Due to the imminent release of inflation data from the eurozone and the U.S. last Friday, the market was dominated by a strong wait-and-see sentiment. The EUR was basically in a consolidation state during the Asian session and right after the opening of the European session. The eurozone's HICP then hit a new high of 10.0% in September, which will cement the ECB's decision to raise interest rates by a further 75 basis points at its October meeting. However, as European Central Bank (ECB) officials have said recently that a 75-basis-point interest rate hike should be made in October, the market has long expected this. The expected interest rate hike generated by HICP has little impact on the EUR. On the contrary, due to the further high inflation and a series of problems in the eurozone such as the energy crisis, the market has been worried about the eurozone economy and the EUR has plunged by nearly 100 points in the short term. US PCE data also unexpectedly rose a little later, and the EUR was able to rise at a low level and close slightly lower by 0.15% due to the "buy the rumor & sell the fact " market behavior after the market had already digested the expectation of the November interest rate increase.

At present, the eurozone is in turmoil. According to the French newspaper Les Échos, four economic research institutions have reduced Germany's economic growth forecast to 1.4% this year. Four institutions predict that a recession in Germany seems inevitable. The recession will start in the last quarter of this year and will further intensify early next year. Germany's GDP is likely to fall by 0.4% in 2023.

The leakage and repair of the Nord Stream pipeline will also delay the gas transmission time. This will undoubtedly aggravate the problem of energy shortage. In addition, many countries have also staged demonstrations to protest against the energy sanctions against Russia.

In addition, the possibility of economic recession in the eurozone is increasing. On the whole, the EUR is currently weak and abnormal. The short-term rise is entirely dependent on the weakening of the USD. Once the USD's negative interest rate is exhausted, the EUR will decline again.

In the 4H timeframe, the EUR rebounded after hitting the bottom of the downtrend channel and is currently blocked by the 38.2% Fibonacci Expansion Level (0.98283), recovering all the downturns since September 23, showing a V-shaped reversal pattern. The strong resistance from above was 0.99107. Since the EUR fell below this support on September 21, it has been heading all the way to the bottom of the downtrend channel. Only by breaking through this line can the EUR have room for further rise. The key support below is 0.95207, and a break below this line will open a new round of declines. As for indicators, Stoch, DMI, and Ichimoku chart all indicate that the EUR will fall in the short term.

Trading direction: Short

Entry price: 0.98283

Target price: 0.97374

Stop loss: 0.98771

Support: 0.97550, 0.97134, 0.96764

Resistance: 0.98283, 0.98518, 0.98771

The dollar swung to the upside last Friday, ending losses for two consecutive days and closing up 0.36%. It also capped off the third quarter. The dollar rose 6.7% during the quarter, gaining for five consecutive quarters.

The current market has fully digested the news of the Bank of England's intervention in the bond market, which has made the biggest driver of the dollar's decline in recent trading days "disappear". At the same time, due to the unexpectedly high U.S. PCE, inflation showed its stickiness, and fighting against inflation is not easy. The market expects the Fed will continue to maintain the current rate hike size. It should be noted that the speeches of Fed officials last Friday showed that there has been disagreement within the Fed. While the unified opinion is to continue to raise rates, it is divided between continuing to maintain aggressive rate hikes and slightly slower rate hikes (that is, from 75 basis points to 50 basis points).

According to Mester, aggressive rate hikes must continue to win the battle against inflation, even if it leads to a recession. It may be better to take more aggressive action because taking aggressive and pre-emptive action can prevent the worst scenario from actually happening.

In addition, Brainard gave a slightly softer assessment that moving forward cautiously and acting in a data-driven manner will allow us to understand how economic activity and inflation will respond to cumulative rate hikes.

From the speeches of officials last week, the Fed can be broadly divided into two factions, one advocating "aggressive rate hikes" and the other advocating "careful advancement." This divergence can be seen in the dot plot released at the September meeting, where eight officials forecast a range of 4% to 4.25% at the end of the year, while 9 officials forecast 25 basis points higher.

Several Fed officials with voting rights this year are scheduled to speak this week, which means that the market may no longer look in general terms at what the Fed officials will express, but rather look for disagreement, that is, the disagreement between Fed officials. It also means that market expectations will probably diverge again.

