2023-10-02 02:50

DXY, EUR/USD – US DOLLAR FOURTH QUARTER TECHNICAL FORECAST: US Dollar clocks in a consistent winning streak in Q3 Potential Golden Cross eyed on the DXY weekly chart Meanwhile, EUR/USD faces Rising Wedge implications DXY Dollar Index The US Dollar clocked in a gain for the third quarter of 2023. On the weekly timeframe below is the DXY Dollar Index. A key takeaway is that the Greenback delivered at least 9 consecutive weeks of wins. You would have to go back to 2014 to see the same kind of consistent performance. How does this set up the currency for the fourth quarter of 2023? One thing that could be interesting to keep an eye on in this timeframe is the potential for a bullish Golden Cross between the 20- and 50-week Simple Moving Averages (SMAs). Gains in the third quarter have set the stage for this potential formation. Confirming it could open the door to a broader bullish technical bias in the period ahead. That may subsequently extend a push towards the 38.2 percent Fibonacci extension level at 109.35. Just above that is the midpoint at 112.37 before last year’s high of 114.77 kicks in. Otherwise, a turn lower and drop through the moving averages places the focus on the current 2023 low of 99.58. Clearing the latter would open the door to a stronger bearish technical conviction. US Dollar Weekly Chart Chart Created in TradingView EUR/USD Focusing on the Euro, things are also looking very interesting. The single currency delivered at least 9 consecutive weeks of losses, making the longest losing streak since 1997. This followed a breakout under a bearish Rising Wedge chart formation on the weekly chart below. This is offering a downward technical bias for the fourth quarter. The broader implications of the Rising Wedge breakout could open the door for EUR/USD to make its way to revisit last year’s low of 0.9535, or below parity to the US Dollar. Clearing the 23.6% Fibonacci extension level of 1.06118 exposes the 38.2% point at 1.0201. Otherwise, turning higher places the focus on the July high of 1.1275. Clearing the latter offers a stronger bullish bias towards 1.1494, which is the February peak. Euro Weekly Chart Chart Created in TradingView https://www.dailyfx.com/news/us-dollar-technical-forecast-dxy-sets-the-stage-for-further-resilience-in-q4-20231001.html

2023-10-02 02:48

The US Dollar broadly outperformed against its major counterparts in the third quarter of 2023. Relatively speaking, it performed the best against the British Pound, Japanese Yen and Australian Dollar. Meanwhile, the Chinese Yuan fared better. A key theme throughout the third quarter was the evolving landscape of long-term Federal Reserve monetary policy expectations. At most, the central bank may hike rates one more time this year. But, that is not where the focus has been. Instead, financial markets have been increasingly pricing in a higher terminal rate. In other words, the tone set by Chair Jerome Powell and company has been alluding to a scenario where interest rates stay higher for longer. That is why we have seen a more aggressive rise in the 10-year Treasury yields as opposed to the 2-year rate. In response, the US Dollar pushed higher. This also pressured lower gold prices. Crude oil prices continued climbing, perhaps a reflection of more robust growth expectations. Sentiment started to give way towards the end of Q3. The Dow Jones, S&P 500 and Nasdaq Composite all finished in the red. But, pronounced gains during the first 2 quarters mean equities are still on track to finish in the green this year. Could this change in Q4? How Markets Performed – Q3 2023 Forecasts: British Pound Q4 Technical Forecast: GBP/USD, EUR/GBP, GBP/JPY This quarterly outlook provides an in-depth analysis of GBP/USD, EUR/GBP, and GBP/JPY, focusing on price action dynamics. It delves into critical technical factors that are poised to influence market direction in the coming months. Australian Dollar Q4 Fundamental Forecast: AUD/USD, AUD/JPY With the Reserve Bank of Australia (RBA) on hold since June and China’s economic woes continuing, the Australian dollar exhibits few bullish drivers - which opens up the possibility for narrow range trading at suppressed levels. Bitcoin Technical Outlook: Price Action Remains Choppy Heading into Q4 This article is dedicated to examining the technical side of Bitcoin in Q4. For a complete understanding of the fundamental outlook and the pivotal drivers in Q4, download DailyFX's all-inclusive fourth-quarter trading guide. Euro Q4 Fundamental Forecast: EUR/USD in Peril on Growing Economic Risks This article is dedicated to examining euro’s fundamental outlook. It offers an exhaustive analysis of EUR/USD, EUR/GBP, and EUR/JPY, providing insights into the pivotal factors that could determine their performance in the fourth quarter. Crude Oil Q4 Technical Forecast: How High Can it Go? Crude oil technical analysis shows Q4 could take prices towards the $100 mark but remain around overbought levels which could limit upside. Japanese Yen Q4 Fundamental Forecast: Bearish Kick-off, Year-End Revival Chance This article is dedicated to examining the yen’s fundamental outlook. It offers an exhaustive analysis of the Japanese currency, discussing major risk factors that could dictate the trend in the fourth quarter. Equities Q4 Fundamental Outlook: Fed Rate Outlook to Weigh on Stocks US equities defied logic for the first half of 2023 but has shown signs of concern more recently as the Fed makes its final policy adjustments before attempting to dismount from its aggressive rate hiking campaign. US Dollar Technical Forecast: DXY Sets the Stage for Further Resilience in Q4? The US Dollar outperformed in the third quarter consistently, obtaining a minimum of 9 weeks of consecutive gains. How is the technical landscape shaping up for the fourth quarter? https://www.dailyfx.com/news/financial-markets-in-q4-us-dollar-euro-british-pound-gold-crude-oil-stocks-20231001.html

