MNI Europe Morning FX Analysis: USD & JPY Firm Up, Trump-Biden Debate Fails To Impress

FOREX: USD & JPY Firm Up, Trump-Biden Debate Fails To Impress

USD & JPY went bid in a relatively slow Asia-Pac session, which saw little in the way of market-moving catalysts. The final Trump-Biden debate was less chaotic than their earlier face-off, but provided nothing to alter the trajectory of the ongoing campaign. BBG trader sources flagged that USD & JPY were bought against EUR & GBP on above average turnover. EUR/JPY had a look under its 100-DMA, but failed to consolidate below the level.

• NZD was sold in reaction to a miss in New Zealand's CPI vs. both market & RBNZ expectations. That being said, price reaction was relatively limited, with participants already expecting further easing from the RBNZ.
• USD/CNH continued to tick away from cycle lows, with State Administration of Foreign Exchange (SAFE) confirming earlier reports that it wants to implement a phased increase in QDII quotas. SAFE also judged that the yuan has been more stable than exp. & its appreciation this year was driven by fundamentals.
• USD/KRW pushed higher initially, amid lingering concerns over a continued increase in South Korea's daily Covid-19 case count, which rose further above 100. The rate gradually trimmed gains and still trades within touching distance from its 19-month low.
• A flurry of PMI data from across the globe, UK retail sales and a speech from BoE's Ramsden feature on today's economic docket.

MNI FX TECHNICALS:

EUR/USD: Pullback Considered Corrective

• RES 4: 1.2011 High Sep and key resistance
• RES 3: 1.1917 76.4% retracement of the Sep 1 - 25 sell-off
• RES 2: 1.1901 1.0% 10-dma envelope
• RES 1: 1.1881 High Oct 21
• PRICE: 1.1799 @ 05:47 BST Oct 23
• SUP 1: 1.1760 Low Oct 20
• SUP 2: 1.1739 50-day EMA
• SUP 3: 1.1723 Trendline support drawn off the Sep 28 low
• SUP 4: 1.1689 Low Oct 15 and a key support

EURUSD is off recent highs however despite the pullback, maintains a positive tone. This week's bullish theme has been reinforced by the break of the former bull trigger at 1.1831, Oct 9 high. The breach signals scope for an extension towards 1.1917 next, a Fibonacci retracement level with the major resistance and hurdle for bulls at 1.2011, Sep 1 high. On the downside, initial firm support lies at 1.1760, Tuesday's low.

GBP/USD: Corrective Pullback

• RES 4: 1.3292 76.4% retracement of the Sep 1 - 23 sell-off
• RES 3: 1.3260 2.0% 10-dma envelope
• RES 2: 1.3233 Former trendline support drawn off the Mar 20 low
• RES 1: 1.3177 High Oct 21
• PRICE: 1.3062 @ 05:58 BST Oct 23
• SUP 1: 1.3025 High Oct 19
• SUP 2: 1.2940 Low Oct 21
• SUP 3: 1.2863 Low Oct 14 and key near-term support
• SUP 4: 1.2806 Low Sep 30

EUR/GBP: Focus Is On Key Support

• RES 4: 0.9162 High Oct 7
• RES 3: 0.9155 1.0% 10-dma envelope
• RES 2: 0.9149 Oct 20 high
• RES 1: 0.90783 20-day EMA
• PRICE: 0.9036 @ 06:01 BST Oct 23
• SUP 1: 0.9012 Low Oct 21
• SUP 2: 0.9007 Low Oct 14 and the bear trigger
• SUP 3: 0.8967 76.4% retracement of the Sep 3 - 11 rally
• SUP 4: 0.8925 Low Sep 7

EURGBP remains vulnerable following Wednesday's sharp move lower. The cross has moved below the 50-day EMA once again and attention is on support at 0.9007, Oct 14 low and the near-term bear trigger. A break of 0.9007 would confirm a resumption of the downtrend that started Sep11 and open 0.8967, a retracement point. Key resistance has been defined at 0.9149, Tuesday's high. The outlook is bearish below this level.

