FOREX: Risk-Off Sentiment Helps Dollar Off Lows, JPY Outperforms

• Despite some significant intra-day swings, the USD index has pressed to a fresh post-Fed high as we approach the APAC crossover, extending the recovery from the September lows to 2.1% in recent trade. Lower oil prices this week and surging equity indices have done little to dampen this dollar enthusiasm.
• The likes of EUR, GBP and CAD are all underperforming on Tuesday, declining around 0.3% on the session. For EURUSD, this translates to the lowest level since July 29. The move down reinforces the current bearish theme as price moves further away from the 50-day EMA, breached last week. Scope is seen for a move towards 1.1416, a Fibonacci retracement. Clearance of this level would expose 1.1325, the Jun 24 low and a key medium-term support.
• USDCAD is up 0.3% at 1.4072 and yesterday’s daily close above the psychological 1.40 mark will have bolstered the short-term bullish trend. Latest price action has also seen the pair narrow in on the Aug 04 and 05 highs at 1.4080.
• For USDJPY, the session was characterised by a sharp move lower during the European morning, which resulted in a quick move from around 157.70 to session lows of 156.83. Subsequently, the general dollar bid has seen spot steadily recover to 157.60 at typing.
  • On the topside, the focus is on both the post-BOJ highs at 158.05 and the 50-day EMA, intersecting at 158.10. Clearance of this key area would strengthen the technical backdrop and signal scope for a stronger recovery to pre-intervention highs at 160.39.
• NZD is a relative outperformer following some hawkish leaning remarks from RBNZ governor. This is most visible through AUDNZD remaining comfortably below recent cycle highs, nearer to the 1.24 mark.
• Eurozone flash PMIs highlight the Wednesday calendar, as markets then turn their focus to headlines emanating from the Trump-Xi summit in Washington.

• EUR/USD: Sep24 $1.1400(E1.1bln), $1.1500(E1.5bln), $1.1575(E1.3bln); Sep25 $1.1400(E1.0bln), $1.1500(E1.1bln); Sep28 $1.1350(E1.0bln), $1.1400(E1.7bln), $1.1450(E1.1bln), $1.1500(E2.8bln), $1.1540(E1.3bln), $1.1600(E1.4bln)
• USD/JPY: Sep24 Y156.00($1.9bln), Y156.50($1.5bln), Y157.50($1.5bln), Y160.00($1.2bln); Sep25 Y155.00($1.9bln); Sep28 Y156.75($1.0bln), Y160.50($1.2bln)
• AUD/USD: Sep24 $0.7160-62(A$1.0bln); Sep28 $0.7100(A$1.1bln)
• USD/CAD: Sep24 C$1.4100($1.4bln)
• USD/CNY: Sep24 Cny6.7075($1.2bln)

• RES 4: 108-27+ High Aug 13
• RES 3: 108-15+ High Aug 28 
• RES 2: 107-23   50-day EMA
• RES 1: 106-19/106-27 High Sep 11 / 20-day EMA 
• PRICE:‌‌ 106-03+ @ 16:55 BST Sep 22
• SUP 1: 105-21   Low Sep 15 and 16
• SUP 2: 105-10+ Low Oct 19 2023 (cont.)
• SUP 3: 105-00+ 2.382 proj of Jun 30 - Jul 14 - 17 price swing
• SUP 4: 104-25+ 2.500 proj of Jun 30 - Jul 14 - 17 price swing

Treasuries remain in consolidation mode - for now. The trend structure is unchanged and it remains bearish. Recent weakness has maintained the price sequence of lower lows and lower highs and note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Sights are on 105-10+, the Oct 19 ‘23 low on the continuation chart. Initial firm resistance is 106-27, at the 20-day EMA.