2023-10-02 02:45

GOLD, RETAIL TRADER POSITIONING, TECHNICAL ANALYSIS – IGCS UPDATE Gold prices fell the most last week since June 2021 And now, 85% of retail traders (IGCS) are net-long Overall, things are not looking great for XAU/USD Gold prices sank about 4 percent last week. To give some context, we have not seen this kind of performance since June 2021. Meanwhile, retail traders continue to increase their upside exposure in XAU/USD. This can be seen by looking at IG Client Sentiment (IGCS), which frequently worked as a contrarian indicator. As such, things may not be looking too good for gold as the new week begins. Gold Sentiment Outlook - Bearish The IGCS gauge shows that a strong majority of 85% of retail traders are net-long XAU/USD. Since they are overwhelmingly biased to the upside, this continues to hint that prices may fall down the road. This is as upside exposure increased by 4.9% from last Thursday through Friday and 34% compared to one week ago from last Friday. With that in mind, the combination of overall exposure and recent changes produces a stronger bearish contrarian trading bias. XAU/USD Daily Chart On the daily chart, gold prices have continued to make further downside progress after confirming a breakout under the rising trendline from February. Now, a bearish Death Cross between the 50- and 200-day Moving Average has recently formed, further underscoring a bearish technical bias. Now, prices are facing the midpoint of the Fibonacci retracement level of 1848.37. A breakout lower exposes the February low of 1804.78 before the 78.6% level of 1714.83 comes into focus. Otherwise, a turn higher places the focus on the 1884.89 inflection point. https://www.dailyfx.com/analysis/gold-prices-collapse-the-most-since-june-2021-last-week-retail-bets-aggressively-long-20231001.html