For two weeks in a row, a large number of Fed officials spoke, and even a "wave" can describe the situation, which is very rare. This may be the Fed's intentional arrangement. Last week's speeches were to express the determination to fight inflation. And this week's speeches are likely to "save" the market to avoid a precipitating decline in the stock market.

If there is a different expression on the speed of interest rate hikes this week, it will bring a hint of variability to the market trend.

In the 4-hour chart, the dollar is still hovering around the 50.0% Fibonacci retracement at 112.372. If it stands firm under this line, the dollar will have the conditions for a deep retracement, which needs to be focused on. The strong support below is 111.30, which is the last support when the dollar retreated from the 120 high in 2001 and 2002. The long-short divide is 109.178, and the dollar will open a downtrend below this line. Although the dollar closed up last Friday, in the current situation, it can only be considered to stop falling, and only to re-break above 113.942 can open a new round of rallies. In terms of indicators, Stoch, DMI, and the Ichimoku cloud are showing that the dollar will start to rise after a short-term decline.

Trade direction: Long

Entry price: 111.75

Target price: 112.670

Stop loss: 111.200

Support: 111.853, 111.300, 110.873

Resistance: 112.372, 112.906, 113.500

1. Japanese Prime Minister: Will vigorously promote the use of Web3 services such as metaverse and NFT.

2. Pro-Russian groups are raising funds in crypto.

3. A U.S. senator introduces the "No Digital Dollar Act" to prohibit the U.S. Treasury and the Federal Reserve from interfering with Americans' use of paper money.

The Crypto Fear and Greed Index is at 24, representing extreme fear. The index was 24 yesterday and 21 the day before yesterday. The market now is in a period without important news released. And as U.S. stocks decline several times, mainstream cryptocurrencies have resisted the pressure. Although the sentiment has not improved, it is clear to see that cryptocurrencies are more supported in the short term.

ETH has been going down since the merger in September, once hitting the lowest in the 1220-1250 range which was the starting point of the previous big rally. After more than a week of adjustment, the oscillating trend has been formed, with the resistance above in the 1360-1420 range and the support near 1250. Before the release of non-farm data this Friday, ETH is unlikely to be volatile. So it is recommended to buy low and sell high in this range.

ETH 2-Hour Candlestick Chart

ETH Daily Candlestick Chart

Trading direction: Long

Entry price: Market price

Target price: 1360

Stop loss: 1240

Support: 1250, 1000

Resistance: 1360, 1420

The S&P Global Eurozone composite Purchasing Managers' Index (PMI) fell further in September. German business activity saw an increased slump as higher energy costs hit the largest economy in Europe. Companies also recorded a drop in new business. The entire euro area faces a bigger test of economic decline as winter approaches.

The U.S. second-quarter GDP data released last week was in line with expectations, but the PCE price index was revised upward. Upward revisions to some indices also suggested that the output gap was even more negative than previously thought, thus increasing the need for further tightening to bring spending into line with supply. In addition, the unexpected drop in initial jobless claims was another sign of a tight labor market. Economic activity remained very buoyant. The dollar has also stabilized, so perhaps this wave of EURUSD rally is basically over and a new round of downside is imminent.

In the daily chart, the EURUSD is still in the downside channel but approaching the upper edge and there is relatively great resistance. Our focus should be on the resistance effect around the 0.99 mark.

Trading direction: Short

Entry price: 0.99000

Target price: 0.95000

Stop loss: 1.01000

Support: 0.97000, 0.95000

Resistance: 1.00000, 1.02000

OPEC+ will hold its first face-to-face meeting since the pandemic. JPMorgan Chase and other investment banks predict the organization may need to cut production by at least 500,000 barrels per day (bpd) to stabilize oil prices, and Royal Bank of Canada believes OPEC+'s production cuts will be twice as large as speculation. According to media reports, the larger-than-expected cut reflects OPEC+'s concern about the rapid global economic slowdown at a time when monetary policy is rapidly tightening.

OPEC and non-OPEC producers are considering cutting oil production by more than 1 million bpd, Reuters reported on October 2. OPEC+ may consider cutting production by more than 1 million bpd at its Oct. 5 meeting in Vienna, an OPEC representative said.

