2023-10-05 04:45

USD/JPY FORECAST: USD/JPY stabilizes after Tuesday’s pullback triggered by possible FX intervention by the Japanese government. The pair maintains a constructive outlook in the near term. This article looks at USD/JPY’s pivotal technical levels worth watching this week. USD/JPY has displayed a strong bullish trend throughout 2023, surging by over 14% since January. This upward momentum has been driven by the sharp rise in U.S. Treasury yields on account of the Federal Reserve's hawkish policy stance. Today, the pair remained relatively stable, hovering around the 149.00 handle, following a modest pullback on Tuesday, which traders speculated was due to possible FX intervention by the Japanese government. While Tokyo has neither affirmed nor refuted its involvement in bolstering the yen earlier in the week, it's evident from the price action that any artificial intervention won't significantly or durably change the currency's devaluation trend. Overall, as long as the substantial gap in monetary policy between the Fed and the Bank of Japan persists, the yen will maintain its bearish bias. This could mean further gains for USD/JPY in the coming weeks. Looking at the bigger picture, Tokyo has few options to counter U.S. dollar strength for now, with U.S. rates soaring to multi-year highs and Japanese yields capped by the BoJ. To illustrate the current disparity, the U.S. 10-year government note is currently trading above 4.7%, while the Japanese security with the same maturity remains stuck around 0.75%. This dynamic undoubtedly benefits the greenback. From a technical perspective, USD/JPY remains entrenched within an indisputable uptrend. That said, if the pair manages to hold above support at 148.80, the bulls may reload, setting the stage for a possible rally above 150.00, towards the upper boundary of an ascending medium-term channel at 151.25. On further strength, attention turns to 151.95. Conversely, in the event that the bears unexpectedly reestablish dominance over the market, initial support emerges at 148.80, as shown in the daily chart below. Moving lower, the focus squarely shifts to 147.25, with 146.00 emerging as the subsequent downside area of interest. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-japanese-yen-outlook-usd-jpy-in-calm-waters-for-now-but-bullish-breakout-looms-20231004.html

2023-10-05 04:44

CRUDE OIL, WTI, RETAIL TRADER POSITIONING, TECHNICAL ANALYSIS – IGCS COMMODITIES UPDATE Crude oil prices on course for worst week since mid-March Retail traders recently turned net-long WTI, a bearish sign Prices broke under key moving averages, where too? Crude oil prices are on course to sink nearly 7 percent this week so far. If confirmed, this could end up being the worst 5-day period for WTI since the middle of March. Retail traders are now increasingly boosting upside exposure. This can be seen by taking a look at IG Client Sentiment (IGCS), which could have a key influence on where the commodity goes from here. Crude Oil Sentiment Outlook - Bearish According to IGCS, about 57% of retail traders are net-long crude oil. Since most of them remain net-long, this hints that prices may continue falling down the road. This is as upside bets increased by 33.08% and 67.76% compared to yesterday and last week, respectively. With that in mind, the combination of overall exposure and recent changes offers a stronger bearish contrarian trading bias. On the daily chart below, WTI has confirmed a breakout under the 20-day moving average and recently closed under the 50-day moving average. However, confirmation of a breakout under the latter has yet to be achieved. That said, recent losses followed negative RSI divergence, which showed that upside momentum was fading. From here, recent losses have exposed the 23.6% Fibonacci extension level of 81.88, which is immediate support. Further losses beyond that place the focus on the August low of 77.63. Otherwise, in the event of a turn higher, keep a close eye on the 84.84 inflection point from the August peak. Crude Oil Daily Chart Chart Created in Trading View https://www.dailyfx.com/analysis/crude-oil-eyeing-7-percent-drop-this-week-so-far-as-retail-bets-becoming-more-bullish-20231004.html

