AUDUSD TECHS: Gains Considered Corrective
- RES 4: 0.6984 0.764 proj of the Aug 5 - 29 - Sep 11 price swing
- RES 3: 0.6942 High Sep 30 and the bull trigger
- RES 2: 0.6852/6889 High Oct 4 / 3
- RES 1: 0.6757 20-day EMA
- PRICE: 0.6705 @ 16:37 BST Oct 18
- SUP 1: 0.6658 Low Oct 16
- SUP 2: 0.6646 50.0% retracement of the Aug 5 - Sep 30 bull leg
- SUP 3: 0.6622 Low Sep 11 and key support
- SUP 4: 0.6576 61.8% retracement of the Aug 5 - Sep 30 bull leg
A downtrend in AUDUSD remains intact and short-term gains are considered corrective. Price has recently traded through both the 20- and 50-day EMAs. This undermines a recent bullish theme and exposes 0.6622, the Sep 11 low and a key support. Clearance of this level would strengthen a bearish theme and open 0.6576, a Fibonacci retracement. Key resistance has been defined at 0.6942, the Sep 30 high. Initial resistance is 0.6757, the 20-day EMA.
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USDJPY TECHS: Trend Outlook Remains Bearish
- RES 4: 147.72 50-day EMA
- RES 3: 147.21 High Sep 3
- RES 2: 143.81/145.57 20-day EMA / High Sep 4
- RES 1: 142.47 High Sep 17
- PRICE: 142.04 @ 20:26 BST Sep 18
- SUP 1: 139.58 Low Sep 16
- SUP 2: 139.00 1.382 proj of the Aug 15 - 26 - Sep 3 price swing
- SUP 3: 138.30 1.50 proj of the Aug 15 - 26 - Sep 3 price swing
- SUP 4: 138.07 Low Jul 28 2023
USDJPY is trading above its most recent low, however, short-term gains are considered corrective. Bears remain in the driver’s seat and the pair has once again traded to a fresh cycle low this week. The recent breach of key support at 141.70, the Aug 5 low, confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. Sights are on 139.00 next, a Fibonacci projection. Firm resistance is 143.81, 20-day EMA.
FED: Final Question on Job Market & Growth Versus Inflation
- Last question of the presser: Are you more worried about the job market and growth than inflation?
- A: No, we think they are roughly balanced. We're recalibrating our policy to a stance that will be more neutral. Today we made a "good strong start" on that. I think it was the right decision and it should send the signal that we're committed to coming up with a good outcome. I don't see anything in the economy that suggests the likelihood of a recession.
STIR: Powell Recalibration Stance Modestly Pares Initial FOMC Rally
- Fed implied rates lifted modestly in Powell’s press conference, with a framing of today’s 50bp cut as a recalibration and not being indicative of a new pace as the FOMC not in a rush and taking decisions one meeting at a time.
- Implied rates for the next few meetings are just 0.5bp higher for Nov but as much as 4.5bp higher for March than before Powell started speaking.
- That limits declines vs pre-announcement levels to 8.5bps for Nov and 7bps for Dec (i.e. partly accounting for the 50bp cut today that was only half priced between a 25bp or 50bp move)
- Cumulative cuts from an assumed effective rate of 4.83%: 35bp Nov, 71bp Dec, 105bp Jan and 174bp June.
