2023-10-20 03:15

EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD rebounded on Thursday after a subdued performance during the previous trading session, but gains were capped by soaring U.S. Treasury rates, a hostile market environment that appears to have prevented the pair from clearing technical resistance around the 1.0600 handle. With U.S. yields on a bullish tear and geopolitical tensions in the Middle East on the rise, the euro will struggle to maintain a sustained upward course. This means that the direction of travel is likely to be lower for the exchange rate. In terms of technical analysis, if EUR/USD fails to push higher and resumes its decline, we could see a move towards trendline support at 1.0500. This floor could provide stability and ease the selling pressure, but if it caves in, prices could be on their way to the 2023 lows at 1.0448. On further weakness, the focus shifts to 1.0350. Conversely, if sentiment shifts in favor of the bulls and EUR/USD takes out overhead resistance at 1.0600/1.0625, buyers may regain control of price action, paving the way for a rally towards 1.0765, the 38.2% Fibonacci retracement of the July/October slump. EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView USD/JPY FORECAST – TECHNICAL ANALYSIS USD/JPY lacked directional conviction on Thursday, despite the surge in U.S. rates. While rising U.S. Treasury yields offered support to the U.S. dollar, the yen experienced heightened demand due to escalating geopolitical tensions in the Middle East. This juxtaposition created a neutral trading environment for the exchange rate. Although both the yen and the U.S. dollar are commonly perceived as safe-haven assets, the yen tends to be favored during periods of elevated market uncertainty. From a technical analysis perspective, USD/JPY remains firmly entrenched in a robust uptrend, although it appears to be undergoing a phase of consolidation at the moment. In any case, caution is warranted given the pair's proximity to the critical 150.00 level. In 2022 and 2023, the Japanese government took steps to defend the country's currency against further depreciation when this threshold was breached. In the event that Tokyo decides not to intervene for now and USD/JPY breaks above 150.00 decisively, upward momentum could gather pace, setting the stage for a rally towards the 2022 highs at 151.95. On further strength, the bulls may muster the impetus to challenge channel resistance near 152.30. On the other hand, if prices get rejected lower and initiate a pullback, initial support is found within the range of 149.25 to 148.90. Clearing this floor might attract fresh sellers to the market, creating favorable conditions for a potential descent toward 147.30, followed by 146.00. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-setups-eur-usd-battles-channel-resistance-while-usd-jpy-stays-put-20231019.html

2023-10-20 03:14

Japanese Yen, USD/JPY, US Dollar, JGB, Treasury Yields, BoJ, - Talking Points The Japanese Yen is looking at potential new lows against USD JGB yields have moved higher, but Treasury yields have done more lifting The BoJ meets later this month. If they modify policy, will USD/JPY rally? USD/JPY is nervously nudging toward 150 with markets wary of potential intervention from the Bank of Japan (BoJ) should the Yen rapidly weaken. The US Dollar has been clocking up the gains against most currencies this week with Treasury yields racing to new heights, particularly in the back end of the curve. These moves have seen the closely watched 2s 10s yield curve become less inverted in what is referred to as a bear steepening. It is called this due to the capital loss seen on the 10-year bond as its yield goes higher. At the same time, Japanese Government Bond (JGB) yields have also edged up, testing the bandwidth that the BoJ will allow as they try to maintain yield curve control, albeit with some flexibility. 10-year JGBs nudged 0.86% overnight and remain near there going into Friday’s trading session, the highest yield on the bond since 2013. At the same time, the 10-year Treasury note eclipsed 5.00% yesterday and has out-accelerated the JGB yield increase, potentially further underpinning USD/JPY as illustrated in the chart below. USD/JPY AND JP-US 10-YEAR BOND SPREAD Chart created in TradingView The BoJ will hold its monetary policy meeting on October 31st and the market is speculating on further tightening. The BoJ has a policy rate of -0.10% and is maintaining yield curve control (YCC) by targeting a non-specific band around zero for Japanese Government Bonds (JGBs) out to 10 years. The band was previously of +/- 0.50% before the bank changed tack and introduced some flexibility. Many market participants are looking toward a possible shift in YCC but the zero interest rate policy might also come under the microscope after comments by a former board member at the BoJ, Makoto Sakurai on Thursday. He said that he thinks that the bank is more likely to abandon negative interest rates before any further adjustments to YCC. Mr Sakurai noted last year that the bank might loosen YCC controls months before the BoJ adjusted it. In any case, the yield differential appears to be supportive of USD/JPY for now, but the question remains, will the BoJ sell USD/JPY if it breaks higher? USD/JPY TECHNICAL ANALYSIS UPDATE USD/JPY is inching closer to the 12-month high seen earlier this month at 150.16. A break above there could see a run toward the 33-year peak seen at this time last year at 151.95. A bullish triple moving average (TMA) formation requires the price to be above the short-term SMA, the latter to be above the medium-term SMA and the medium-term SMA to be above the long-term SMA. All SMAs also need to have a positive gradient. When looking at any combination of the 10-, 21-, 34-, 55-, 100- and 200-day SMAs, the criteria for a TMA have been met and might suggest that bullish momentum is evolving. For more information on trend trading, click on the banner below. On the downside, support may lie at the recent lows near 147.30 and 145.90 or further down at the breakpoints in the 145.05 – 145.10 area ahead of the prior lows near 144.50 and 141.50. Chart created in TradingView https://www.dailyfx.com/news/japanese-yen-scoping-150-plus-as-us-dollar-consolidates-higher-usd-jpy-20231020.html