2023-10-02 02:44

The softening in US August core PCE inflation (3.9% YoY vs previous 4.3%, 0.1% MoM vs previous 0.2%) failed to drive a sustained rebound in Wall Street last Friday, as Treasury yields stayed firm despite some paring in rate hike bets. While further progress on the core inflation front may offer room for the Federal Reserve (Fed) to hold off on its last rate hike, still-resilient personal income and spending (both 0.4% MoM), along with higher-than-expected final consumer inflation expectations, could have reinforced the narrative for high-for-longer rates. Into the new week, a temporary resolution in the US government shutdown situation may provide some respite, which may allow sentiments to shift its focus onto upcoming US economic data, such as the US Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) release today. Key focus around the data may revolve around employment, where the fourth straight month of contraction is expected, while manufacturing prices is expected to show a lesser extent of contraction. Further comments from Fed Chair Jerome Powell may also be on the radar today, although his script may be unlikely to shift too significantly from the recent Fed meeting. Following some profit-taking from oversold technical conditions, elevated Treasury yields continue to be supportive of the US dollar, with the formation of a bullish pin bar last Friday reflecting buyers still in control. The next resistance at the 106.84 level remains on watch to overcome, with its weekly Moving Average Convergence/Divergence (MACD) crossing above zero for the first time this year. On the downside, the 105.00 level serves as immediate support to hold. The latest Commodity Futures Trading Commission (CFTC) figures show that the US dollar's net aggregate positioning against G10 currencies has crossed into net-long territory for the second straight week. Source: IG charts Asia Open Asian stocks look set for a mixed open, with Nikkei +1.54%, ASX -0.16% and NZX -0.36% at the time of writing. China and Hong Kong markets are closed for National Day today. There are some outperformance in Japan’s 3Q 2023 Tankan survey, more notably in large firms, but positive sentiments around the Nikkei 225 index may revolve around the Bank of Japan (BoJ) minutes. Particularly, a continued dovish stance is displayed, whereby “even if the Bank were to terminate its negative interest rate policy, this can be considered as continuation of monetary easing if real interest rates remain negative”. There are also more clarity on a potential policy pivot guided to be around January-March next year, whereby the central bank may be able to determine if its “2% sustainable inflation” condition has been met. The minutes seem to be well-received by the Nikkei, with the index moving higher to retest the Ichimoku cloud resistance on the daily chart. More positive follow-through may be needed, with a move back above the cloud may provide greater conviction for buyers. For now, its daily MACD has crossed below the zero mark as a reflection of broad downward momentum, while its RSI is still trading below the key 50 level, both of which may have to be overturned by buyers. Source: IG charts On another front, PMI data from China released over the weekend have been largely mixed. There were further signs of stabilising in the official data (52 vs previous 51.3), as the manufacturing read heads into expansionary territory for the first time since March 2023 (50.2 vs previous 49.7) while the services sector reversed higher for the first time (51.7 vs previous 51.0) since March this year as well. The resilience, however, was not mirrored in the Caixin composite readings (50.9 vs previous 51.7), which tracks sentiments from the small and medium-sized enterprises. This week will bring about the Reserve Bank of Australia (RBA) rate decision on Tuesday, with market participants largely expecting the central bank to keep its cash rate on hold for the fourth straight meeting but are still unconvinced that the peak rate has been seen just yet. Much may depend on whether recent uptick in Australia’s August inflation is sufficient to prompt a more hawkish stance from the RBA. The AUD/USD continues to trade in a range since August this year, with a retest of the upper bound at the 0.650 level last week failing to find any successful break. For now, its daily RSI continues to hang around its key 50 level as an indication of near-term indecision, awaiting cues from the RBA to provide more conviction moves. On the downside, the 0.636 level remains a key support to hold, failing which may pave the way to retest its October 2022 bottom at the 0.620 level next. Source: IG charts https://www.dailyfx.com/news/asia-day-ahead-china-s-pmi-mixed-boj-minutes-well-received-by-nikkei-20231002.html

2023-09-29 03:06

EUR/USD PRICE FORECAST: EUR/USD Recovers from Psychological 1.0500 Level as the DXY Retreats from 10-month highs. ECB Data Remains Weak but German Inflation Showed Positive Signs Ahead of EU Inflation Tomorrow. IG Client Sentiment Shows Majority of EURUSD Traders are Holding Long Positions. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. The Euro has defended the 1.0500 Psychological level against the Greenback thanks in large part to USD weakness. Having printed fresh 8-month lows just below the 1.0500-mark yesterday this is no doubt a welcome reprieve for Euro bulls. The question of whether it is a sustainable move, however, remains up in the air for now…. EURO AREA AND US DATA European data releases have been scarce this week, but we did have some positive news from Germany today as headline inflation preliminary estimates showed a sharp drop-off in September. YoY print came in at 4.5% down from the previous 6.1% in August which will be like music to the ears of the European Central Bank. The Eurozone Economic Sentiment Index continued its decline this month but did come in just above estimates. This isn’t a positive though given we are now on a 5th consecutive month of decline since the April print while Consumer Confidence came in at -17.8, in line with forecasts but further deterioration from last month’s print of -16. The US session brought US jobs data into focus once more and the resilience continues. Initial jobless claims coming in at 204k for the week ended September 23 while the final GDP print came out in line with estimates of 2.1 for Q2. On the flip side there are cracks that are starting to show as evidenced by Home Sales data as the interest rate environment hinders new home buyers. The line up of Fed Policymakers continues today with Chicago Fed President Austin Goolsbee speaking earlier. A mixed bag from Goolsbee who refused to rule out further rate hikes and fueling the narrative around the USD. Later we will hear further commentary from Policymaker Cook before the floor will be given to Fed Chair Jerome Powell. A continuation of the recent hawkish rhetoric could arrest the slide we are witnessing in the US Dollar Index (DXY) today and provide at least some fresh impetus ahead of the PCE data due out tomorrow. RISK EVENTS AHEAD FOR EUR/USD From a risk event perspective, the PCE data EU inflation flash number will take center stage tomorrow and promises to be as intriguing as ever. The recent rise in headline US inflation and a potential slowdown in Q4 mean that the PCE print this month could prove to be even more important than usual. Tomorrow’s data however would need to show a significant beat or miss of expectations for any material longer-lasting move to occur. Otherwise, it could be case of a spike in volatility before the resumption of the current status quo. For all market-moving economic releases and events, see the DailyFX Calendar TECHNICAL OUTLOOK AND FINAL THOUGHTS Looking at EURUSD from a technical perspective and todays bounce occurred just shy of the 2023 lows before making a run for the 1.0550 mark. The advance has continued unto the early hours of the US session and could be a sign of profit taking ahead of both PCE data and Euro flash inflation data. As things stand EURUSD is on course for a bullish engulfing daily candle close off a key support area, not to mention that the pair had been trading in oversold territory. On the other end of the spectrum, we have a second potential death cross developing as the 50-day MA eyes a cross below the 200-day MA. Earlier In the week we already saw a death cross pattern as the 50-day MA crossed below the 100-day MA. A bit of mixed signals from the technical side is nothing new in 2023, a year in which many of the major moves have been driven by the constantly evolving macroeconomic outlook. Taking that into account and if the drop in the DXY proves temporary we could be in for another leg to the downside heading into next week. Key resistance areas I will be keeping an eye on will be 1.0600, 10630 and a potential third touch of the descending trendline if we are to see a deep retracement. EUR/USD Daily Chart – September 28, 2023 Source: TradingView IG CLIENT SENTIMENT DATA IGCS shows retail traders are currently Net-Long on EURUSD, with 70% of traders currently holding LONG positions. Given the contrarian view adopted here at DailyFX, is EURUSD destined for further downside? https://www.dailyfx.com/news/forex-eur-usd-gets-a-reprieve-with-the-dollar-on-offer-today-20230928.html