In the daily chart, the daily candlestick is oscillating around 81.5 which is the resistance level in the 4-hour timeframe. The current downside channel remains smooth, but the price is likely to challenge the pressure at the upper edge of the channel. Later on, we will observe whether the price can successfully stabilize above the 20-day SMA, and we will still expect it to rebound.

Trading direction: Long

Entry price: 80.000

Target price: 87.000

Stop loss: 78.000

Support: 78.000, 75.000

Resistance: 85.000, 87.000

The increase in activities in July was mainly concentrated in the commodity sector. The commodity production sector rose by 0.5%, while the service production sector fell by 0.1%. Output is expanding in 11 of the 20 industries. Among them, the mining, quarrying, and oil and gas industries experienced significant growth, with a 1.9% growth for the month. This was "the product of the increase in synthetic oil production and the record level of marketable crude bitumen in Alberta that contributed the most to the growth". Oil sand production increased after the facility overhaul in the second quarter of 2022, which limited production until July.

Retail trade and accommodation & food services grew weakly this month as consumers began to cut back on spending.

Market observation: Canada's unexpected economic growth in July was led by the materials industry against the backdrop of high commodity prices. Despite the apparent weakness in some consumer-oriented sectors, the July economic data, together with the August forecast, reconfirmed our expectations for continued growth to about 1% in the third quarter. Given the pressure on the economy from high inflation and fast-rising interest rates, such growth is already impressive.

For its part, the Bank of Canada (BOC) needs to see a further slowdown to ease inflationary pressures. We have seen this in recent labor market indicators, but GDP continues to remain positive, and how long this will continue is uncertain, especially given that we expect the BOC to raise interest rates to 4% by the end of the year.

On the market side: in the past week, we have seen significant fluctuations in the money market, with the weakening of risk appetite pushing the USD higher. The CAD was hit by both the Fed's aggressive policies and the escalation of the conflict between Russia and Ukraine, which curbed risk appetite. For these reasons, the CAD was miserable in September, as the USDCAD rose 4.5%.

For the CAD, there is still additional resistance to further depreciation against the USD. That is, the BOC took the lead in tightening measures to raise the benchmark interest rate to 3.25%. The Fed's terminal rate is higher than Canada's (4.60% versus 4.10%). This means that the CAD will not benefit from the higher spread and Canadian bond yields are already lower than those of the U.S. In addition, Canada is a major exporter of crude oil, and the drop in crude oil prices has put pressure on the CAD. In addition, we have seen a sharp decline in the long positions of the CAD, and this trend is most likely to continue, pushing down the CAD again.

On Wednesday, the USDCAD rose to 1.3833 above the bullish channel before moving into consolidation. It is worth noting that this area coincides with the 61.8% Fibonacci retracement from March 2020 to June 2021.

Surprisingly, the 1.3600 range has formed a "denying death cross" pattern to help the market consolidate some weekly gains, but as the RSI and stochastics hover in the overbought zone, it is doubtful how far the gains will go. Nevertheless, as the indicators remain high in the bullish areas, there will be some room for further upward movement before the next bearish wave begins.

If bulls push the USDCAD above the key resistance range of 1.3725-1.3831, the rally will accelerate towards the 1.4000-1.4035 range from March to May 2020. Beyond this level, the next resistance will appear around 1.4140.

However, a downward reversal will retest the support of 1.3600. If it proves easy to break through, the sell-off will extend to 1.3500. If it drops, the 20-day SMA at 1.3347 would be the last line of defense to consolidate the outlook for the upward trend.

Overall, the USDCAD remained bullish in both the short and long term, although prices continued to trade in the overbought zone, and concerns that the upward trend has peaked will continue to depress market sentiment. However, for all the factors we have observed above, the long-term outlook remains bullish. It is recommended to go long with caution.

Trading direction: Long

Entry price: 1.3640

Target price: 1.4000

Stop loss: 1.3460

Deadline: 2022-10-14 20:00:00

Support: 1.3654, 1.3600, 1.3500

Resistance: 1.3756, 1.3793, 1.3831