Forex Signals Brief for September 19th: The US Leads the Charge as Risk-On is Back

Morning All,

On Monday it was a case of equities continuing to lead from the front. The SPX has finally ticked above the important 2500 level and we saw a bit of strength in the USD as it came along for the ride. The strength has also helped other markets like the Nikkei, and USD/JPY to rally hard and make fresh highs after a period where safe-haven trades were all the rage.

All that flies in the face of the theory that markets were going to be quiet ahead of the FOMC. Sometimes we can get some muted trading sessions, however, it appears that risk-on is in full swing.

I feel like we’re due for a short-term correction in the SPX, and I think there’s every chance that we might see a short-term sell-off, as markets are getting to the point of being clearly overbought. Perhaps the FOMC will mark an important short-term turning point?

Top Economic Events Today

EUR – German ZEW Economic Sentiment

ZEW Economic Sentiment for Germany is due for release at 9:00 GMT. Analysts are predicting an increase from the last month. Economic sentiment is a gauge of confidence in the economy over the coming six months, and it appears it’s on the rise which is bullish.

SPX – Is the Market Getting Overheated?

For the last few weeks, equities have been rallying strongly. We’ve seen much of that in the US and as of Monday, we have finally ticked past the important 2500 level in the SPX (S&P 500 Index). If you look at the daily chart we’ve been trading in a pretty tight channel of recent times. Indicators are really pointing to us being overbought, and I think it’s time we looked to short at these levels.

SPX – Daily Chart

Key Levels

SPX – Trading Plan

Given the fact that we are now at an upper trend line at resistance of 2500 and also overbought, I will be looking to sell in the 2520 range. We, of course, have FOMC to contend with but this is longer term trade idea that will likely play out over the course of a week or two.

EUR/USD – Quiet Times

While we’ve seen a fair bit of action in other currency pairs on Monday the Euro was surprisingly quiet. We have top tier data out today and that might be the spark we need.

EUR/USD – 240 min Chart

Key Levels

EUR/USD Trading Plan

Longer term I’m bullish on the EUR/USD, however, I just don’t want to be overpaying for it. I am still happy to wait for a pullback and hopefully, ZEW might give us some wiggle room. I want to be buying below 1.1850 which is key near-term support.

Markets are always interesting when risk-on is in full swing. Be sure to keep an eye out for our analysts and their signals, so you get first crack at some great trading opportunities in the upcoming session.

Good trading guys!

ABOUT THE AUTHOR See More

Rowan Crosby

Asia-Pacific Analyst

Rowan Crosby is a professional futures trader from Sydney, Australia. Rowan has extensive experience trading commodities, bonds and equity futures in the Asian, European and US markets. Rowan holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.

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