US Session Bullet Report – Volkswagen – a car giant behind the USD strength

The USD strikes back across the board. This sentence pretty much sums up the picture we have seen so far. So what it was a lackluster day with no economic releases scheduled? The Volkswagen scandal in the USA where the auto giant is accused of manipulating car emission tests using a software, and the potential fine that it could face from US lawmakers, pushed the DAX -3% and along with it all other European stock indices. EURUSD revisited the lows of 1.1150 breaking the direct correlation that we saw in August (when stocks would rise, EURUSD would fall). With tomorrows ECB press conference that could hint more QE and the rate decision itself, we could see far more action in the EURUSD.

Credit Agricole states: This could diminish the EUR’s safe-haven appeal and allow other FX drivers play a greater role than before. In particular, we expect that the relative policy outlook could become a dominant force behind EUR/USD and EUR/GBP, pushing them lower yet again in the near-term.

In other markets, everything has surrendered to the USD with notable exception being the JPY.

Trading Quote of the Day:

“The basic concept that applies to both poker and trading is that the primary objects is not winning the most hands, but rather maximizing your gains.” – Jeff Yass

EURUSD
Pivot: 1.122
Likely scenario: Short positions below 1.122 with targets @ 1.115 & 1.112 in extension.
Alternative scenario: Above 1.122 look for further upside with 1.1255 & 1.132 as targets.
Comment: The pair has validated a bearish flag pattern and remains on the downside.

GBPUSD

Pivot: 1.553
Likely scenario: Short positions below 1.553 with targets @ 1.539 & 1.533 in extension.
Alternative scenario: Above 1.553 look for further upside with 1.557 & 1.561 as targets.
Comment: The RSI is badly directed.

AUDUSD

Pivot: 0.716
Likely scenario: Short positions below 0.716 with targets @ 0.706 & 0.703 in extension.
Alternative scenario: Above 0.716 look for further upside with 0.718 & 0.721 as targets.
Comment: The RSI is badly directed.