2023-10-05 04:42

Market Recap Slowing growth in the US services sector and a significantly lower-than-expected US private payroll data paved the way for some cooling in the US Treasury yields rally, which offered room for relief in Wall Street overnight. The US Automatic Data Processing (ADP) payroll data totalled just 89,000 in September versus the 153,000 forecast, and while it may not necessarily go hand-in-hand with the official non-farm payroll data released Friday, rate expectations were quick to pare back on some hawkish bets. This also comes as the US services purchasing managers index (PMI) data softened to 53.6 from previous 54.5, while new orders registered its lowest level since December (51.8 vs 57.5 forecast). The S&P 500 VIX has retraced off the 20 level for now, which marked a key level of resistance from its May 2023 high, although overall risk mood may likely stay cautious in the lead-up to the US non-farm payroll data to end the week. Much attention is on oil prices, with Brent crude seeing a 5.4% plunge overnight. Despite another week of higher-than-expected drawdown in US crude inventories, traders have their focus on the significant build in gasoline inventories (+6.5 million vs +0.2 million expected). A decisive break below its 50-day moving average (MA) for Brent crude prices could leave sellers in control for now, while its daily Relative Strength Index (RSI) heads to its lowest level since May this year. The US$82.50 level may serve as a key level for buyers to defend next, where the lower edge of its Ichimoku cloud on the daily chart rests alongside its key 200-day MA. Having reclaimed its 200-day MA back in July this year for the first time in 11 months, the MA-line may be a key level of support to retain the broader upward trend. Source: IG charts Asia Open Asian stocks look set for a positive open, with Nikkei +0.66%, ASX +0.09% and KOSPI +0.28% at the time of writing. Lower Treasury yields, a weaker US dollar and falling oil prices may allow risk sentiments in the region to stabilise from its recent sell-off, although there is still some caution around risk-taking being presented. China markets remain closed for the rest of the week, while the Hang Seng Index touched a new low since November 2022 in yesterday’s session. Economic data this morning saw a higher-than-expected inflation read from South Korea (3.7% versus 3.4% forecast), with the second straight month of increase likely to keep the Bank of Korea on its hawkish pause at its 19 October meeting, leaving room for additional tightening but still on further wait-and-see for now. Aside, the Straits Times Index may be on the radar, with the index back at the lower base of its long-ranging pattern, which may prompt some defending from buyers ahead at the 3,145 level. Greater conviction may still be needed from a move in the daily moving average convergence/divergence (MACD) back above the zero mark, alongside the daily RSI above the 50 level. A successful defend of the 3,145 level may leave the 3,230 level on watch next. Source: IG charts On the watchlist: Natural gas prices touch eight-month high Natural gas prices have been largely stuck in its base-building phase since February this year, but are starting to see some signs of life lately, as a near-term ascending channel pattern led prices to touch a new eight-month high overnight. Thus far, prices have managed to stay above its Ichimoku cloud zone on the daily chart after reclaiming it back in June 2023, with the cloud providing intermittent support on at least three previous occasions. For now, its weekly RSI is also attempting to cross above the key 50 level for the first time since September 2022, with further positive follow-through reflecting buyers taking greater control. On the downside, the $3.000 level will serve as near-term support to hold while further upside may leave sight on the $3.400 level next. Source: IG charts https://www.dailyfx.com/news/asia-day-ahead-sti-at-key-support-natural-gas-touches-eight-month-high-20231005.html

2023-10-05 04:41

NZD/USD, GBP/NZD, NZD/JPY - OUTLOOK: NZD/USD is holding above key support after RBNZ held rates steady. GBP/NZD has pulled back from stiff resistance; NZD/JPY’s range appears to be reinforced. What is the outlook and the key levels to watch in NZD/USD, GBP/NZD, and NZD/JPY? The New Zealand dollar appears to be holding above strong support against the US dollar even as the Reserve Bank of New Zealand held interest rates steady at its meeting on Wednesday. The New Zealand central bank held benchmark rates steady at a 15-year high, in line with expectations, but the accompanying statement was less hawkish than expected. RBNZ said the policy needs to remain restrictive to ensure inflation returns to its 1%-3% target, echoing the global higher-for-longer narrative, but stopped short of suggesting further increases were on the table. Diverging economic growth and monetary policy outlooks between the US and New Zealand imply that any upside in NZD/USD could be limited. The growth outlook in New Zealand has deteriorated in recent months, compared with a material improvement in US economic growth expectations in recent months. Moreover, the US Federal Reserve has left the door open for one more rate hike before the year-end. NZD/USD Weekly Chart Chart Created Using TradingView NZD/USD: Holding the above channel support On technical charts, NZD/USD is holding above key converged support, including a downtrend line from March, the median line of a declining pitchfork channel since May, and the September low of 0.5860. In order to confirm that an interim low is in place, NZD/USD needs to break above immediate resistance at 0.6000-0.6050, including the June low and the end-September high. Until then, the path of least resistance could be sideways to down. Any break above could push the pair up toward the 200-day moving average (now at about 0.6170). GBP/NZD Monthly Chart Chart Created Using TradingView GBP/NZD: Retreats from strong resistance GBP/NZD has retreated from strong resistance on the 200-month moving average, roughly coinciding with the 2020 high and a downtrend line from 2006. The fall below the Ichimoku cloud on the daily charts is a sign that the upward pressure has faded in the interim. Strong support is on the 200-day moving average (now at about 2.0150). NZD/JPY Daily Chart Chart Created Using TradingView NZD/JPY: Range reinforced The sharp retreat in recent sessions reinforces that NZD/JPY remains within the two-month range of 85.00-90.00. This follows a failure last month to break above the July high of around 90.00. Further downside could be limited to the August low of 85.85, with strong support on the 200-day moving average, near the July low of 85.00. https://www.dailyfx.com/news/new-zealand-dollar-after-rbnz-holds-rates-nzd-usd-gbp-nzd-nzd-jpy-20231005.html

