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As industry spending surges, top financial institutions say a sharp correction could occur if investor appetite for artificial intelligence turns sour.

Fundamental Overview

The USD has been stronger
this week, but the tailwinds have been coming from outside the US. In fact, the
greenback’s strength has been coming mostly from USDJPY flows and the weakness
from other currencies like the EUR with the French political uncertainty and
the NZD with the RBNZ’s 50 bps cut.

Domestically, nothing has
changed for the US dollar as the US government shutdown continues to delay many
key US economic reports. The dollar “repricing trade” needs strong US data to
keep going, especially on the labour market side, so any hiccup on that front
is likely to keep weighing on the greenback.

In the absence of the
government data, an October rate cut is now seen as a done deal. The reality is
that an October cut was never really in question. It’s the December cut that
could be priced out in case the data strengthens. We still have three NFP and
two CPI reports before the December meeting.

On the JPY side, the
victory of Takaichi over the weekend resulted in a big negative gap at the open
for the yen as traders priced in more expansionary fiscal policy and a delay to
rate hikes from the BoJ. The ball is now in the central bank’s court as traders
will be focused on BoJ’s forward guidance.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY is trading at the top trendline around the 153.00 handle. This
is where we can expect the sellers to step in with a defined risk above the
trendline to position for a drop back into the 151.00 handle. The buyers, on
the other hand, will want to see the price breaking higher to keep pushing into
the 154.80 level next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the price action at the trendline with some visible
consolidation. The strong bullish momentum might stall here and lead to a deeper
pullback, but we will need to see a change in the trend on the lower timeframe to
confirm that.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor support zone around the 152.30 level. This is where the
buyers will likely continue to step in with a defined risk below the support to
keep pushing into new highs. The sellers, on the other hand, will look for a
break lower to increase the bearish bets into the 151.00 handle next. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today we have Fed Chair Powell speaking, while tomorrow we
conclude the week with the University of Michigan Consumer Sentiment report.

Watch the video below

This article was written by Giuseppe Dellamotta at investinglive.com.

• Eurostoxx +0.2%
• Germany DAX +0.2%
• France CAC 40 +0.2%
• UK FTSE -0.3%
• Spain IBEX -0.2%
• Italy FTSE MIB -0.2%

It’s a mixed bag though the changes are relatively light as we get things going in European morning trade. US futures are also looking rather tentative and muted with S&P 500 futures now flat on the day. Once again, we’re seeing another day with a lack of major catalysts for market players to work with. That as the US government shutdown continues to stretch on for longer, likely to delay next week’s CPI report as well.

This article was written by Justin Low at investinglive.com.

The Australian Dollar (AUD) remains steady against the US Dollar (USD) after losing daily gains on Thursday.

Let’s continue our theme this week on the health of stock market and who metaphorically “has the ball” – the offense or the defense.

The pair now trades at its highest levels since February, threatening a break above the 153.00 mark. The figure level was what stalled the upside move yesterday but the buying momentum is just continuing so far on the week. With the gains today, USD/JPY buyers are looking to make it six straight days of gains with four coming this week after the gap higher on Monday following the LDP leadership election result in Japan.

As mentioned yesterday, the Japanese yen currency is facing a triple whammy on the week. And those circumstances have not changed whatsoever coming into today.

As we draw closer towards the 155.00 mark next, expect Tokyo officials to come up with some verbal intervention at least to keep things from getting out of hand. That especially as Takaichi will not want to suffer such an early fallout with the public of having to deal with a weak yen currency so early on.

This article was written by Justin Low at investinglive.com.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.70 during the Asian trading hours on Thursday. The WTI gains traction amid a larger-than-expected crude inventory build. However, easing geopolitical tensions in the Middle East might cap its upside.

The Japanese Yen (JPY) meets with a fresh supply following an intraday uptick on Thursday and drops to its lowest level since February 13 against a broadly firmer US Dollar (USD) heading into the European session.