2023-10-19 06:15

GBP PRICE, CHARTS AND ANALYSIS: GBP/USD Needs Acceptance Above the 1.2200 Level for Bullish Continuation. DXY Remains a Stumbling Block. EUR/GBP Remains Rangebound Between the 0.8700-0.8500 Mark. Rising Wedge Pattern in Play. GBP/AUD Mixed as Price Action Offers Little Clarity. Improving Chinese Data Could Keep the AUD Supported and Facilitate a Deeper Retracement in the Coming Weeks. The GBP has enjoyed a somewhat mixed day as it lost ground against the USD and the Australian Dollar while gaining against the Euro. Some would say surprising given the stickiness in the UK inflation data print this morning with the British Pound largely unfazed in the aftermath. UK INFLATION AND BANK OF ENGLAND (BOE) UK inflation data this morning did exhibit some positive signs and could explain the lack of bullish price action by the GBP. Market participants seemed to agree as the rate hike expectation for the Bank of England remain relatively unchanged following the CPI release. Higher petrol prices and sticky services inflation were the major contributors to the rise in inflation. There was a positive where food prices were concerned, falling across the board in what is the first MoM decline in 2 years. This certainly doesn’t appear enough to warrant a rate hike in November as the underlying risks from the Middle East fallout have yet to fully felt as well. BoE Rate Hike Probability Distribution Source: Refinitiv The Bank of England (BoE) will also be paying attention to the PPI data which hints at further disinflation in food prices, an area of particular concern for both the Central Bank and the Government. Looking ahead and without any stark change to the data moving forward (Yesterday average earnings throwing up no surprises) there is very little to suggest a change in policy from the Bank of England moving forward. Many analysts are also expecting a sharp drop in the October inflation data barring any surprises which adds further credence to a continued pause from the Bank of England (BoE). RISK EVENTS AHEAD Looking ahead to the rest of the week and we do not have a lot of high impact data releases on the docket. In the case of GBPAUD the Australian labor data will be released tomorrow and could aid a further recovery in the Aussie Dollar on a positive print. This after Chinese GDP this morning has kept the AUD largely supported throughout the day. We also have a speech from Fed Chair Powell ahead of the weekend with next week actually bringing a host of high impact data releases from Australia, Europe and the United States which could provide some volatility and movement on all three GBP pairs. For all market-moving economic releases and events, see theDailyFX Calendar PRICE ACTION AND POTENTIAL SETUPS GBPUSD GBPUSD is struggling to regain the 1.2200 level this week failing to sustain above the level every day this week. The 20-day MA rests at around this level as well but the lack of bullish conviction may in part be attributed to the US Dollar continuing to hold the high ground as well. For the moment GBPUSD has been stuck in a 100-pip range this week between the 1.2120 and 1.2220 range with a break above likely opening a run toward the descending trendline and resistance at the 1.2310 level. Alternatively, a break below the 1.2120 mark could finally be the catalyst needed for a retest of the 1.2000 mark. This could hinge on further developments in the Middle East as further risk-off sentiment could boost the USD which will make life difficult for GBP bulls attempting a recovery. GBP/USD Daily Chart Source: TradingView, Prepared by Zain Vawda Key Levels to Keep an Eye On: Resistance levels: 1.2200 1.2250 1.2312 Support levels: 1.2120 1.2030 (weekly low) 1.2000 EURGBP EUR/GBP Daily Chart Source: TradingView, Prepared by Zain Vawda From a technical perspective, EURGBP has been on a steady rise since bottoming out in the middle of August. However, the 0.8700 remains a stumbling block for bulls and has held firm since May last year. For now, the 200-day MA adds further credence to the 0.8700 level while we also have a rising wedge patter in play. A break of the 0.8700 mark could potentially be a trap to clear short sellers before then reversing at the top end of the wedge pattern and may be worth monitoring. Personally, I would advise potential bulls to remain cautious until the upper end of the wedge pattern is broken as well as a daily candle close above the level. Looking at the downside and a immediate rejection at the 0.8700 mark with immediate support resting at 0.8657, provided by the 20-day MA. A break lower then faces the lower end of the wedge pattern with a break lower opening up a retest of the 100-day MA. GBPAUD Looking at the GBPAUD pair and I am evaluating a weekly timeframe given the size of moves we usually see on the exotic pair. The weekly timeframe has broken the trendline and is making an attempt to continue the bullish run which began in October 2022. This morning’s data from China is likely to complicate matters for GBPAUD buyers as a consistent recovery in China could further enhance the AUD. Dropping to a daily timeframe and we have a death cross pattern last week which failed to facilitate a push lower with a new higher high being printed instead. This is indicative of the choppy price action we are seeing in GBPAUD of late with a new leg to the upside still plausible looking at the price action on a daily timeframe. Key Levels to Keep an Eye On: Resistance levels: 1.9205 1.9380 1.9500 Support levels: 1.9000 1.8850 1.8690 (200-day MA) GBP/AUD Weekly Chart Source: TradingView, Prepared by Zain Vawda https://www.dailyfx.com/news/gbp-price-action-setups-gbp-usd-eur-gbp-gbp-aud-post-uk-cpi-20231018.html

