US equity markets rebounded from earlier losses last night as investors reassessed the impact of Hurricane Harvey and North Korea’s latest missile launch.
President Trump didn’t express any radical commentary against North Korea this time, instead saying that ‘all options are on the table’, which helped to calm the market. Safe havens including gold, silver and the Japanese yen retraced from recent highs due to the strong dollar, as well as less demand for safety.
The US dollar index experienced a strong ‘v-shaped’ rebound last night and came back to the 92.2 area this morning. The intraday low registered at around the 91.7 area, which happens to be the 200% Fibonacci extension level. In the near term, its support and resistance levels can be found at the 91.7 and 92.6 areas respectively.
EUR/USD surged to as high as 1.207 yesterday before cooling off to the 1.197 area this morning. Technically speaking, 1.197 is its 200% Fibonacci extension level. Breaking out above this level could open the door for more upside toward new highs.
Fundamentally, the non-farm payroll numbers due this Friday will determine the movement of the dollar index in the days to come. According to Reuters polls, the market expects some 183k new jobs to be added this month. A significantly higher reading will strengthen the outlook of the jobs market and, thus, the probability of December rate hike. This scenario will lead to a stronger US dollar.
An opposite scenario will do the reverse. The ADP private sector employment report tonight will help investors to have a pre-emptive view of the job market status.
- Breakout key resistance level of 1.197 (200% Fibonacci extension), which will become a support level
- 10-Day Simple Moving Average sloped upwards
- SuperTrend (10,1.5) is sloped upwards, suggesting the uptrend is intact
- Momentum indicator MACD has formed a bullish crossover, which is a bullish indicator
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