. Daily FX Analysis - Currency Markets React as FOMC Looms.

Daily FX Analysis – Currency Markets React as FOMC Looms.

Daily FX Analysis – Currency Markets React as FOMC Looms.

01 Nov 2023

Introduction:

In the dynamic world of currency markets, EUR/USD remains under pressure, trading below the 1.0600 level in the cautious European market. In contrast, AUD/USD grapples with a decline amidst IMF’s calls for stricter monetary policies. Meanwhile, NZD/USD faces a second day of losses driven by various factors, while USD/CHF consolidates ahead of a significant event, the FOMC policy meeting. Investors are closely watching the FOMC for insights into interest rate trends.

EUR/USD:

EURUSD stays on the back foot below 1.0600 amid a cautious market.

In the early hours of Wednesday in Europe, the EUR/USD currency pair is facing downward pressure and is trading below the 1.0600 level.

At the start of the week, the EUR/USD currency pair briefly reached its highest levels for the week but later reversed its course on Tuesday. This reversal was influenced by the increased strength of the US Dollar, as investors geared up for the release of US employment data and the Federal Open Market Committee (FOMC) meeting.

The US Dollar remains bolstered by solid underlying economic factors in the United States. While these factors might not be sufficient to initiate a new surge, they are effectively restraining any substantial corrections.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0574 | Negative Crossover | Bearish
  • MA 20: 1.0580 | Negative Crossover | Bearish
  • MA 50: 1.0579 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.0582 | Negative Crossover | Bearish
  • MA 20: 1.0583 | Negative Crossover | Bearish
  • MA 50: 1.0576| Negative Crossover | Bearish

RSI (Relative Strength Index): 44.09| Neutral Zone | Neutral

Stochastic Oscillator: 29.59| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 1.0638| R2: 1.0749
  • S1: 1.0543| S2: 1.0446

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0521 | Take Profit: 1.0446 | Stop Loss: 1.0575

AUD/USD:

AUD/USD hovers below major level ahead of Fed decision.

The Australian Dollar continues its decline following disappointing economic data released on Wednesday. The International Monetary Fund (IMF) suggests that the Reserve Bank of Australia (RBA) should contemplate implementing more stringent monetary policies due to persistent inflationary pressures.

The AUD/USD pair is experiencing downward pressure, primarily driven by lacklustre economic data from Australia and the strengthening US Dollar (USD) in anticipation of the Federal Open Market Committee (FOMC) policy

Investors are prepared to carefully observe the post-meeting communication from the Federal Open Market Committee (FOMC), as they look for valuable hints that can help them assess the likely path of interest rates.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6340| Positive Crossover | Bullish
  • MA 20: 0.6344| Negative Crossover | Bearish
  • MA 50: 0.6347 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.6339 | Positive Crossover | Bullish
  • MA 20: 0.6342 | Negative Crossover | Bearish
  • MA 50: 0.6346 | Negative Crossover | Bearish

RSI (Relative Strength Index): 49.41| Buy Zone | Bullish

Stochastic Oscillator: 57.29| Buy zone | Neutral

Resistance And Support Levels:

  • R1: 0.6383| R2: 0.6451
  • S1: 0.6328| S2: 0.6243

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6309| Take Profit: 0.6243 | Stop Loss: 0.6354

NZD/USD:

NZD/USD declines below 0.5800 on weak Chinese PMI, focus remains on the FOMC decision.

NZD/USD is experiencing a second consecutive day of decline as it faces pressure from a combination of factors.

Weak employment data from New Zealand and China’s Caixin manufacturing Purchasing Managers’ Index (PMI) are exerting downward pressure on the New Zealand Dollar.

Meanwhile, expectations of a more hawkish stance from the Federal Reserve and higher US bond yields are providing support to the US Dollar. Now, USD bulls are eagerly awaiting US economic data for potential momentum ahead of the Federal Open Market Committee (FOMC) decision.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.5819 | Negative Crossover | Bearish
  • MA 20: 0.5829| Negative Crossover | Bearish
  • MA 50: 0.5861 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.5821 | Negative Crossover | Bearish
  • MA 20: 0.5825 | Negative Crossover | Bearish
  • MA 50: 0.5877| Negative Crossover | Bearish

RSI (Relative Strength Index): 44.56| Neutral Zone| Neutral

Stochastic Oscillator: 50.42 |Buy Zone | Neutral

Resistance And Support Levels:

  • R1: 0.5869| R2: 0.5929
  • S1: 0.5809 | S2: 0.5717

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.5789 | Take Profit: 0.5718 | Stop Loss: 0.5843

USD/CHF:

USD/CHF consolidates its gains, eyes on Fed rate decision.

The USD/CHF currency pair is trading within a tight range of 0.9076 to 0.9105 as it anticipates a significant upcoming event.

Market attention on Wednesday will be focused on the FOMC policy meeting and a speech by Swiss National Bank (SNB) Chairman Jordan.

The USD/CHF pair is holding steady, consolidating the gains it made after reaching multi-week highs of 0.9107 in the Asian session on Wednesday. Investors are eagerly awaiting the much-anticipated Federal Open Market Committee (FOMC) policy meeting scheduled for later in the day, with no interest rate adjustments anticipated.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.9077 | Positive Crossover | Bullish
  • MA 20: 0.9022| Positive Crossover | Bullish
  • MA 50: 0.9014| Positive Crossover | Bullish

Simple:

  • MA 5: 0.9073 | Positive Crossover | Bullish
  • MA 20: 0.9000| Positive Crossover | Bullish
  • MA 50: 0.8999| Positive Crossover | Bullish

RSI (Relative Strength Index): 71.56| Buy Zone | Bullish

Stochastic Oscillator: 95.99| Buy Zone | Positive

Resistance And Support Levels:

  • R1: 0.9106| R2: 0.9221
  • S1: 0.9008| S2: 0.8915

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.9130| Take Profit: 0.9221 | Stop Loss: 0.9073

Elsewhere in the Forex Market

GBP/USD up 0.06% to 1.2160. The USD/CAD up 0.1% to 1.3876. The USD/JPY down 0.27% at 151.25. EUR/GBP down 0.14% at 0.8690, EUR/JPY down 0.3% at 159.80, The USD/CNY up 0.05% at 7.3191, AUD/SEK down 0.7% at 7.0819, at the time of writing.

Key Economic Events & Data Release Today:

(NZD) Employment Change (QoQ) (Q3) Actual –0.2%, Forecast 0.4%, Previous 1.0% at 03:15.

(NZD) RBNZ Gov Orr Speaks at 03:30.

(CNY) Manufacturing PMI (Oct) Actual 49.5, Forecast 50.8, Previous 50.6 at 07:15.

(USD) ADP Nonfarm Employment Change (Oct) Forecast 150K, Previous 89K at 17:45.

(USD) ISM Manufacturing PMI (Oct) Forecast 49.0, Previous 49.0 at 19:30.

(USD) Fed Interest Rate Decision at 23:30.

(USD) FOMC Statement at 23:30.