. Daily FX Analysis - Currency Pairs React to Key Levels Amid Geopolitical Shifts

Daily FX Analysis – Currency Pairs React to Key Levels Amid Geopolitical Shifts

Daily FX Analysis – Currency Pairs React to Key Levels Amid Geopolitical Shifts

17 Oct 2023

Introduction:

The provided content discusses recent developments in currency pairs in the foreign exchange market. It covers the NZD/USD pair’s decline due to downbeat consumer inflation in New Zealand and the potential impact of U.S. data. Additionally, it touches on the USD/CAD pair’s price recovery, the USD/CHF pair’s movements amid renewed USD demand, and the EUR/GBP pair’s response to UK wage inflation data. These insights provide a snapshot of the current market conditions for these currency pairs.

NZD/USD:

NZD/USD declines to 0.5900 on downbeat Kiwi consumer inflation, US data eyed.

NZD/USD reverses recent gains following weaker New Zealand economic data.

The Kiwi headline CPI (Q3) increased to 1.8% from the anticipated 2.0%; the annual rate decreased.

The US dollar could admire the improved US Treasury yields.

NZD/USD pulled back from the recent gains following the release of negative consumer inflation data from New Zealand, trading down around 0.5900 during the early European session on Tuesday.

The Reserve Bank of New Zealand (RBNZ) is expected to boost interest rates in November, but investors are being forced by the data to lower their expectations, which is driving down the NZD/USD pair.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.5908 | Negative Crossover | Bearish
  • MA 20: 0.5942 | Negative Crossover | Bearish
  • MA 50: 0.5955 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.5913 | Negative Crossover | Bearish
  • MA 20: 0.5966 | Negative Crossover | Bearish
  • MA 50: 0.5956| Negative Crossover | Bearish

RSI (Relative Strength Index): 38.3| Sell Zone | Bearish

Stochastic Oscillator: 13.47| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 0.5979| R2: 0.6067
  • S1: 0.5883 | S2: 0.5791

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.5859 | Take Profit: 0.5791 | Stop Loss: 0.5913

USD/CAD:

USD/CAD price recover some lost ground; the key barrier is seen at 1.3700.

The USD/CAD pair draws buyers at 1.3630 in response to the increase in US bond yields.

Tuesday’s Asian session sees the USD/CAD pair end a two-day losing skid. A rise in US Treasury yields and a drop-in oil price support the pair’s recovery. The US Retail Sales and the Canadian inflation statistics will be watched carefully by traders. As of this writing, the USD/CAD pair is up 0.15% on the day and is trading close to 1. 3635.

The US Retail Sales figure is expected to rise by 0.3% MoM whereas the annual and monthly Canadian Consumer Price Index (CPI) for September is expected to rise by 4.0% and 0.1%, respectively.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3632| Positive Crossover | Bullish
  • MA 20: 1.3632 | Positive Crossover | Bullish
  • MA 50: 1.3611 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.3627 | Positive Crossover | Bullish
  • MA 20: 1.3622 | Positive Crossover | Bullish
  • MA 50: 1.3605 | Positive Crossover | Bullish

RSI (Relative Strength Index): 52.1| Buy Zone | Bullish

Stochastic Oscillator: 43.1 | Neutral zone | Positive

Resistance And Support Levels:

  • R1: 1.3685| R2: 1.3782
  • S1: 1.3608| S2: 1.3522

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.3714| Take Profit: 1.3782 | Stop Loss: 1.3672

USD/CHF:

USD/CHF holds above the 0.9000 area amid renewed USD demand, US retail sales loom.

Throughout Monday’s Asian session, the USD/CHF pair remains above the critical 0.9000 mark.

The traditional safe-haven Swiss franc may rise in response to the intensifying geopolitical tensions between Israel and Hamas.

Tuesday’s early Asian session sees the USD/CHF pair end a two-day losing skid. The pair receives some support from the increase in US Treasury yields. As of this writing, the USD/CHF pair is up 0.12% on the day and is trading close to 0.9021.

Investors will be watching the headlines of the Israel-Hamas war. On Tuesday, the US Retail Sales for September will be announced. A 0.2% increase in sales is expected. This Thursday is the deadline for the September Swiss Trade Balance. These numbers can provide the USD/CHF pair with a clear direction.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.9017 | Positive Crossover | Bullish
  • MA 20: 0.9046| Negative Crossover | Bearish
  • MA 50: 0.9061 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.9011 | Positive Crossover | Bullish
  • MA 20: 0.9041 | Negative Crossover | Bearish
  • MA 50: 0.9111| Negative Crossover | Bearish

RSI (Relative Strength Index): 41.91 | Neutral Zone| Neutral

Stochastic Oscillator: 25.08| Sell Zone | Neutral

Resistance And Support Levels:

  • R1: 0.9085 | R2: 0.9171
  • S1: 0.9004 | S2: 0.8896

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.8980 | Take Profit: 0.8896 | Stop Loss: 0.9044

EUR/GBP:

EUR/GBP attracts some buyers around the mid-8600s following the UK wage inflation data, eyes on ZEW survey.

The EUR/GBP pair is trading slightly higher at 0.8648 in response to the UK wage inflation statistics.

The average earnings in the UK, excluding bonuses, were 7.8%, while the average earnings including bonuses increased to 8.1% from 8.5% previously.

According to the head economist at the ECB, interest rates will remain high until inflation hits 2% again.

Investors will be watching Tuesday’s ECB De Guindos speech and the October ZEW Economic Sentiment Survey.

Market participants will be watching the ECB’s De Guindos speech later on Tuesday and the October ZEW Economic Sentiment Survey closely. The ECB’s President Lagarde’s speech and the UK Consumer Price Index (CPI) statistics are both highly anticipated events on Wednesday. These occurrences can provide the EUR/GBP cross with a clear direction.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.8654 | Positive Crossover | Bullish
  • MA 20: 0.8648| Positive Crossover | Bullish
  • MA 50: 0.8645| Positive Crossover | Bullish

Simple:

  • MA 5: 0.8654 | Positive Crossover | Bullish
  • MA 20: 0.8642| Positive Crossover | Bullish
  • MA 50: 0.8657| Positive Crossover | Bullish

RSI (Relative Strength Index): 58.66| Buy Zone | Bullish

Stochastic Oscillator: 69.79| Buy | Negative

Resistance And Support Levels:

  • R1: 0.8666| R2: 0.8709
  • S1: 0.8635| S2: 0.8602

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.8676 | Take Profit: 0.8709 | Stop Loss: 0.8655

Elsewhere in the Forex Market

GBP/USD down 0.29% to 1.2176. The EUR/USD down 0.01% to 1.0548. The AUD/USD up 0.30% at 0.6358. USD/JPY up 0.07% at 149.61, CAD/JPY down 0.05% at 109.79, The USD/CNY up 0.06% at 7.3147, AUD/SEK up 0.28% at 6.9432, at the time of writing.

Key Economic Events & Data Release Today:

(NZD) CPI (QoQ) (Q3) Actual 1.8%, Forecast 2.0%, Previous 1.1% at 03:15.

(AUD) RBA Meeting Minutes at 06:00.

(GBP) Average Earning Index+Bonus (Aug) Actual 8.1%, Forecast 8.3%, Previous 8.5% at 11:30.

(USD) Core Retail Sales (MoM) (Sep) Forecast 0.2%, Previous 0.6% at 18:00.

(USD) Retail Sales (MoM) (Sep) Forecast 0.3%, Previous 0.6% at 18:00.

(CAD) Core CPI (MoM) (Sep) Previous 0.1% at 18:00.