USD/JPY: Vulnerable

• RES 4: 106.11 High Oct 7 and key resistance
• RES 3: 105.75 High Oct 20
• RES 2: 105.53/65 High Oct 21 / 50-dma
• RES 1: 105.04 Low Oct 4 and a recent breakout level
• PRICE: 104.71 @ 06:08 BST Oct 23
• SUP 1: 104.34 Low Oct 21
• SUP 2: 104.00 Low Sep 21 and the bear trigger
• SUP 3: 103.67 76.4% retracement of the Mar 9 - 24 rally
• SUP 4: 103.09 Low Mar 12

USDJPY maintains a weaker outlook following the Wednesday sell-off and the confirmation of a resumption of the downleg from 106.11, Oct 7 high. A number of important supports have been cleared this week signalling scope for a deeper pullback towards the key 104.00 handle, Sep 21 low. A break of 104.00 would signal scope for further USD depreciation within the bear channel drawn off the Mar 24 high. Initial resistance is at 105.04.

EUR/JPY: Edges Lower

• RES 4: 125.97 76.4% retracement of the Sep 1 - 28 sell-off
• RES 3: 125.28 61.8% of the Sep 1 - 28 sell-off
• RES 2: 125.00/09 High Oct 20 and Oct 9
• RES 1: 124.09 Oct 22 high
• PRICE: 123.59 @ 06:20 BST Oct 23
• SUP 1: 123415 Intraday low
• SUP 2: 123.03/02 Low Sep 29 and Oct 2 / Low Oct 15
• SUP 3: 122.38/28 Low Sep 28 / 61.8% of the Jun 22 - Sep 1 rally
• SUP 4: 122.25 38.2% retracement of the May - Sep rally

EURJPY continues to weaken, extending this week's correction. Attention turns to support at 123.03/02, low prints between Sep 29 and Oct 15. Low. A break of this level would undermine the recent bullish outlook and instead highlight risk for a deeper sell-off towards 122.38, Sep 28 low and the bear trigger. Moving average studies are in a neutral position. To strengthen a bullish argument, price needs to clear key resistance at 125.09, Oct9 high.

AUD/USD: Bearish Below Trendline Resistance

• RES 4: 0.7243 High Oct 10 and the intraday bull trigger
• RES 3: 0.7176 Trendline resistance drawn off the Sep 1 high
• RES 2: 0.7170 High Oct 15
• RES 1: 0.7139 Intraday high
• PRICE: 0.7107 @ 06:26 BST Oct 23
• SUP 1: 0.7021 Low Oct 20
• SUP 2: 0.7006 Low Sep 25 and the bear trigger
• SUP 3: 0.6965 23.6% retracement of the Mar - Sep rally
• SUP 4: 0.6931 0.764 projection of Sep 1 - 25 sell-off from Oct 9 high

AUDUSD remains vulnerable despite the recent recovery. The pair continues to trade below trendline resistance drawn off the Sep 1 high. The line intersects at 0.7176 and the recent failure at the trendline highlights the bearish risk. Attention is on the primary support and bear trigger at 0.7006, Sep 25 low. A trendline resistance break is needed to alter the picture and signal a stronger reversal.

USD/CAD: Bearish Conditions Dominate

• RES 4: 1.3421 High Sep 30 and primary resistance
• RES 3: 1.3341 High Oct 7
• RES 2: 1.3246/59 50-day EMA / High Oct 15 and the bull trigger
• RES 1: 1. 3197 20-day EMA
• PRICE: 1.3151 @ 06:30 BST Oct 23
• SUP 1: 1.3081 Low Oct 21 and the intraday bear trigger
• SUP 2: 1.3047 Low Sep 7
• SUP 3: 1.3038 Low Sep 2
• SUP 4: 1.2994 Low Sep 1 and the major support

USDCAD bearish conditions dominate despite the most recent bounce. The pair weakened through key support at 1.3099 this week, Oct 13 low. The move lower confirms a resumption of the current downtrend that started Sep 30. Moving average studies are bearish too, reinforcing the current climate. Scope exists for a move towards the major support at 1.2994, Sep 1 low. Key resistance has been defined at 1.3259, Oct 15 high.

MNI KEY LEVELS:

EUR/USD: MNI Key Levels

• $1.1966 Aug18 high
• $1.1917/29 Sep10 high/Sep02 high
• $1.1897/00/08 Upper 1.0% 10-dma env/Sep15 high/Upper Boll Band (3%)
• $1.1867/81/82 Oct22 high/Oct21 high/Sep16 high
• $1.1851/57/60 Cloud top/100-mma/Upper Boll Band (2%)
• $1.1812/22/24 100-hma/Oct21 low/Intraday high
• $1.1796/97 55-dma/50-dma
• $1.1798 ***CURRENT MARKET PRICE 05:31BST FRIDAY***
• $1.1787/85/74 Intraday low/50% 1.1689-1.1881/200-hma
• $1.1762/60/57 61.8% 1.1689-1.1881/Oct20 low/21-dma
• $1.1747/34 50% 1.1612-1.1881/76.4% 1.1689-1.1881
• $1.1703/94/89 Oct19 low/Oct16 low/Oct15 low
• $1.1685 Sep30 low, Sep25 high
• $1.1666/62 Lower Boll Band (2%)/Lower 1.0% 10-dma env
• $1.1661 Sep29 low

