The US dollar index surged over 0.5% to the 92.9 area last night as Yellen’s comments on inflation ramped up expectations of another rate hike in the months to come.

She expressed a cautious view against “moving (interest rates) too gradually” because the robust jobs market could potentially create inflationary pressure in the future. After her speech, the likelihood of a December rate hike, according to CME’s FedWatch tool, surged to 76.4%. 

EUR/USD slid further to the 1.178 area this morning due to the stronger dollar. Technically its SuperTrend (10,2) has flipped to red, which usually suggests the formation of a bearish trend. The price has broken down below the key support level of 1.183 (100% Fibonacci extension level) and its next support level can be found around the 1.168 area (78.6% Fibonacci extension level). 

A ‘head-and-shoulders’ pattern is emerging on the EUR/USD daily chart. Head-and-shoulders is a significant trend-reversing pattern and usually suggests a major reversal of a bullish trend.  

The US market stopped bleeding last night despite President Trump advocating that a ‘military option’ against North Korea will be devastating, although it is not a preferred option. Markets are a bit numb to the ongoing war of words between Trump and Kim, and most market participants still believe that this issue can be solved with a diplomatic approach if it doesn’t escalate further. 

Against the backdrop of the strong US dollar, precious metals including gold and silver continued to consolidate around their key support levels of US$1,295 and US$16.78 respectively. Both gold and silver prices have entered into bearish trends in their daily charts, with the 10-Day Simple Moving Average and SuperTrend (10, 1.5) sloping downwards. 

The Singapore stock market showed resilience over the last two days against strong headwinds from Hong Kong’s property sector sell-off. In the near term, 3,200 is still a strong support level for the Straits Times Index.

Technical Analysis:

EUR/USD

  • 10-Day Simple Moving Average sloped downwards
  • SuperTrend (10,2) has flipped downwards, suggesting that a downtrend was formed 
  • Immediate support level at 1.168 (78.6% Fibonacci extension)
  • A head-and-shoulders pattern is emerging, suggesting a major trend reversal


 
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