2023-10-04 04:46

RAND TALKING POINTS & ANALYSIS Hawkish Fed & poor local data weighs negatively on rand. Fed’s Bostic in focus later today. Possible ascending triangle breakout on USD/ZAR daily chart. USD/ZAR FUNDAMENTAL BACKDROP The South African rand steadily weakens against the USD on the back of poor local economic data and higher US Treasury yields. Yesterday’s ABSA Manufacturing PMI slumped to its lowest levels since July 2021 while the US reports surprised to the upside, highlighting the divergence between the two economies. Some hawkish guidance from Fed officials (Mester) earlier this morning (refer to economic calendar below) added to the restrictive monetary policy narrative but with Atlanta Fed Chief Raphael Bostic (known dove) to come, the less accommodative stance could be favored. China’s National Day Golden Week will limit commodity trade and with China being a major partner with South Africa, the combination with a stronger dollar and weaker commodity prices have resulted in a softer rand. Concerns around a global economic slowdown have favored the safe haven dollar particularly against Emerging Market currencies (EM’s) like the ZAR and if Treasury yields continue to stay elevated, the rand may suffer in line with this move. USD/ZAR ECONOMIC CALENDAR (GMT +02:00) Source: DailyFX Economic Calendar TECHNICAL ANALYSIS USD/ZAR DAILY CHART Chart prepared by Warren Venketas, TradingView Daily USD/ZAR price action shows bulls testing the 19.3000 resistance handle for the third time since mid-August. This third touchpoint now forms a horizontal trendline resistance level now resembling a short-term ascending triangle. That being said, the longer-term rising wedge pattern (dashed black line) may hint at a brief upside rally after which we could see a pullback towards 19.0000 and beyond. Resistance levels: 19.5000/Wedge Resistance Support levels: 19.3000 19.0000 18.7759/Wedge support/50-day MA (yellow) https://www.dailyfx.com/news/forex-usd-zar-price-forecast-rand-sinks-to-key-resistance-zone-wv-20231003.html

2023-10-04 04:44

USD/JPY OUTLOOK: USD/JPY briefly breaks above 150.00, but then pulls back sharply on signs that the Japanese government has stepped in to support the yen in currency markets. Any FX intervention measures will not be enough to support the yen on a sustained basis. As long as the underlying fundamentals do not change, the USD/JPY will remain in an uptrend. USD/JPY has been on a bullish tear in 2023, up more than 14% since January, boosted by soaring U.S. Treasury yields on the back of hawkish Fed policy. Earlier on Tuesday, the pair pushed above 150.00, the highest exchange rate since October 2022, but was quickly smacked lower in a strong knee-jerk reaction, signaling that the Japanese government may have stepped in to stem the yen’s slide. While Tokyo’s FX intervention could provide brief respite to the yen and curb speculative activity from time to time, it will not alter the currency's depreciatory trajectory as long as the underlying market fundamentals remain the same. Monetary policy divergence between the FOMC and the Bank of Japan, for instance, will continue to be a tailwind for the U.S. dollar. When considering the bigger picture, Japanese authorities have few options available to counter the sharp rise in U.S. rates driven by U.S. economic resilience and the Federal Reverse's stance. Over the course of this week, the U.S. 10-year yield has surged past 4.75%, reaching its highest level since August 2007, while the Japanese 10-year note has held steady around 0.76%. These dynamics and yield differentials clearly favor USD/JPY strength. From a technical standpoint, USD/JPY remains entrenched within an indisputable uptrend. With that in mind, if the pair manages to hold above support at 148.80 when the dust settles after possible FX intervention, the bulls may reload, setting the stage for a move above 150.00 and towards 151.00, the upper boundary of an ascending medium-term channel. On further strength, the focus shifts to 151.95. On the flip side, if the bears regain decisive control of the market unexpectedly, initial support is seen at 148.80, as illustrated in the daily chart below. Further down the line, the crosshairs will be fixed on 147.25, followed by 146.00. USD/JPY TECHNICAL CHART USD/JPY Chart Prepared Using TradingView https://www.dailyfx.com/news/forex-japanese-yen-forecast-usd-jpy-hit-by-potential-fx-intervention-will-bulls-reload-20231003.html