• EUR/USD remains muted in the early Asian session on Friday.
  • The pair remains pressured below 1.1600 following the USD strength.
  • Momentum oscillator throws caution before placing aggressive bids.

EUR/USD seems to be consolidating some losses on Friday morning. The pair moves in a very narrow trade band with a downside risk ahead of the eurozone PMI data. At the time of writing, EUR/USD is trading at 1.1579, down 0.01% for the day.

EUR/USD daily chart

On the daily chart, the EUR/USD pair has come under renewed selling pressure after testing the highs near 1.1900 since the beginning of the September series (September 3). The pair ended the month breaking below the yearly lows around 1.1600 on this Wednesday. Now, If the price sustains the session’s low at 1.1579, it could test the previous day’s high at 1.1609 as the first upside target.

The Moving Average Convergence Divergence (MACD) indicator offers potential for more upside as it remains in the oversold zone with stretched selling conditions. Any uptick in the MACD would amplify the buying toward the 1.1665 horizontal resistance level followed by the psychological 1.1700 mark.

EUR/USD weekly chart

Alternatively, if the price reverses direction, the EUR/USD bears would once again dominate the trend with their eyes on the previous session’s low of 1.1562. The price action would then target the weekly lows of July 24, 2020 at 1.1402.

EUR/USD additional levels

 

  • The AUD/USD pair fell 1.27% in September against the greenback.
  • The greenback appreciated for the fourth consecutive month against the Aussie.
  • US Initial Jobless Claims makes a case for a pause in the bond tapering process. 

The AUD/USD begins the Asian session on the right foot, is trading at 0.7220, posting a minimal gain of 0.01% at the time of writing. On the last trading day of September, market sentiment was downbeat, as major US stock indices recorded losses between 0.4% and 1.59%. 

The US Dollar Index (DXY) finished the day at 94.24, slightly down 0.02%, while the US 10-year Treasury yield dropped four basis points, sitting at 1.492%.

The Australian dollar depreciated for the fourth consecutive month against the greenback

In September, the Australian dollar depreciated 1.27% against the greenback for the fourth consecutive month. However, the price action of the last two month’s is trapped between the 0.7105-0.7478 range. 

The bond taper prospects weighed across all the US dollar counterparts. However, on Thursday, during the New York session, the US Initial Jobless Claims increased for the third consecutive week. The figure came at 362K, against 335K, foreseen by analysts. The data disappointed as we look forward to the Nonfarm Payrolls report in the following week.

The Federal Reserve Chairman Jerome Powell said one good employment report could convince the board that they have reached the bar needed to reduce the QE.

On Friday, the Australian economic docket, the Commonwealth Bank of Australia, and IHS Markit Economics will release the PMI for September, expected at 57.3. Later on, it will feature the Home Loans and Investment Lending for Homes, both reports related to August figures.

Meanwhile, in the US, Personal Consumption Expenditures and Personal Income for August will be revealed on Friday at 12:30GMT. Later during the day, the Markit and ISM Manufacturing PMIs could provide clues regarding production. Further, the UoM Consumer Sentiment will be disclosed.

ADDITIONAL KEY LEVELS TO WATCH

 

  • USD/JPY extends the previous session’s decline on Friday.
  • Falling US Treasury yields undermine the demand for the US dollar.
  • The corrective pullback on inflation fears keeps USD/JPY lower.

USD/JPY consolidate gains on the last trading day of the week. The pair posted a fall of more than 70-pips in the overnight session after it peaked near 112.00. At the time of writing, USD/JPY is trading at 111.29, up 0,01% for the day.

The US benchmark 10-year Treasury yields fell 4 basis points 1.49%, after testing the high of 1.56% this Tuesday about the concern of higher inflation and the prospect of tighter monetary policy. The US Fed Chair Jerome Powell said on Thursday that inflation pressure from the pandemic could last longer than previously anticipated, although he still believes that they will be transitory. In addition, US Treasury Secretary Janet Yellen warned again that any default on US debt would cause irreparable damage as well as an ensuing financial crisis if legislators failed to Act.

The US Dollar Index (DXY), which tracks the performance of the greenback against six major currencies, trades near 94.30 with 0.08% losses. Meanwhile, House Speaker Nancy Pelosi reaffirmed her confidence in the vote on a bipartisan infrastructure bill, even as members of her own Democratic leaders said lack of support to progress to pass the bill. On the economic data side, the US Weekly Jobless Claims rose to 362K in the week ending on September 25, against the market expectations of a decline of 335K whereas the Gross Domestic Growth (GDP) rose by 6.7% in Q2.

On the other hand, the Japanese yen gains on its safe-haven appeal, despite concerns over the pace of economic recovery in China and Japan. Industrial output declined in August whereas Retail sales fell by 3.2% in August against the market expectations of a 1% drop. Furthermore, the Bank of Japan (BOJ) Governor Haruhiko Kuroda said that the central bank will continue to support Japan’s economic recovery with its massive stimulus.

As for now, traders are waiting for the slew of data: Japan’s Unemployment Rate, Tankan Large Manufacturers Index, BOJ Summary of Opinions, US Personal Spending and Income, PCE Price Index, and ISM Manufacturing PMI to gauge the market sentiment.

USD/JPY additional levels