Date: 05 Oct 2017

Although celebration of the mid-autumn festival in Hong Kong and South Korea (and consumption of the traditional Moon Cakes), along with the ongoing National Day holidays in China may have helped produce a quiet session in Asia for euro/dollar (EURUSD) traders in Europe and North America will be hoping for greater movement as the market heads towards Friday’s key release of US jobs data (1230GMT).  Of course, in the latter case, traders may also wish to bear in mind that, whatever the data, there are sizeable option expiries on Friday rolling off at the New York cut (1400GMT), with talk of some EUR 1.75 billion of notional expiries in the 1.1735-50 area alone then. In the meantime, some chartists, such as Germany’s Commerzbank continue to feel that the outlook for EURUSD “remains negative following the recent erosion of the 5 month uptrend and the 1.1836/23 September lows and we look for further weakness initially to the 1.1662 August low and then the midJune high at 1.1296 and the more important 1.1110 end of May low.” Traders will have their own opinions and the German bank’s view is a longer-term one. However, in the “very near term the market is bouncing off the

Traders will have their own opinions and the German bank’s view is a longer-term one. However, in the “very near term the market is bouncing off the 200 week ma at 1.1721,” Commerzbank contends, but feels that “intraday rallies should fail in the 1.1817/36 region, the 55 day ma and late August and mid-September lows.” The German bank would only reassess its bearish stance if EURUSD broke above 1.2092. Elsewhere, on the day, ThomsonReuters IFR highlights resistance in EURUSD at “1.1785-95 where the 10-day MA and [Wednesday’s] high converge” with “support at [Wednesday’s] 1.1735 low and this week’s low at 1.1695.” It remains to be seen if traders will agree that these chart points are on the level or just a moonshot.

Written by Neal Kimberley, External Currency Analyst.