U.S. Dollar Trading (US) the USD finished the month and the quarter on a strong footing with safe haven demand on fresh risk aversion. Stocks fell heavily in the US session with fears that the debt crisis in Europe is going to drag the US and Global economy into recession. Chicago PMI forecast at 60.4 vs. 56.5 previously. In US stocks, DJIA -240 points closing at 10913, S&P -28 points closing at 1131 and NASDAQ -65 points closing at 2415. Looking ahead, September ISM Manufacturing forecast at 50.3 vs. 50.6 previously.

The Euro (EUR) continued to slide with talk Greece will not meet deficit targets putting more pressure on the German and French politicians to support the troubled country. Concerns are also evident in the banking sector with more European banks having to tap Dollar funding from the ECB. Looking ahead, German Bank Holiday. September PMI Manufacturing forecast at 48.4 vs. 48.4 previously.

The Japanese Yen (JPY) The USD/JPY moved higher on USD strength breaking above Y77 and closing above the figure for small losses against the other safe haven in the market. Risk currencies slumped though with EUR/JPY falling back to Y103 and target Y100 as the downtrend continues. UPDATE Q3 Tankan Manufacturing Index at 2 vs. -9 previously.

The Sterling (GBP) fell back below 1.5600 as the selling in stocks put downward pressure on the GBP but the EUR/GBP selling helped keep GBP/USD limited. Support at 1.5550 has held so far but further negative news could cause a break and test of 1.5500 today in the UK session.

The Australian Dollar (AUD) selling came back in force breaking to 0.9650 in the US session with the uncertainty and lack of progress on Greece creating a toxic environment for the Aussie. Commodities are also under heavy selling pressure and Chinese concerns are adding to the downside risks. Support is seen at year lows 0.9620 and the key 0.9500.

Oil & Gold (XAU) Gold traded in a range above $1600 with the USD strength countered by renewed buying interest in the precious metal. Crude Oil slumped under $80 a barrel to hit support at $78 before stabilizing.  

Pairs to watch

EUR/USD more selling to come?

USD/JPY breaking the range to the topside?


TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3246

1.3286

1.3335

1.3601

1.3797

USD/JPY

75.00

76.11

77.05

77.28

77.86

GBP/USD

1.5433

1.5526

1.5550

1.5706

1.5870

AUD/USD

0.9537

0.9622

0.9655

0.9810

0.9986

XAU/USD

1566.00

1583

1634

1676

1704

OIL/USD

75.00



78.00

78.50

80.00

81.00



Euro - 1.3335

Initial support at 1.3286 (1.3937 plus 0.618 of 1.4549-1.3495) followed by 1.3245 (Jan 17 low). Initial resistance is now located at 1.3601 (Sep 30 high) followed by 1.3797 (Sept 21 high)



Yen - 77.05

Initial support is located at 76.11 (Sep 22 low) followed by 75.00 (Psych Support). Initial resistance is now at 77.28 (Sep 15 high) followed by 77.86 (Sep 9 high).

Pound - 1.5550

Initial support at 1.5526 (Sept 27 low) followed by 1.5433 (Sep 26 low). Initial resistance is now at 1.5706 (Sept 27 high) followed by 1.5870 (38.2% retrace of 1.6618-1.5328).



Australian Dollar - 0.9655

Initial support at 0.9622 (Sep 26 low) followed by the 0.9537 (Dec 1 low). Initial resistance is now at 0.9810 (Sep 30 high) followed by 0.9986 (Sep 27 high).

Gold - 1634

Initial support at 1583 (Sep 29 low) followed by 1566 (76.4% retrace of 1532.72-1676.97). Initial resistance is now at 1676 (Sep 27 high) followed by 1704 (Aug 25 low).



Oil - 78.50

Initial support at 78.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at  80.00 (Intraday resistance) followed by 81.00 (Intraday Resistance).





Written by Anthony Darvall