2023-10-19 06:12

XAU/USD, XAG/USD PRICE FORECAST: Gold (XAU/USD) Rally Gathers Steam Following Gaza Hospital Blast. Dollar Index (DXY) Resumes Bullish Moves as Treasury Yields Hit Multi-Year Highs but Gold Remains Unfazed. IG Client Sentiment Shows that Retail Traders are Overwhelmingly Long on Gold and Silver. Gold extended its gains throughout the day today in light of increased risk aversion from market participants. The rise of the risk-off environment today comes courtesy of an explosion of a hospital in Gaza last night which saw both Israel and Palestine trade blame for the atrocity. The impact and fallout spurred renewed concern of a wider conflict which helped Gold accelerate toward the $1950/oz handle. FED POLICYMAKERS, MIDDLE EAST TENSIONS AND US TREASURIES The US has seen another week of upbeat data as retail sales smashed estimates. The result has seen a slight uptick in rate hike projections for the Fed at the December meeting. Meanwhile Fed policymakers have been out in force this week with many not ruling out additional hikes but rather reiterating the importance of the data ahead. Federal Reserve policymaker Waller stated today that a slowdown in the real economy could see the Fed hold rates steady. If there is one thing many analysts seem to agree on is that higher for longer narrative continues to grow from strength to strength. Another positive according to the Fed is the longer dated US treasuries which continue to advance. The US 10Y yield has hit multi-year highs this week and printed a fresh 2023 high with Fed policymakers believing a higher yield on longer dated treasuries could do some of the heavy lifting for them. As you can see on the chart below the US 10Y is now trading at levels last seen in in January of 2007. US Treasury Yield 2Y & 10Y, Four-Hour Chart Source: TradingView, Created by Zain Vawda Looking at the Middle East situation and I have said this repeatedly over the past week regarding escalation. As things stand Iran has been the most vocal country in the region which isn’t a surprise given the strained relations with Israel. I do not expect any country in particular to get involved directly, however if one understands the Middle East then escalation via proxies remains extremely plausible at this stage. The likes of Hezbollah and potentially other smaller terror groups in the region could very well join with funding or weapons from countries in the region. Any development that threatens to bring the US more to the forefront of the conflict could see Gold prices accelerate once more. The $2000 level will remain under threat the longer the conflict drags on without a ceasefire or resolution and should be monitored in the days ahead. RISK EVENTS AHEAD The majority of the major risk ahead in terms of Gold is likely to come from the Middle East for the remainder of the week. There is no high impact data releases which are likely to impact Gold and Silver prices for the rest of the week. This is evidenced by the rise in the Dollar today which had very little impact on Gold and Silver as the rally in both commodities actually gathered steam today. For all market-moving economic releases and events, see the DailyFX Calendar TECHNICAL OUTLOOK GOLD Form a technical perspective, Gold has broken the descending trendline that had been in play since mid-July. The upside rally has been expansive with very little pullback with a high today of around $1962/oz at the time of writing. A daily close above the $1950 mark will likely be required for bullish continuation. Under normal circumstances this would be key but given the geopolitical situation, a close below $1950 could still see bullish continuation tomorrow depending on risk sentiment heading into the weekend. $1950 has been a key area of resistance on two occasions since August, underlining the importance of the level. Although the RSI is not always the most accurate indicator particularly around high impact data event or external drivers, the 14-day RSI is approaching overbought territory and could come into