Failures at extremes lead to some covering before employment
The stock market started to reverse some of the gains and so did some of the gains in the dollar - at least against the EUR, GBP, JPY and CHF. The pairs are still up on the day but the some of the gains are being eroded.
The market is still not sure about the Feds move. Adam points out that the September hike expectations is down to 30% but can that be a reliable indicator in the on again/off again uncertain environment Markets are getting more concerned about the China impact. The US employment report is on deck for tomorrow. A strong report will have that September percentage moving higher, but what does a weak report do?
Draghi was more bearish today. US ISM was stronger. That forced the EURUSD below the 100 day MA at the 1.1189, but support at 1.1088 held and that started a comeback/correction (especially after finding more momentum above the 100 day MA at 1.11089 level). The next targets come in at 1.1146 and 1.1158 (the 100 bar MA on the 5 minute chart).
The GBPUSD likewise fell below a key level at the 50% of the move up from the April low at 1.52456, but it too is back above that level and getting out of the bearish woods. It approaches resistance at the 1.5277 area.
The USDJPY has been more offered today after finding sellers against the 100 hour MA in the Asian Pacific session. Nevertheless, it corrected from the initial low to the 200 bar MA (see green line in the chart above), before heading back lower over the last few hours. .
The USDCHF broke above trend line resistance on the hourly chart at 0.9759, but like the EURUSD and the GBPUSD, could not sustain the momentum. It is trading looking toward the 50% of the days range at the 0.9725.
For now the mood is corrective, but the moves are still corrective. With employment tomorrow, be more nimble and don't be afraid to take some profit along the way.
