Yesterday the pair slightly strengthened, remaining near its local highs.
The Dollar is supported by quite strong macroeconomic data from the US. On Wednesday, market participants met with optimism data on New Home Sales for September. After a sharp fall in August by 8.6%, September’s figures showed a growth of 3.1% that was noticeably better than the expectations of economists. In absolute numbers, sales rose to 0.593 million. In addition, data on the Markit PMI’s came out better than forecasts as well. The Services PMI in October grew from 52.3 to 54.8 points while the Composite index increased from 52.3 to 54.9 points.
At the same time, during today’s morning session the Yen rose after Bank of Japan Deputy Governor Iwata appearance. He stated that the regulator is going to continue pursuing strong quantitative easing policy.
Support and resistance
Bollinger Bands on the daily chart is moving up while the price range remains very narrow. MACD is growing and giving a weak sell signal. Stochastic is turning down near the border of the overbought zone.
The indicators recommend waiting for clearer trading signals.
Support levels: 104.19 (local low), 104.00, 103.64, 103.33 (13 October low), 103.00, 102.80 (10 October low), 102.45, 102.26, 102.00 (4 October low).
Resistance levels: 104.63 (13 October high), 105.00 (29 July high), 105.59, 106.04, 106.39 (27 July high).
Trading tips
Long positions can be opened after the price consolidation above the level of 104.63 with targets at 105.59, 106.04, 106.39 and stop-loss at 104.19. Validity – 2-3 days.
Short positions can be opened after the breakdown of the level of 104.19 with targets at 103.00, 102.80 and stop-loss at 104.63. Validity – 2-3 days.
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