play tomorrow should the rally continue. Key Levels to Keep an Eye On: Resistance levels: 1962 1980 2000 Support levels: 1940 1929 1912 Gold (XAU/USD) Daily Chart – September 21, 2023 Source: TradingView, Chart Prepared by Zain Vawda XAG/USD Silver prices appeared to be in freefall having broken below the long-term symmetrical triangle pattern at the end of September. Much like Gold the commodity appears to have benefitted from the Middle East tension despite a strong US Dollar. Silver has however run into a key confluence area around the 23.23 mark where we have a key resistance level coupled with both the 100 and 200-day MAs. Having had a ullback from the confluence area, Silver is now trading below the 50-day MA with a close below leaving the commodity vulnerable to a deeper pullback. Unlike Gold who is likely to benefit from safe-haven appeal, Silver has historically not enjoyed the same priviledge. This begs the question of whether a stronger US Dollar should tensions intensify in the Middle East push Silver lower or not? Silver (XAG/USD) Daily Chart – September 21, 2023 Source: TradingView, Chart Prepared by Zain Vawda https://www.dailyfx.com/news/gold-xau-usd-hits-1950-oz-on-risk-aversion-as-middle-east-tensions-intensify-20231018.html

2023-10-19 06:10

EUR/USD TECHNICAL ANALYSIS EUR/USD pulled back on Wednesday after failing to clear channel resistance located just below the 1.0600 handle, thereby putting an end to a two-day winning streak. The retreat was amplified by the broad-based strength of the U.S. dollar, driven by the substantial rise in U.S. government yields. For context, the entire U.S. Treasury curve shifted upwards, with the 10-year note soaring past 4.90%, its highest level since 2007. With U.S. yields steadily increasing due to the resilience of the U.S. economy, and geopolitical tensions in the Middle East on the rise, the euro is likely to maintain a bearish bias against the greenback in the near term, with fresh 2023 lows possibly just around the corner. From a technical standpoint, if EUR/USD deepens its retrenchment in the days ahead, trendline support at 1.0500 could provide stability to the market and ease the downward pressure, but in case of a breakdown, the pair is likely to gravitate towards its 2023 trough at 1.0448. On further weakness, sellers could steer the exchange rate towards an important floor near 1.0350. On the flip side, if sentiment shifts in favor of the bulls and prices resume their recovery, overhead resistance extends from 1.0600 to 1.0625. Successfully piloting above this technical barrier could reinforce upward momentum, paving the way for a rally towards 1.0765, the 38.2% Fibonacci retracement of the July/October sell-off. EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView EUR/AUD TECHNICAL ANALYSIS EUR/AUD fell towards multi-month lows in late September, but started to rebound soon after. Negative market sentiment in the face of heightened geopolitical tensions in the Middle East reinforced the pair's recovery, pushing prices towards the 50-day simple moving average and the 50% Fibonacci retracement of the August/September decline, an area that currently presents a formidable hurdle for the bulls (~1.6700) Looking ahead, it is essential for traders to keep a watchful eye on two critical technical zones: overhead resistance around 1.6700 and short-term trendline support at 1.6545, which also roughly coincides with the 100-day simple moving average. When considering potential outcomes, a resistance breakout could send EUR/AUD towards 1.6790 (corresponding to the 61.8% Fibonacci retracement). In the event of sustained strength, the spotlight will shift to this year's peak. Conversely, if support is breached, sellers may be emboldened to drive prices towards 1.6400. Below that threshold, attention will shift to the lows observed in September. EUR/AUD TECHNICAL CHART EUR/AUD Chart Created Using TradingView https://www.dailyfx.com/news/forex-euro-forecast-eur-usd-hindered-by-resistance-eur-aud-still-in-bullish-trend-20231018.html