GBP/USD: MNI Key Levels

• $1.3263 Upper 2.0% 10-dma envelope
• $1.3206 Upper Bollinger Band (3%)
• $1.3177 Oct21 high
• $1.3153 Oct22 high
• $1.3124/33 Upper Boll Band (2%)/Upper 1.0% 10-dma env
• $1.3094 Intraday high
• $1.3072 Cloud top
• $1.3061 ***CURRENT MARKET PRICE 05:33BST FRIDAY***
• $1.3057 Intraday low
• $1.3027/25/19 100-hma/Oct19 high/55-dma
• $1.3014 50-dma
• $1.2992 200-hma
• $1.2981/79 Cloud base/Oct20 high
• $1.2953/51/47 50-mma/21-dma/200-wma
• $1.2940 Oct21 low

EUR/GBP: MNI Key Levels

• Gbp0.9220 Sep22 high
• Gbp0.9176/81 Upper Boll Band (3%)/Sep24 high
• Gbp0.9151/57/62 Upper 1.0% 10-dma env/Sep30 high/Oct07 high
• Gbp0.9137/42/49 Oct21 high/Upper Boll Band (2%)/Oct20 high
• Gbp0.9079/80/94 21-dma, Cloud base/Oct20 low/Cloud top
• Gbp0.9062/65/68 55-dma, 200-hma/50-dma/100-hma
• Gbp0.9039/46 Intraday high/Oct22 high, 100-dma
• Gbp0.9035 ***CURRENT MARKET PRICE 05:38BST FRIDAY***
• Gbp0.9021/15/12 Intraday low/Oct22 low/Oct21 low
• Gbp0.9010/07 Lower Boll Band (2%)/Oct14 low
• Gbp0.8977/70 Lower Boll Band (3%)/Lower 1.0% 10-dma env
• Gbp0.8967 Sep08 low
• Gbp0.8925 Sep07 low
• Gbp0.8900/90 Sep04 low/200-dma
• Gbp0.8880/66 Lower 2.0% 10-dma env/Sep03 low

USD/JPY: MNI Key Levels

• Y105.61/62 50-dma/Cloud base
• Y105.53 Oct21 high
• Y105.41/43 76.4% 105.75-104.34/21-dma
• Y105.21/23 61.8% 105.75-104.34/200-hma
• Y105.11 100-hma
• Y105.04/05/06 Oct14 low, 50% 105.75-104.34/Cloud Tenkan Sen/Cloud Kijun Sen
• Y104.94 Intraday high
• Y104.70 ***CURRENT MARKET PRICE 05:42BST FRIDAY***
• Y104.68/67 Lower Boll Band (2%)/Intraday low
• Y104.48 Oct22 low
• Y104.34/31 Oct21 low/Lower Bollinger Band (3%)
• Y104.14/00 Lower 1.0% 10-dma env/Sep21 low
• Y103.94 200-mma
• Y103.09 Lower 2.0% 10-dma env, YTD Mar12 low
• Y102.04/02 Lower 3.0% 10-dma env/Mar10 low

EUR/JPY: MNI Key Levels

• Y124.16 100-hma
• Y124.09 Oct22 high
• Y124.02 Intraday high
• Y124.01 Cloud Tenkan Sen
• Y123.95 21-dma
• Y123.90 200-hma
• Y123.68/74 Cloud base/Cloud Kijun Sen
• Y123.57 ***CURRENT MARKET PRICE 05:52BST FRIDAY***
• Y123.53/41 100-dma/Intraday low
• Y123.37 Oct19 low
• Y123.12 Oct16 low
• Y123.03 Oct02 low, Sep29 low
• Y123.02 Oct15 low
• Y122.96 Lower Bollinger Band (2%)
• Y122.67 Lower 1.0% 10-dma envelope

