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Daily FX Brief, September 12 – Major Trade Setups & Who’s Up for ECB Rate Decision?


The U.S. dollar gained impulse on Wednesday, as the euro weakened ahead of the European Central Bank’s monetary policy meeting. The Dollar Index increased by 0.3% on the day to 98.63. This morning, U.S. President Donald Trump declared a delay in achieving higher tariffs on $250 billion of Chinese goods for two weeks to October 15, indicating “the fact that the People’s Republic of China will be celebrating their 70th Anniversary”.

Moreover, the U.S. official data revealed that producer prices increased by 1.8% on-year in August (vs +1.7% expected and in July).

The U.S. government bond prices were down for a third session, as the benchmark 10-year Treasury yield raised to 1.733% from 1.706% Tuesday.

Economic Events to Watch Today

Let’s took at these fundamentals… 

EUR/USD – Daily Analysis

 EUR/USD currency pair consolidates in a narrow range around 1.10 due to increase of the tensions ahead of all main European Central Bank rate decisions, which is scheduled to release at 11:45 GMT. 

The Central Bank is expected to deliver rates cut by ten-basis points to hit the fresh record low of -0.50%. Moreover, The European Central Bank will also announce a QE program worth 30 billion EUR per month starting from next month. Besides, this starts a small tiering system and repricing of targeted long-term refinancing operations.

President Draghi announced during July that the economy of the Eurozone condition is becoming worse and worse. The market has positioned itself to deliver the aggressive rate cut announcement. Therefore setting the step for a dynamic delivery during September.

For example, the German two-year treasury yield marked a record low of -0.94% on September 3 and ended at -0.84% on Wednesday.

However, the EUR may break below the recent low of 1.0926 if the European Central Bank releases an unexpected bigger Quantitative Easing (QE) program and deliver rate cuts by more than twenty-basis-points.

The dovish expectations may be bolstered if the German consumer price index releases below estimates which are scheduled to release at 06:00 GMT.


Daily Support and Resistance


S3 1.0988    

S2 1.1017    

S1 1.1033    

Pivot Point 1.1046    

R1 1.1062    

R2 1.1075    

R3 1.1105

EUR/USD – Trading Tips

The euro slid 0.3% to $1.1013. Later today, the ECB is expected to lower its deposit facility rate to -0.50% from -0.40%. There’s a bearish trendline which is keeping the market bearish under 1.1040 area. Consider staying bearish below 1.1060 and bullish above 1.0965 as the market is likely to trade choppy ahead of ECB rate decision today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the 6-weeks highs above the 108 handles to 108.05. It has been in a well-respected upward streak ever since. Stocks advanced with the DJIA getting its 6-straight gain, while the S&P 500 ended sharply higher for the 5th-time in 6-sessions as well as the Nasdaq broke of its 3-day losing series.

Whereas, the traders expecting the United States Consumer Prices Index, as well as the Federal Reserve interest rate decision later this week. Also, prefers the PCE deflator, CPI continues to moves markets at times US August CPI is marked higher by 0.1% month, 1.8% year overall.

AT the Sino-US trade front, President Donald Trump said about China that China wants to make a trade deal and reach on a positive outcome.

At the data front, the two-year Treasury yields fluctuate in a narrow range between 1.65% and 1.68% while the ten year Treasury yield ranged between 1.71% and 1.75% (a one-month high). “Markets are pricing 25 basis points of easing during the Federal Reserve meeting which is due on September 19, and a terminal rate of 1.09% (Fed funds rate currently 2.13%), As for data, the US PPI inflation rose 0.1% in August, as well as the core rate increased 0.3% – 1.8% and 2.3% YoY. 

On the technical side, the currency pair is trading in the overbought zone and has formed an inverted hammer pattern on the 2-hour timeframe. USD/JPY may find an immediate resistance at 108.100 along with support around 107.777, the 38.2% Fibonacci support level. 

Daily Support and Resistance

S3 106.63

S2 107.03

S1 107.28

Pivot Point 107.43

R1 107.68

R2 107.83

R3 108.23

USD/JPY – Trading Tips

Consider staying bearish below 108.100 to target 107.700 and 107.60 today. Buying can be seen above 107.500 later during the U.S.session. 

AUD/USD – Daily Analysis

During the early Asian session, the AUD/USD currency pair is presently trading at 0.6870, hit the high level of 0.6880 and faced rejection, which is 50% Fibonacci retracement of the decline from 0.7082 to 0.6677.

The AUD/USD currency pair has faced rejection at the key Fibonacci level for the 2nd straight day, even after improving sentiment on the US-China trade front.

The United States President Donald Trump postponed imposing an additional 5% tariff on $250 billion worth of Chinese goods by 2-weeks to October 15. It should be noted that Chinese Yuan trades at 3-week highs against the greenback and the decrease haven demand for bonds sending the United States ten-year treasury yields to 1-month high of 1.76%. 

However, the Australian Dollar falsing red, due to the week domestic data, Australia’s consumer inflation expectations for September came in at 3.1% vs 3.5% during August.

On the other hand, the buyers have to maintain the session low of 0.6859. Otherwise, the rejection at the key Fib hurdle would increase confidence, which may be leading to a more profound decline to 0.6830. 

As of writing, the S&P 500 futures are publishing a 0.30% increase. Therefore, the Australian Dollar may be able to defend 0.6859.


Daily Support and Resistance  

S3 0.6817

S2 0.6839

S1 0.6851

Pivot Point 0.686

R1 0.6872

R2 0.6882

R3 0.6904

AUD/USD – Trading Tips

On the technical front, the AUD/USD continues to trade in the bullish channel, which is likely to support Aussie around 0.6860. On the other hand, resistance stays at 0.6914. The EMA is also signalling a bullish bias among traders. Therefore, I would consider staying bullish above 0.6860 and bearish below 0.6910 today. 

All the best!  


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