Intraday Forex Thursday, October 1 (EURUSD, USDJPY, etc). Dollar heads for best week in months as Fed tightening looms.


Hi everyone. This observation is made around 5:30 UTC today, with 30 minutes time frames. The Resistance and Support Line were constructed according to Fibonacci retrenchment. Any discussion is welcomed.

Equities started the October on the back foot, tumbled on Friday, as risk sentiment soured amid mounting fears about slowing economic growth, elevated inflation, supply-chain bottlenecks, a global energy crunch and regulatory risks emanating from China.
The dollar headed for its weekly gains against its major peers, picking up speed, fueled by a hawkish tilt from the Federal Reserve, rising Treasury yields and concerns over the possibility of a drawn-out battle to raise the U.S. debt ceiling.

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  • The euro rose slightly on Friday to $1.15794 and on course to a 1.3% lower this week, tumbling through major support around $1.16 to touch its lowest levels since July 2020.​
  • The greenback rode higher since early of the week on a "risk-off" mood. The dollar is mostly benefiting from the Fed’s upcoming announcement about tapering its purchase scheme. The prospects of the Fed buying fewer bonds triggered a sale of U.S. debt, resulting in higher yields. The increase of 10-year Treasuries to around 1.50% makes the dollar more attractive.​
  • The recent surge in T-note yields is still supporting the dollar, along with central bank divergence, with the Fed expected to taper QE well before the ECB, BoE, or BoJ.​
  • The greenback has taken a breather overnight, edging lower against the euro on a report that the U.S. Congress is set to approve government funding through December 3, averting an imminent shutdown.​
  • From a short-term technical perspective, intraday bias in EUR/USD remains on the downside at this point. Immediate support awaits at 1.155, a level recorded a year ago. On the upside, above 1.161 minor resistance will turn intraday bias neutral and bring consolidations first.​
Important Levels to Watch for:​
  • Resistance line of 1.16116 and 1.17302.​
  • Support line of 1.15513 and 1.15326.​

  • The Japanese yen traded at 111.207 per dollar, stronger than levels around 112 seen against the greenback yesterday.​
  • The yen is, however still down 0.6% for the week and twice as much in a fortnight as higher U.S. Treasury yields have drawn flows out of the Japanese yen into dollars. U.S. Treasury yields have surged on growing market expectations of U.S. tapering by year-end and rate hikes in 2022.​
  • The dollar on Friday retreated from a 1-1/2 year high and posted moderate losses. The Japanese yen rebounded from yesterday losses and moved higher after a decline in stocks boosted the safe-haven demand for the yen.​
  • The USDJPY pair is undergoing a reversal, as sellers returned with conviction in yesterday’s trading session, resulting in a break of the yesterday’s support line. Selling activity continues in today’s trading which may see the pair return to a previous range at the 111.04 and 110.715 support lines.​
Important Levels to Watch for Today:​
  • Resistance line of 112.121 and 112.453.​
  • Support line of 111.047 and 110.715.​

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