps, we will see it even in this month, as the market of the US Treasury bonds is experiencing the rapid growth of profitability. In this regard, both short-term and medium-term scenarios suggest the upward movement in this pair. Don’t forget about the Bank of Japan, which will hold its meeting on 1 November and 20 December, where we can expect either the verbal intervention aimed at the devaluation of the yen or the announcement of new stimulus as Japan has been experiencing the deflation for five months.
Against this background, during the day Buy positions on the reduction of quotations should be opened within 104.00 / 103.65 and it is preferable to take profit at the level of 104.65.