- In yesterday mid-session, the headline from some media that EU negotiator Michel Barnier could offer UK 2-year transition stay in EU market helped the British pound stage a V-shape rebound to a new high since the rally from the start of the week.
- The dollar’s rebound was held below H4-period EMA60, awaiting short-term dictations from U.S. September CPI and retail sales due to release at 2030 BJT for now.
On Thursday 12 October, the British pound staged a V-shape rebound as some media claimed that EU negotiator Michel Barnier could offer UK 2-year transition stay in EU market during a meeting of EU ambassadors on 13 October. The dollar index (DXY) corrected upwards after FED governor Jerome Powell commented that FED would continue to normalize monetary policy and pursue to implement FED’s dual mandate in the future. The major macro data to watch are the U.S. September CPI and retail sales due to release at 2030 BJT.
The dollar index’s declines took a breather and rallied to H4-period EMA60 before entering into consolidation mode in New York session. After turning higher, its short term moving averages were held below its long term moving averages which remained bearish and divergent but narrowing on the 1 hour chart. Depending on the major macro data tonight, its short term moving averages could turn lower again or be able to cross above its long term moving averages.
（DXY H1 chart）
As to non-U.S. currencies, the euro corrected downwards in Asian and European sessions while whipsawed in New York session, with solid short-term downside support at H1-period EMA60. Turning focus to early session today, signs of resurgence in the single currency’s upside momentum seemed to appear. The pound reversed up in a V-shape and rose strongly as much as over 150 on the back of aforementioned fundamental event during the session. Whether or not the sterling could continue to go up after short-term correction will be important to observe. The Aussie dollar rebounded off H4-period EAM60 support in a choppy market, targeting last week’s highs which confluences with circa H4-period EMA169 resistance.
（GBP/USD H1 chart）
Let’s take a look at precious metals. The gold rallied again after hitting H1-period EMA60 support. Its short term moving averages turned higher and divergent again after converging above its long term moving averages which remained bullish and divergent on the 1 hour chart in early Asian session. Given the possibility that the MACD indicator could potentially form the bearish divergence pattern again on the 4 hour chart, the price action of the yellow metal could resume its downtrend on the daily chart once the U.S. macro data tonight are good for the dollar.
（Gold H1 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.