. Daily FX Analysis - EUR/USD Freefall, AUD/NZD Volatility, GBP/USD Amid Tensions.

Daily FX Analysis – EUR/USD Freefall, AUD/NZD Volatility, GBP/USD Amid Tensions.

Daily FX Analysis – EUR/USD Freefall, AUD/NZD Volatility, GBP/USD Amid Tensions.

04 Dec 2023

Introduction:

In currency markets, GBP/USD is on an upward trajectory, bolstered by a hawkish Bank of England and a weakened U.S. Dollar. Meanwhile, EUR/USD hovers near 1.0900, influenced by falling inflation and anticipation of potential interest rate cuts following ECB Chair Christine Lagarde’s speech. NZD/USD maintains positivity driven by Chinese PMI data. USD/CAD faces persistent selling pressure, declining further below mid-1.3500s amidst a softer U.S. Dollar and heightened market caution.

GBP/USD:

GBP/USD declines below 1.2700 as the US Dollar begins to strengthen.

In early Monday trading in Europe, the GBP/USD is declining towards 1.2650. The US Dollar is gaining support due to the escalating conflict in the Middle East, putting pressure on the pair.

Nevertheless, the downside appears restricted as there is an increase in expectations for a rate cut by the Federal Reserve. The economic calendars for both the UK and the US lack significant data at the moment.

GBP/USD is expected to encounter demand on dips, with the focus shifting to the forefront as the US employment data becomes a central factor.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2671 | Positive Crossover | Bullish
  • MA 20: 1.2633 | Positive Crossover | Bullish
  • MA 50: 1.2530 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2666 | Positive Crossover | Bullish
  • MA 20: 1.2645 | Positive Crossover | Bullish
  • MA 50: 1.2510| Positive Crossover | Bullish

RSI (Relative Strength Index): 61.70| Buy Zone | Bullish

Stochastic Oscillator: 24.06| Selling Zone | Positive

Resistance And Support Levels:

  • R1: 1.2709| R2: 1.2888
  • S1: 1.2598| S2: 1.2431

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2751 | Take Profit: 1.2888 | Stop Loss: 1.2671

EUR/USD:

EUR/USD declines toward 1.0850 as US Dollar draws safe- haven bid.

During the European morning on Monday, the EUR/USD is decreasing towards the 1.0850 level. This decline is influenced by a renewed safe-haven appeal for the US Dollar amid emerging geopolitical uncertainties. Additionally, a slight increase in US Treasury bond yields is contributing to the strength of the US Dollar.

On Friday, the EUR/USD pair shows a renewed upward momentum, rebounding from the decline driven by weaker Eurozone inflation the previous day, which had led to the pair hitting a one-week low.

Investors are keeping an eye on the EU’s Sentix data and an upcoming speech by Lagarde.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0880| Negative Crossover | Bearish
  • MA 20: 1.0911| Negative Crossover | Bearish
  • MA 50: 1.0867 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0878 | Negative Crossover | Bearish
  • MA 20: 1.0911 | Negative Crossover | Bearish
  • MA 50: 1.0877 | Positive Crossover | Bullish

RSI (Relative Strength Index): 41.54| Neutral Zone | Neutral

Stochastic Oscillator: 4.00| Sell zone | Negative

Resistance And Support Levels:

  • R1: 1.0960| R2: 1.1094
  • S1: 1.0863| S2: 1.0692

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0820| Take Profit: 1.0692 | Stop Loss: 1.0917

AUD/USD:

AUD/USD corrects from its multi-month peak, downside appearing restricted ahead of RBA on Tuesday.

AUD/USD pulls back after reaching a new five-month high in the Asian session on Monday. The prevailing cautious market sentiment supports the safe-haven USD, exerting downward pressure on the risk-sensitive Aussie.

The AUD/USD pair encounters selling pressure around the 0.6700 level, which is just above the five-month high reached in the Asian session on Monday. As a result, it retreats to a new daily low in the most recent hour.

Bullish traders are currently favoured by the technical setup, with attention turning towards the Reserve Bank of Australia (RBA) policy meeting scheduled for Tuesday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6642 | Positive Crossover | Bullish
  • MA 20: 0.6611| Positive Crossover | Bullish
  • MA 50: 0.6553 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6640 | Positive Crossover | Bullish
  • MA 20: 0.6611 | Positive Crossover | Bullish
  • MA 50: 0.6537| Positive Crossover | Bullish

RSI (Relative Strength Index): 61.02| Buying Zone| Bullish

Stochastic Oscillator: 48.65 |Buying Zone | Positive

Resistance And Support Levels:

  • R1: 0.6673| R2: 0.6809
  • S1: 0.6585 | S2: 0.6482

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6708 | Take Profit: 0.6809 | Stop Loss: 0.6652

NZD/USD:

NZD/USD extends its upside above 0.6200 on the softer USD, Fed rate cut.

The NZD/USD is advancing close to 0.6210 due to the weakening of the USD. In the third quarter (Q3), New Zealand’s Terms of Trade Index experienced a 0.6% quarter-on-quarter decline, compared to the 0.3% decrease in the previous period.

During the early Asian session on Monday, the NZD/USD pair is gaining strength, approaching the round figure of 0.6200. The weakening of the US Dollar (USD) is attributed to speculation that the US Federal Reserve (Fed) may have concluded its cycle of interest rate hikes, consequently boosting the NZD/USD.

Traders will keep a close eye on the US Factory Orders data for October. Additionally, later this week, Tuesday will bring forth New Zealand’s ANZ Commodity Price report and the US ISM Services PMI.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6186 | Positive Crossover | Bullish
  • MA 20: 0.6138| Positive Crossover | Bullish
  • MA 50: 0.6066| Positive Crossover | Bullish

Simple:

  • MA 5: 0.6185 | Positive Crossover | Bullish
  • MA 20: 0.6134| Positive Crossover | Bullish
  • MA 50: 0.6045| Positive Crossover | Bullish

RSI (Relative Strength Index): 67.71| Buying Zone | Bullish

Stochastic Oscillator: 35.09| Sell Zone | Positive

Resistance And Support Levels:

  • R1: 0.6208 | R2: 0.6316
  • S1: 0.6140 | S2: 0.6063

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6228| Take Profit: 0.6316 | Stop Loss: 0.6182.

Elsewhere in the Forex Market

EUR/GBP up 0.22% to 0.8571. The USD/CAD up 0.29% to 1.3553. The USD/CHF up 0.40% at 0.8723. USD/JPY down 0.14% at 146.54, EUR/JPY up 0.01% at 161.49, The USD/CNY up 0.12% at 7.1372, AUD/SEK down 0.03% at 6.9283, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) Retail Sales (MoM) Actual –0.2%, Forecast –0.2%, Previous 0.9% at 06:30.

(CHF) CPI (MoM) (Nov) Forecast –0.1%, Previous 1.7% at 13:00.

(EUR) ECB President Lagarde Speaks at 19:30.