. Daily FX Analysis - Forex Pairs Test Key Levels in Volatile Market.

Daily FX Analysis – Forex Pairs Test Key Levels in Volatile Market.

Daily FX Analysis – Forex Pairs Test Key Levels in Volatile Market.

31 Oct 2023

Introduction:

In the dynamic world of currency markets, the USD/CAD, EUR/USD, GBP/USD, and NZD/USD pairs are all under the influence of various factors shaping their trajectories. As the USD/CAD eyes the 1.3850 level amid declining crude oil prices, the EUR/USD grapples with 1.0600 ahead of key Eurozone data. Meanwhile, the GBP/USD faces pressure below 1.2150 due to a resurgent US Dollar, and the NZD/USD experiences a minor dip after weaker Chinese PMIs and the Federal Reserve’s hawkish undertones. These developments set the stage for a week filled with anticipation and market sentiment.

USD/CAD:

USD/CAD looks to approach 1.3850 on downbeat crude prices.

The yearly high in the USD/CAD pair may be revisited due to the influence of declining Crude oil prices.

BoC Governor Macklem expressed that the combination of increased interest rates and sluggish growth will affect the government’s expenditure.

Following a retreat from its annual high, the USD/CAD pair is recovering some of its recent losses and is trading in the vicinity of 1.3840 during Tuesday’s Asian session. This pair might find support for an upward trend due to the adverse effects of declining Crude oil prices. Additionally, the Chinese Purchasing Managers’ Index (PMI) data, indicating weakness, could exert pressure on oil prices, further bolstering the USD/CAD pair’s strength just ahead of the US Federal Reserve (Fed) policy decision scheduled for Wednesday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3836 | Negative Crossover | Bearish
  • MA 20: 1.3794 | Positive Crossover | Bullish
  • MA 50: 1.3726 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.3840 | Negative Crossover | Bearish
  • MA 20: 1.3785 | Positive Crossover | Bullish
  • MA 50: 1.3703| Positive Crossover | Bullish

RSI (Relative Strength Index): 60.6| Buy Zone | Bullish

Stochastic Oscillator: 74.24| Buy Zone | Negative

Resistance And Support Levels:

  • R1: 1.3848| R2: 1.3972
  • S1: 1.3774| S2: 1.3654

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.3873 | Take Profit: 1.3972 | Stop Loss: 1.3805

EUR/USD:

EUR/USD battles 1.0600 ahead of Eurozone GDP, inflation data.

In the European morning of Tuesday, the EUR/USD is contending with the 1.0600 level but has seen a decline. This retreat is influenced by a rebound in the US Dollar, driven by a deteriorating risk sentiment.

In the American session, the EUR/USD rose beyond the 1.0600 mark, benefiting from a generally weaker US Dollar as investors prepared for the FOMC meeting and important employment figures.

Crucial US data is scheduled for release throughout the week, commencing with the Employment Cost Index on Tuesday. This will be followed by the ADP private employment report, with the week culminating in the Nonfarm Payrolls data set to be published on Friday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0597| Positive Crossover | Bullish
  • MA 20: 1.0584| Positive Crossover | Bullish
  • MA 50: 1.0581 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0596 | Positive Crossover | Bullish
  • MA 20: 1.0590 | Positive Crossover | Bullish
  • MA 50: 1.0575 | Positive Crossover | Bullish

RSI (Relative Strength Index): 56.38| Buy Zone | Bullish

Stochastic Oscillator: 71.52| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.0626| R2: 1.0794
  • S1: 1.0518| S2: 1.0392

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop buy: 1.0662| Take Profit: 1.0794 | Stop Loss: 1.0566

GBP/USD:

GBP/USD drops below 1.2150 amid US dollar recovery.

Early in the European session on Tuesday, the GBP/USD is continuing its decline below the 1.2150 level. The pair is facing pressure from a widespread recovery in the US Dollar, driven by renewed concerns about China’s economic growth, which have dampened risk sentiment and strengthened the Greenback. Investors are anticipating sentiment data from the US.

In the Asian session, GBP/USD experienced limited price movements within a narrow range before it later declined to the 1.2100 vicinity during the European morning. The short-term technical analysis indicates that the bearish sentiment remains unchanged.

Towards the end of the week, both the Federal Reserve (Fed) and the Bank of England (BoE) are set to reveal their monetary policy decisions. Investors may choose to adopt a cautious approach in anticipation of these events, potentially constraining the level of activity in GBP/USD.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2146 | Positive Crossover | Bullish
  • MA 20: 1.2147| Positive Crossover | Bullish
  • MA 50: 1.2173 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.2144 | Positive Crossover | Bullish
  • MA 20: 1.2152 | Positive Crossover | Bullish
  • MA 50: 1.2180| Negative Crossover | Bearish

RSI (Relative Strength Index): 50.61| Buying Zone| Bullish

Stochastic Oscillator: 59.72 |Buy Zone | Positive

Resistance And Support Levels:

  • R1: 1.2172| R2: 1.2338
  • S1: 1.2056 | S2: 1.1899

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2223 | Take Profit: 1.2338 | Stop Loss: 1.2144

NZD/USD:

NZD/USD ticks lower after weaker Chinese PMIs, and remains below mid 0.5800s.

Several factors are influencing the NZD/USD pair in the Asian session.

Expectations of a more hawkish stance from the Federal Reserve and higher US bond yields are boosting demand for the US Dollar.

Additionally, the discouraging Chinese Purchasing Managers’ Index (PMI) data is adding to the modest intraday decline in the currency pair.

In the Asian session on Tuesday, the NZD/USD pair is showing a slight decline, undoing a portion of the positive gains made the previous day, but this decrease lacks significant momentum. The current prices are holding below the mid-0.5800s range and are not showing a strong reaction to the disappointing Chinese PMI data release.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.5832 | Positive Crossover | Bullish
  • MA 20: 0.5834| Positive Crossover | Bullish
  • MA 50: 0.5867| Negative Crossover | Bearish

Simple:

  • MA 5: 0.5833 | Positive Crossover | Bullish
  • MA 20: 0.5827| Positive Crossover | Bullish
  • MA 50: 0.5887| Negative Crossover | Bearish

RSI (Relative Strength Index): 49.04| Buy Zone | Bullish

Stochastic Oscillator: 64.36| Buy Zone | Positive

Resistance And Support Levels:

  • R1: 0.5843| R2: 0.5928
  • S1: 0.5779| S2: 0.5715

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.5861| Take Profit: 0.5927 | Stop Loss: 0.5816

Elsewhere in the Forex Market

USD/CHF up 0.01% to 0.9018. The AUD/USD down 0.30% to 0.6356. The USD/JPY up 0.75% at 150.20. EUR/GBP up 0.01% at 0.8731, EUR/JPY up 0.07% at 159.33., The USD/CNY up 0.07% at 7.3182, AUD/SEK down 0.22% at 7.0894, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) Manufacturing PMI (Oct) Actual 49.5, Forecast 50.2, Previous 50.2 at 07:00.

(JPY) BoJ Monetary Policy Statement at 08:00.

(EUR) GDP (QoQ) (Q3) Forecast 0.0%, Previous 0.1% at 15:30.

(CAD) GDP (MoM) (Aug) Forecast 0.1%, Previous 0.0% at 18:00.

(USD) CB Consumer Confidence (Oct) Forecast 100.0, Previous 103.0 at 19:30.