2023-09-29 03:04

USD/JPY OUTLOOK: USD/JPY halts its advance near 11-month highs after breaching channel resistance earlier in the week. Despite some market hesitation, the U.S. dollar maintains a bullish outlook. Absent FX intervention by the Japanese government, the pair may soon break above the 150.00 level and head higher. This article looks at key USD/JPY technical levels to watch in the coming trading sessions. USD/JPY was a touch softer on Thursday, but clung near 11-month highs after breaking above the 149.00 handle and breaching channel resistance earlier in the week. Against this backdrop, the pair was down around 0.12% in afternoon trading in New York, to hover around 149.25, in a session characterized by a lack of major catalysts ahead of Friday's key August U.S. personal income and outlays figures. In terms of expectations, household spending, the main driver of the country's economic activity, is forecast to have risen 0.4% last month, following a 0.8% increase in July. Meanwhile, core CPI, the Fed's favorite inflation gauge, is seen climbing 0.2% monthly, allowing the annual rate to ease to 3.9% from 4.2% previously. Overall, if the American consumer keeps up their robust spending and inflation remains sticky, the U.S. dollar might stay in a leading position. In this regard, any upward deviation of tomorrow’s data from consensus estimates could spark a rally in U.S. yields by strengthening the case for “further policy firming” and “higher interest rates for longer”. This could push USD/JPY above 150.00. UPCOMING US DATA Source: DailyFX Economic Calendar In the event that USD/JPY breaks above the 150.00 mark, however, traders should exercise caution and proceed with vigilance, as the Japanese government may step in to prop up the yen. This is especially pertinent if such FX intervention takes place on a Friday during U.S. trading hours, when other major markets have already closed, as the lower liquidity environment heading into the weekend could amplify exchange rate moves. USD/JPY TECHNICAL ANALYSIS USD/JPY breached medium-term channel resistance at 148.50 earlier in the week, pushing towards its highest level since October 2022. After the latest leg higher, the pair has stalled and its propulsion tapered off, but that could be related to profit-taking by traders with bullish positions rather than a loss of momentum or a market reversal. That said, the underlying bias remains constructive for now. In terms of potential scenarios, if USD/JPY manages to hold above support extending from 148.80/148.50, buying interest could re-emerge, setting the stage for a move towards 150.75, the upper boundary of an ascending channel in place since March 2023. On further strength, buyers could be emboldened and initiate an all-out assault on the 2022 highs around 151.95. In contrast, if the bears regain control of the market and trigger a pullback, initial support rests at 148.80/148.50. Further down the line, the focus shifts to 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-pauses-after-breakout-as-fx-intervention-risks-grow-20230928.html