EUR/USD attempts to halt a five day decline as the Federal Reserve sticks to the sidelines, and the exchange rate may stage a larger recovery over the remainder of the month as it appears to be reversing ahead of the yearly low (1.1664).
EUR/USD bounces back from a fresh monthly low (1.1684) as the Federal Open Market Committee (FOMC) retains the current course for monetary policy, and the lack of urgency to taper the quantitative easing (QE) program may continue to produce headwinds for the US Dollar as market participants push out bets for higher interest rates.


Looking ahead, it remains to be seen if the federal election in Germany will sway EUR/USD as the European Central Bank (ECB) plans to carry out “a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters,” but it seems as though the Governing Council will continue to utilize its emergency tools throughout the remainder of the year as “there remains some way to go before the damage to the economy caused by the pandemic is overcome.” 

EURUSD D1 09 23 2021 2305

 

EUR/USD sits below 1.1980 for the first time since April as the advance from the March low (1.1704) failed to produce a test of the January high (1.2350), with the exchange rate trading to a fresh yearly low (1.1664) in August as the 50-Day SMA (1.1786) established a negative slope.
EUR/USD may trade within a defined range as it appears to be reversing ahead of the yearly low (1.1664), with lack of momentum to push below1.1670  to 1.1710  bringing the 1.1780 to 1.1810  region back on the radar.
Need a break above the July high (1.1909) to open up the 1.1950  to 1.1970 region, with a move above 1.1980 opening up the overlap around 1.2080 to 1.2140.

 

 

Wednesday’s FOMC meeting is keeping the gold market in check as traders look to Fed chair Jerome Powell to give them some more clarity over when the central bank will pare back its USD120 billion a month bond-buying program. 

XAUUSD D1 09 21 2021 1620

 

The daily gold chart shows the precious metal back at an important level of the March 2020/August 2020 move. This level continues to attract price action and now acts as resistance back into the $1,763/oz. - $1,837/oz. trading range that has held sway since mid-June, ex the early-August flash crash. A break and close above support will allow gold to drift higher although there are a cluster of old lows and highs and all three simple moving averages all the way back to $1,800/oz. It is likely that any rally will be short-lived.

 

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NZD/USD trades in a narrow range following the failed attempt to test the monthly high (0.7170), and the exchange rate may continue to consolidate over the remainder of the week as it gives back the advance following the larger-than-expected slowdown in the US Consumer Price Index (CPI).

It remains to be seen if New Zealand’s GDP report will influence the near-term outlook for NZD/USD as the growth rate is expected to 16.3% in the second quarter of 2021, which would mark the highest reading since the series began in 1987, but signs of a robust recovery may put pressure on the Reserve Bank of New Zealand (RBNZ) to normalize monetary policy sooner rather than later as Assistant Governor Christian Hawkesby revealed that “a 50 basis point move was definitely on the table” at the August meeting.

As a result, an upbeat GDP report may fuel speculation for an imminent shift in RBNZ policy with only two more meetings left for the remainder of the year, but a further appreciation in NZD/USD may fuel the tilt in retail sentiment like the behavior seen earlier this year.

A head-and-shoulders formation materialized in the first quarter of 2021 as NZD/USD slipped below the 50-Day SMA (0.7002) for the first time since November, with the exchange rate pushing below the 200-Day SMA (0.7115) for the first time since June 2020 to trade to a fresh yearly low (0.6805) in August.  

NZDUSD D1 09 15 2021 1901

 

NZD/USD has reversed course ahead of the November 2020 low (0.6589) amid the failed attempt to close below the 0.6810region, and it remains to be seen if the advance from the August low (0.6805) will turn out to be a correction in the broader trend as a bull flag formation takes shape.
In turn, NZD/USD may continue to defend the opening range for September as it holds above 0.7070 to 0.7110  but a break of the monthly high (0.7170) may open up the 0.7260 (78.6% expansion) as the continuation pattern comes into play.
A break above the June high (0.7288) brings the 0.7330 to 0.7350 area on the radar, with the next region of interest coming in around the 0.7500 (100% expansion) handle.

 

 

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The precious metal is finding some support around recent lows (1,785/80) but momentum seems to be building for another break lower. I do see support arising up until 1,771 at which point Gold is at risk of falling below 1,750 for the fourth time this year. 

XAUUSD D1 09 16 2021 1950

 

The August reading for US CPI has suggested that inflation may have well peaked, which falls in nicely with Powell’s transitory argument. This would in theory be a driver for Gold as it scales back the need for the Fed to start tapering soon, possibly leaving rates lower for longer, which is positive for the non-yielding yellow metal. But investor positioning suggests that expectations are still high that the Fed will announce a start to tapering at its September meeting this week, which would be a headwind for XAU/USD, and likely a cause for the renewed pullback.

 

 

 

 

GBP/JPY has been generally trending lower since May, but the price action has appeared to be more corrective than bearish. The trend since the March 2020 low remains pointed broadly higher, and that could soon reassert itself if the trend-line from May is broken.

It is a significant trend-line, as a result of price connecting along it at so many points since the May peak. Even in the short-term we can see its importance as sideways price action hugs the barrier. A strong breakout above it (close above the recent high at 152.29) should have GBP/JPY running.

In the event of a breakout, the first meaningful line of resistance to watch is in the low to mid 153s; this could indeed be a point of contention given it runs back to April and proved a problem during July and August. Beyond there we are looking at 155 up to the cycle high at 156.07.

On the flip-side, if GBP/JPY turns down from resistance, then attention will turn towards the March 2020 trend-line, 200-day moving average, and the lows created since March. It is possible that the price action since March is taking on the shape of a top, but at this juncture seems like the lesser likely scenario.

GBPJPY D1 09 14 2021 1004

 

 

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