US: UoM Consumer Sentiment Index for October Edges Higher

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Written By: Eno Eteng (MSTA)
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    Summary:
  • UoM Consumer Sentiment Index rises to 95.5 but comes in slighly below market expectations, leaving USDJPY unchanged but US Dollar Index upbeat.

What to look for in the USDJPY

The USDJPY has had a very quiet week in comparison to what has transpired since August. However, it is destined to jerk back to life as the FOMC meets next week. Investors are pricing in yet another 25bp rate cut as the US economy is starting to show signs of a slowdown in performance. Furthermore, Friday jobs report will provide another talking point as investors will look to see if last month’s less than stellar increase in job numbers was a temporary setback or a sign of worsening labour conditions brought on by the US-China trade imbroglio.

The USDJPY currently trades at 108.61 and is finding support at the 50% Fibonacci line, traced from the April 24 swing high to August 26 swing low. A break below this level targets 106.86, with a possible pitstop at the July 3/September 16 low of 107.50.

Sustenance above the 50% Fibonacci support could get prices to start to push up again towards 109.36 (August 1 high). Above this area, 110.67 (May 25 high) could become relevant if the Fed fails to deliver dovish statement.

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In the short-term, the trend will remain bullish as long we trade above the August 2 low of 1429.77. The price is about 60 dollars from the low, and about 54 dollars from the next major targets, hence the risk-reward ratio for a fresh long position is poor. However, if the price corrects 50% of the rally from the August 2, and thereby reaches 1461 level, the risk-reward ratio will improve to 2.54 times the risk.

Written By: Eno Eteng (MSTA)

Eno is a certified financial technician and member of the UK Society of Technical Analysts. He loves to trade and write about stocks, Forex, and CFDs. Since 2009, he has consulted several financial companies as a trader and strategy developer. His work can be seen on several forex blogs and trading educational websites.

Published by
Written By: Eno Eteng (MSTA)