The Forex Market Insight Report shows charts on different major currencies and commodities, with brief commentaries on how new data releases and news cause movements in the market.

Headline:

  • Markets shocked lower in early trading after US debt negotiations break down over weekend
  • US dollar weakens significantly, especially against safe havens like JPY and CHF
  • Gold surges to all-time of 1623 this morning on US debt fears
  • AUD sharply lower as risk currencies sold in early trading
  • US equity futures open Monday with 200-point fall
  • Looking forward, debt talks crucial as White House warns of ‘stressful’ times for markets

AUD/USD
It’s going to be a tricky start to the week with market action likely to be driven by the ongoing US debt negotiations. Markets have started the week on the back foot with the Aussie falling about 30 pips on the open before stabilising around 1.0820. Traders will be looking to take new long positions while we hold above 1.0800, but a fall below this level is clearly bearish.

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XAU/USD
Gold’s had an unbelievable start to the week as it surged above the all-time highs at 1610 and is now bumping up against 1625. Gold’s move is being driven by worries about the US dollar as investors seek a safer alternative to the struggling greenback. Any pullback to 1610 will be seen as a buying opportunity, while traders are also likely to take long positions on
EUR/USD
The Euro is having trouble pushing above resistance at 1.4450, while the US dollar’s woes are hitting the risk currencies like the EUR. This is resulting in selling pressure on the EUR/USD and traders are looking to take new shorts around 1.4400/50 in expectation of a move back to 1.4280. A clear break of 1.4450 changes the view to bullish.

GBP/USD
No real change on the GBP/USD with the pair still seeing resistance at 1.6350 and support at 1.6200. Like most other currencies this morning, the GBP’s fate will be determined by the US dollar. The best strategy is to focus on the important technical levels and potentially wait for a break above 1.6350.
USD/JPY
The dollar-yen should be one of the better pairs to play as the US debt negotiations drag on as the USD/JPY traditionally behaves in a rational manner in these situations: that is, the USD/JPY will usually fall on the back of US dollar negative news. At the moment, the line in the sand is 78.20 and a break below this level will be bearish.

SILVER
Silver should benefit in much the same way as gold as traders look for ‘safe haven’ alternatives to the US dollar. In the near term, the market will be waiting for a break of 40.80 to trigger new long positions. Don’t forget that any good news of the US’s debt situation is likely to see selling across both silver and gold.

USD/CHF
The USD/CHF remains one of the most closely watched pairs as traders use this pair to take advantage of the US debt woes. The pair was sent sharply lower this morning and this sets up a potential break below 80.80. Any break below 80.80 is likely to see further selling.
GBP/JPY
The GBP/JPY remains trapped under resistance at 128.20, but the pair is increasingly looking as if it is trying to break higher. In the near term, traders are likely to continue and work the short side, but a clear break higher above 128.20 could generate some buying interest.
AUD/JPY
The AUD/JPY continues to trade within the broader consolidation pattern with support at 83.20/50 and resistance at 85.20. If further bad news develops from the US, the market will expect to see the AUD/JPY see further selling pressure and this could set up a move back to the lower end of the range.

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OIL
Crude remains unable to push above 100 and the market will be looking to sell crude on any move back toward this level of
resistance. Support is seen at 98.00. A falling US dollar should be supportive of oil, but markets might place greater focus n
the overall impact a US default might have on global economic growth.
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