. Daily FX Analysis - Currency Pairs Test Key Levels in Global Markets

Daily FX Analysis – Currency Pairs Test Key Levels in Global Markets

Daily FX Analysis – Currency Pairs Test Key Levels in Global Markets

18 Oct 2023

Introduction:

The provided content discusses recent developments in currency pairs in the foreign exchange market. GBP/USD is holding steady near 1.2200 following the release of UK inflation data. EUR/USD maintains its position below 1.0600, influenced by a softer US dollar and positive economic data from China. The market’s attention is on Christine Lagarde’s speech and forthcoming data releases from the European Union and the United States. AUD/USD reached weekly highs on the back of favourable Chinese economic data. USD/JPY trades within a narrow range around 149.75, as investors await Japanese CPI data and the potential for intervention by Japanese authorities.

GBP/USD:

GBP/USD holds onto slight gains near 1.2200 after UK inflation data.

On Wednesday morning in Europe, the GBP/USD pair is trading higher at about 1.2200. According to UK data, the annual Consumer Price Index (CPI) inflation rate remained stable in September at 6.7%, above the 6.5% market estimate.

Following its Monday surge above 1.2200, the GBP/USD pair reversed course and dropped as early as Tuesday to the 1.2150 region. The technical picture for the pair in the immediate term is bearish, and further losses can be seen if the 1.2130 support level is broken.

September retail sales data will be included in the US economic docket for September. A negative surprise could hurt the USD, but unless there is a discernible improvement in market sentiment, GBP/USD might continue to decline.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2184 | Positive Crossover | Bullish
  • MA 20: 1.2195 | Negative Crossover | Bearish
  • MA 50: 1.2223 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2178 | Positive Crossover | Bullish
  • MA 20: 1.2218 | Negative Crossover | Bearish
  • MA 50: 1.2183| Positive Crossover | Bullish

RSI (Relative Strength Index): 49.74| Buy Zone | Bullish

Stochastic Oscillator: 34.45| Sell Zone | Positive

Resistance And Support Levels:

  • R1: 1.2215| R2: 1.2366
  • S1: 1.2077 | S2: 1.1915

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2262 | Take Profit: 1.2366 | Stop Loss: 1.2192

EUR/USD:

EUR/USD holds higher ground below 1.0600 amid softer US dollar.

In the Asian session on Wednesday, EUR/USD is maintaining its higher position, yet it is still below the 1.0600 level. The predominant flow of risk-on sentiment is influencing the US Dollar, particularly considering the positive economic data coming out of China. Attention is focused on Christine Lagarde’s speech and the upcoming data releases from the European Union and the United States.

Both US and European bond yields have experienced significant increases, with the 10-year US yield surging by 2.60% to reach 4.86%, and the German equivalent rising from 3.40% to 2.88%.

Nevertheless, strong economic data from the United States is likely to cap the potential gains in the EUR/USD pair. Scheduled for Wednesday are key releases such as US Housing Starts, Building Permits, and the Federal Reserve’s Beige Book.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0568| Positive Crossover | Bullish
  • MA 20: 1.0559 | Positive Crossover | Bullish
  • MA 50: 1.0574 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0565 | Positive Crossover | Bullish
  • MA 20: 1.0568 | Positive Crossover | Bullish
  • MA 50: 1.0547 | Positive Crossover | Bullish

RSI (Relative Strength Index): 54.91| Buy Zone | Bullish

Stochastic Oscillator: 62.25| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.0599| R2: 1.0761
  • S1: 1.0492| S2: 1.363

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0663| Take Profit: 1.0761 | Stop Loss: 1.0593

AUD/USD:

AUD/USD extends gains to weekly highs post-release of positive Chinese data.

The Australian Dollar rebounded from its earlier intraday losses due to positive economic data from China. On the other hand, the Aussie Dollar faced downward pressure due to a slowdown in Australian demand and per capita consumption.

Governor Bullock has indicated a willingness to implement responsive policy measures if inflation continues. In the United States, Retail Sales for the month of September exceeded expectations by rising 0.7% on a month-on-month basis.

The Australian Dollar (AUD) staged a rebound, regaining its intraday losses in response to China’s unexpectedly positive data across a range of economic indicators. Nevertheless, the AUD/USD pair ended its two-day winning streak earlier today. This reversal was triggered by a speech delivered by Reserve Bank of Australia (RBA) Governor Michele Bullock on Wednesday, in conjunction with optimistic economic figures from the United States (US).

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6365 | Positive Crossover | Bullish
  • MA 20: 0.6366| Positive Crossover | Bullish
  • MA 50: 0.6374 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6363 | Positive Crossover | Bullish
  • MA 20: 0.6367 | Positive Crossover | Bullish
  • MA 50: 0.6371| Positive Crossover | Bullish

RSI (Relative Strength Index): 53.99| Buy Zone| Bullish

Stochastic Oscillator: 81.62| Buy Zone | Positive

Resistance And Support Levels:

  • R1: 0.6386| R2: 0.6498
  • S1: 0.6299 | S2: 0.6209

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6429 | Take Profit: 0.6498 | Stop Loss: 0.6386

USD/JPY:

USD/JPY remained capped below the 150.00 mark; investors await the Japanese CPI data.

In the early hours of Wednesday’s Asian trading session, the USD/JPY pair is trading within a narrow range around the 149.75 level. The pair is supported by a rise in US Treasury bond yields.

Near the 150.00 level, investors are vigilant for the potential of Japanese authorities intervening in the market. According to Bloomberg’s report on Tuesday, the Bank of Japan (BoJ) is expected to revise its Core CPI forecast for the fiscal year 2023, with a likely increase to around 3%, up from the 2.5% forecast in July.

The forecast for the fiscal year 2024 is anticipated to be set at 2% or higher. A higher inflation projection suggests that the BoJ has confidence in the prospect of rising wages, which would contribute to an increase in inflation.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 149.67 | Positive Crossover | Bullish
  • MA 20: 149.43| Positive Crossover | Bullish
  • MA 50: 149.05| Positive Crossover | Bullish

Simple:

  • MA 5: 149.68 | Positive Crossover | Bullish
  • MA 20: 149.34| Positive Crossover | Bullish
  • MA 50: 149.25| Positive Crossover | Bullish

RSI (Relative Strength Index): 59.02| Buy Zone | Bullish

Stochastic Oscillator: 73.77| Buy | Negative

Resistance And Support Levels:

  • R1: 149.78| R2: 152.02
  • S1: 148.49| S2: 146.59

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 150.12 | Take Profit: 152.02 | Stop Loss: 149.09

Elsewhere in the Forex Market

NZD/USD up 0.06% to 0.5899. The USD/CAD down 0.01% to 1.3634. The USD/CHF down 0.09% at 0.8993. GBP/JPY up 0.11% at 182.67, EUR/GBP down 0.12% at 0.8671., The USD/CNY up 0.02% at 7.3116, AUD/SEK up 0.44% at 6.9760, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) GDP (YoY) (Q3) Actual 4.9%, Forecast 4.4%, Previous 6.3% at 07:30.

(CNY) Industrial Production (YoY) (Sep) Actual 4.5%, Forecast 4.3%, Previous 4.5% at 07:30.

(GBP) CPI (YoY) (Sep) Actual 6.7%, Forecast 6.6%, Previous 6.7% at 11:30.

(EUR) ECB President Lagarde Speaks at 14:30.

(EUR) CPI (YoY) (Sep) Forecast 4.3%, Previous 5.2% at 14:30.

(USD) Building Permits (Sep) Forecast 1.445M, Previous 1.541M at 18:00.