The recent bout of USD weakness seen since the start of the month did no manifest itself in the USDJPY and Gold, with both trade setups highlighted last month now at key inflection points. The EURUSD is also back on our radar as the pair posted a significant rally of key support early in the month. While our broader biases remain unaffected, the September opening range has offered some interesting price action as the USDOLLAR retreated off our objective target at 10,800. Here are the updated setups on USDJPY, Gold and the EURUSD.

USDJPY Daily Chart

Forex_EUR_Gold_at_Key_Inflection_Point-_Scalps_Target_USDJPY_Pullback_body_USDJPY_DAILY.png, EUR, Gold at Key Inflection Point- Scalps Target USDJPY Pullback

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • Interim resistance now at 100.58
  • Breach targets 101.60, 102.59 and key resistance at 103.54/72
  • Interim support 99.84/93- Bullish invalidation now brought up to 98.56/75
  • Key Events: Machine Orders tonight, Industrial Productionon Friday

Notes: The September opening range has further reinforced our directional bias with the USDJPY achieving both objectives sited last month at 98.56/75 and 99.84/92. The subsequent topside breach found resistance at the key 61.8% Fibonacci extension taken off the June advance at 100.58 (today’s high 100.60) with daily RSI now failing as second attempt at breaching the 60-threshold. Caution is warranted here with an impending trendline support break in the oscillator suggesting a near-term correction lower may be in the making. Bottom line: we may get a short-term correction but remaining constructive above 98.56/75 with only a break (and close) below 97.65/73 (three way Fib confluence) invalidating our broader bullish outlook.

GOLD Daily Chart

Forex_EUR_Gold_at_Key_Inflection_Point-_Scalps_Target_USDJPY_Pullback_body_GOLD_DAILY.png, EUR, Gold at Key Inflection Point- Scalps Target USDJPY Pullback

Technical Outlook

  • Interim support confluence at $1356 (key inflection point)
  • September opening range suggests bearish bias warranted
  • Support break eyes targets at $1336, $1319 and $1298-$1306
  • Near-term Bearish invalidation lowered to $1415 (opening range high / 38.2% Fib retracement)
  • Daily RSI break below 40 would offer further conviction on a larger reversal
  • Key Events: US Retail Sales and University of Michigan Confidence on Friday

Notes: Gold is at a critical inflection point- the $1356 level represents a host of technical support structures with a break below warranting short side exposure. The 100% Fib extension off the August highs, 100-day moving average, and current operative channel support all line up here with a break eyeing subsequent targets at $1336, $1319, and the $1298-$1306 support zone. Note, just ahead of these targets rests current trendline support of the imbedded descending channel and could limit the decline in the interim. Bottom line: we may not have the momentum to break now, but we’ll look to sell rallies with our broader bias remaining bearish below $1415.

EURUSD Daily Chart

Forex_EUR_Gold_at_Key_Inflection_Point-_Scalps_Target_USDJPY_Pullback_body_EURUSD_Daily.png, EUR, Gold at Key Inflection Point- Scalps Target USDJPY Pullback

Technical Outlook

  • Interim resistance range 1.3320/40- Breach eyes topside targets 1.3416, 1.3450, and 1.35
  • Daily RSI wedge break to offer conviction
  • September opening range break suggests bullish bias
  • Bullish invalidation with break below 1.3185- Bearish sub-1.31
  • Interim support 1.3277/85 pivot level (50% retrace of decline / multi-year TL pivot)
  • Key Events: Eurozone Industrial Production on Thursday and 2Q Employment on Friday

Notes: Looking lower to sideways in the near-term while noting that the decline off the August highs looks like a clean 5-wave decline suggesting that the broader trend remains weighted to the downside. As such we look for a setback to possibly offer one more leg higher with a break above 1.3416 risking a more meaningful advance towards 1.35. A move back below 1.3185 invalidates the near-term uptrend with a break below key support at 1.31-1.3112 (with RSI conviction) shifting our focus lower. Such a scenario eyes a key support range at 1.30-1.3020.

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---Written by Michael Boutros, Currency Strategist with DailyFX

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