2023-10-19 06:09

Australian Dollar, AUD/USD, US Dollar, Unemployment, CPI, RBA, China – Talking Points The Australian Dollar crumbled after today’s jobs numbers The RBA meeting has taken on a new light with inflation in its sights The market is eyeing next week’s CPI. Will it drive AUD/USD direction? The Australian Dollar weakened today after a mixed reading from the latest employment report from the Australian Bureau of Statistics (ABS). It had already appeared vulnerable going into the figures. The unemployment rate came in at 3.6% in September, below the 3.7% anticipated and prior. 6.7k Australian jobs were added in the month, which was less than the 20k expected to be added and 64.9k previously. Unfortunately, 39.9k full time jobs were lost while 46.5k part time roles were added and the participation rate fell from 67.0% to 66.7%, assisting the headline unemployment rate to inch lower. The RBA left rates unchanged earlier this month at 4.10% but there have been some notable developments since then. It started with Reserve Bank of Australia (RBA) Assistant Governor Chris Kent on Wednesday last week. While he highlighted the problems around the time lags in the transmission effect of monetary policy, he went on to say, “Some further tightening may be required to ensure that inflation, that is still too high, returns to target.” Then earlier this week, the RBA meeting minutes were released, and they showed that the board was far closer to hiking than the statement on monetary policy said at the time. Specifically, the minutes stated, “The Board has a low tolerance for a slower return of inflation to target than currently expected. Whether or not a further increase in interest rates is required would, therefore, depend on the incoming data and how these alter the economic outlook and the evolving assessment of risks.” Compounding the hawkish tilt, RBA Governor Michele Bullock spoke at a summit yesterday and pointed to the problems of external events triggering inflation when they arrive one after the other. She said, “the problem is we’ve had shock after shock after shock. The more that keeps inflation elevated, even if it’s from supply shocks, the more people adjust their thinking.” Before adding, “And the more people adjust their inflation expectations, the more entrenched inflation is likely to become. So that’s the challenge.” All of this brings next Wednesday’s Australian CPI data for the third quarter into sharp focus for the Aussie Dollar. A Bloomberg survey of economists is anticipating headline inflation to be 5.2% year-on-year against 6.0% previously, well above the RBA’s mandated target of 2 – 3%. A wide variation from expectations could trigger a bout of volatility for AUD/USD. In the near term, Treasury yields have been climbing higher, underpinning the US Dollar and this may see AUD/USD test lower levels if yields continue higher. AUD/USD PRICE REACTION TO JOBS DATA Chart created in TradingView AUD/USD TECHNICAL ANALYSIS UPDATE AUD/USD bounced off the low of 0.6286 to start the week and if the price fails to move below that level, a Double Bottom might be in place. Overall, it remains in a descending trend channel and bearish momentum might be intact for now. A bearish triple moving average (TMA) formation requires the price to be below the short-term Simple Moving Average (SMA), the latter to be below the medium-term SMA and the medium-term SMA to be below the long-term SMA. All SMAs also need to have a negative gradient. When looking at any combination of the 21-, 34-, 55- 100- and 200-day SMAs, the criteria for a bearish TMA have been met and might suggest that bearish momentum is evolving. Last Wednesday’s high of 0.6445 coincided with the 55-day Simple Moving Average (SMA) and that level may offer resistance ahead of a cluster of prior peaks in the 0.6500 – 0.6510 area. Further up, the 0.6600 - 0.6620 area might be another resistance zone with several breakpoints and previous highs there. On the downside, support may lie near the previous lows of 0.6286, 0.6272 and 0.6170. The latter might also be supported at 161.8% Fibonacci Extension level at 0.6186. AUD/USD DAILY CHART Chart created in TradingView https://www.dailyfx.com/news/australian-dollar-drops-on-mixed-jobs-data-ahead-of-cpi-where-to-for-aud-usd-20231019.html