The US Dollar was confined within a neutral consolidation and range phase within the G3 currency complex (US Dollar, Japanese Yen and Euro) throughout September and into early October. However, emerging US$ strength through early October has translated into a USDJPY Double Bottom pattern, whilst the EURUSD sell-off into mid-October is threatening a more bearish shift, but only confirmed below 1.0950.
We anticipate that the US currency will be the strong G3 currency for the second half of October, and likely through November, potentially even through year-end.
A Friday rejection of the Thursday dip lower, holding above 103.14 support and probing above minor resistance at 103.90 to maintain bullish pressures from the recent Double Bottom pattern (see below), leaving risk of further gains Monday.
The Wednesday break higher overcame key resistance at 104.32, confirming a Double Bottom pattern, shifting the intermediate-term outlook to bullish.
• We see an upside bias for 104.48 and 104.63; break here aims for 105.00.
• But below 103.75 opens risk down to 103.31/14, maybe as deep as 102.77/59.
Short/ Intermediate-term Outlook – Upside Risks:
• We see a positive tone with the bullish threat to 105.62.
• Above here targets 107.49 and 109.26.
What Changes This? Below 101.62 signals a neutral tone, only shifting negative below 100.07.
Daily USDJPY Chart
A push lower Friday below support at 1.1020/15 and 1.0983 to reinforce the Thursday setback from initial resistance at 1.1061 (from 1.1058), to again leave the risk for further losses Monday.
We now see strong likelihood of a bearish shift in the intermediate-term outlook, but only confirmed below 1.0950.
• We see a downside bias through 1.0960 for key 1.0950; break here aims for critical 1.0910, then 1.0855
• But above 1.1026 opens risk up to 1.1058/61, maybe towards 1.1100/02.
The late July push above 1.1189 saw a shift to an intermediate-term, neutral range theme.
Short/ Intermediate-term Range Parameters: We see the range defined by 1.1428 and 1.0950.
Range Breakout Challenge
• Upside: Above 1.1428 aims higher for 1.1616 and 1.1714.
• Downside: Below 1.0950 sees risk lower for 1.0910, 1.0823/21, 1.0777/08 and maybe 1.0520.
Daily EURUSD Chart