AUD/USD: MNI Key Levels

• $0.7244/54 200-wma/Sep17 low
• $0.7235/43 Upper Boll Band (2%), Sep22 high, Oct12 high/Oct09 high
• $0.7218 Oct13 high
• $0.7198 50-dma
• $0.7189/91/94 Upper 1.0% 10-dma env/Oct14 high/55-dma
• $0.7168/70/82 Cloud base/Oct15 high/Falling Trend Sep1
• $0.7131/39 21-dma/Intraday high
• $0.7113 ***CURRENT MARKET PRICE 05:56BST FRIDAY***
• $0.7108/07 Intraday low/200-hma, 100-dma
• $0.7087/85 100-hma/Oct22 low
• $0.7047/36 Oct21 low, Lower 1.0% 10-dma env/Lower Boll Band (2%)
• $0.7021/06 Oct20 low/Sep25 low
• $0.6986/75 Lower Boll Band (3%)/Lower 2.0% 10-dma env
• $0.6973/63 Jul20 low/Jul16 low
• $0.6921 Jul14 low

USD/CAD: MNI Key Levels

• C$1.3320 Cloud top
• C$1.3288 Upper 1.0% 10-dma envelope
• C$1.3259/73 Oct15 high/Oct08 high
• C$1.3227/38 21-dma/Oct16 high
• C$1.3199/04/06 50-dma/Oct20 high/55-dma
• C$1.3175/78 50-mma/Oct22 high
• C$1.3150/58/60 100-hma/Intraday high/200-wma, 200-hma
• C$1.3148 ***CURRENT MARKET PRICE 06:01BST FRIDAY***
• C$1.3143 Cloud base
• C$1.3124 Oct22 low, Intraday low
• C$1.3081 Oct21 low
• C$1.3044/38 Lower Boll Band (2%)/Sep02 low
• C$1.3024 Lower 1.0% 10-dma envelope
• C$1.2994 Sep01 low
• C$1.2976/69 Jan08 low/YTD Jan02 low

OPTIONS: Expiries for Oct23 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1750-55(E1.3bln), $1.1800(E2.0bln), $1.1830-50(E2.0bln), $1.1975(E518mln), $1.2000(E1.4bln)
• USD/JPY: Y103.00($1.3bln), Y105.00($751mln), Y105.40-60($1.2bln), Y105.85($628mln)
• GBP/USD: $1.3090-1.3100(Gbp1.1bln-GBP calls)
• AUD/USD: $0.7180(A$827mln)
• USD/CAD: C$1.3080($936mln), C$1.3190-00($576mln)

Larger Option Pipeline

• EUR/USD: Oct26 $1.1500(E1.8bln), $1.1650-60(E1.6bln), $1.1830-45(E1.1bln); Oct28 $1.1745-60(E1.1bln),
  $1.1800-05(E1.5bln), $1.2000-05(E2.9bln); Oct30 $1.1800(E1.1bln), $1.1850(E1.2bln), $1.1950(E1.7bln-EUR calls), $1.2000(E1.1bln); Nov03 $1.1900-05(E1.1bln)
• USD/JPY: Oct26 Y103.95-104.00($2.5bln-USD puts), Y105.30-40($1.7bln), Y105.60-75($1.2bln),
  Y106.95-107.00($1.6bln); Oct27 Y105.00($1.3bln), Y106.00-05($1.2bln); Oct28 Y104.85-90($1.2bln), Y105.00($1.5bln); Oct29 Y103.20-25($1.6bln), Y104.00($1.6bln), Y105.25($1.3bln), Y105.55-65($2.2bln), Y106.00($1.2bln); Oct30 Y104.50($1.9bln), Y104.80-85($1.1bln), Y106.00-05($2.2bln); Nov03 Y105.45-49($1.3bln); Nov04 Y105.00($1.1bln); Nov05 Y106.06-09($1.6bln)
• EUR/JPY: Oct26 Y122.80(E1.2bln); Nov05 Y124.50(E1.0bln)
• EUR/GBP: Oct26 Gbp0.8900(E880mln), Gbp0.9000(E2.1bln-EUR puts); Nov02 Gbp0.8900(E1.6bln-EUR puts)
• AUD/USD: Oct27 $0.6680(A$1.1bln); Nov02 $0.7140-45(A$1.5bln)
• AUD/JPY: Oct29 Y73.20(A$1.0bln-AUD puts), Y76.35-40(A$2.4bln-AUD calls)
• AUD/NZD: Oct27 N$1.0809-20(A$2.5bln); Oct30 N$1.0750(A$1.2bln)
• USD/CNY: Nov03 Cny6.5334($1.1bln); Nov05 Cny6.75($1.0bln), Cny6.80($1.9bln), Cny6.85($1.3bln)