EURUSD SLIDES TO MULTI-MONTH LOW AS DOLLAR STRENGTH REMAINS

Global stocks staged an unease recovery rally on Wednesday after some positive news from Evergrande. The company said that it will sell a stake in a commercial bank for $1.5 billion. It will sell its 20% stake of Shengijing bank to a state-owned bank in a sign that the authorities are attempting to help the company. The firm will still hold about 14% of the bank after the transaction ends. These funds will help the company to pay some of its debt. In Europe, the DAX, FTSE 100, and CAC 40 indices rose by more than 0.80%. Similarly, in the United States, futures tied to the Dow Jones and S&P 500 indices rose by more than 0.50%.

The Japanese yen strengthened against the US dollar after clarity on who will become the country’s prime minister. Fumio Kishida, a former foreign minister, was elected as the new leader of the country’s ruling party. This assures him that he will become the country’s prime minister after Yoshihide Suga resigned. In the campaign, Kishida said that the country should build missile-strike weapons to boost its defence against China and North Korea. He also called for more measures to redistribute wealth to shrink the gap between the rich and the poor.

The euro sell-off accelerated on Wednesday even after the relatively strong Eurozone confidence data. The numbers showed that more people in Europe have started leaving their homes to go shopping and eat out even as the number of new Covid infections kept rising. In total, consumer confidence has risen to the pre-pandemic levels. In contrast, data published from the United States showed that consumer confidence declined to the lowest level in 7 months in September. Meanwhile, industrial sentiment increased to 14.1 while the business and consumer survey rose to 117.8.

EURUSD

The EURUSD pair declined below the key support level at 1.1663 even after the strong Eurozone confidence numbers. It dropped to a low of 1.1655, which was the lowest level since November last year. It also moved below the 25-day and 50-day moving averages and the Ichimoku cloud. The Williams %R has moved to the oversold level while the MACD is also below the neutral level. Therefore, the pair will likely keep falling as bears target the next key support at 1.1600.

USDJPY

The USDJPY retreated to a low of 111.20, which was lower than the intraday high of 111.67. The pair has been in a strong bullish trend since September 22. On the four-hour chart, it is still slightly above the 25-day and 50-day moving averages. Also, the pair is slightly above the important support level at 110.80, which was the highest level in August. Therefore, while the overall trend is bullish, there is a likelihood that the pair will retest the support at 110.80 soon.

NZDUSD

The NZDUSD pair declined to a low of 0.6940 as the US dollar held steady. This price was the lowest level since August 27. On the four-hour chart, the pair managed to move below the key support at 0.6980, which was the lowest level on September 23rd. The MACD dropped below the neutral level while the on-balance volume has been falling. The pair will likely continue falling as bears target the key support at 0.6900.